Certificates of deposit, or CDs, pay a fixed rate of interest for your keeping funds in the account for a fixed period of time. They are similar to savings accounts and time deposits. Interest rates are fixed for the life of the deposit, and the longer the term of the deposit, the higher the interest rate.

CDs are less liquid than other cash management alternatives because money must be deposited for a certain amount of time; however, with that reduction in liquidity comes a higher interest rate. The required minimum balance for a CD account is generally higher than it is for a savings or checking account. CDs are very safe and are generally FDIC insured. CDs enforce penalties for early withdrawal if you withdraw money before the end of the specified term. Information on CD rates and how to purchase CDs is available from the Wall Street Journal and various financial institutions.