What is a Certificate of Deposit or CD? A Simple Explanation for Kids & Beginners

What is a Certificate of Deposit or CD? A Simple Explanation for Beginners

Introduction to Certificate of Deposit or CD for Kids and Teens

What is a Certificate of Deposit or CD - A Simple Explanation for Kids Teens Beginners
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This video explains the concept of Certificate of Deposit in a simple, concise way for kids and beginners. It could be used by kids & teens to learn about CDs, or used as a money & personal finance resource by parents and teachers as part of a Financial Literacy course or K-12 curriculum.

Suitable for students from grade levels:

  • Kindergarten
  • Elementary School
  • Middle School
  • High School

The topics covered are:


Howdy Wall St. Willy! I heard that interest rates in CDs are low lately. But…

What is a Certificate of Deposit or CD?

CD or Certificate of Deposit for Kids Teens Beginners
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Well, a CD is a Certificate of Deposit. It is a place where you keep your money to get interest from the bank that you kept it in for the amount of money that you kept.

The interest rate is decided before you keep your money in and you keep it there for a certain amount of time.

After that you get your money that your kept in it plus the interest.

Can I withdraw my money early from a CD?

Yes, you can withdraw your money early, before the term of the CD or how long you’re supposed to keep it for.

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But you’ll face a penalty and you might also not get any of the interest that you had accumulated.

So, try not to invest in a CD or Certificate of Deposit if you think that you might need to withdraw your money early.

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Does the price of the CD go up and down like a stock or a bond?

No, it does not because it is not actively traded on the market.

But then…

Why should I invest in a CD?

Reasons for Investing in a CD or Certificate of Deposit
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Well, you should invest in a CD because it is a good short-term and mid-term investment where you have no risk of losing your money but where you can earn some interest.

You are guaranteed to get your money back plus interest if you keep your money in the CD for the agreed upon amount of time.

Well, thank you very much for explaining that. Now it’s a lot simpler.

You are welcome, Sooper Cooper. Remember, Finance is Your Friend!


Podcast: What is a Certificate of Deposit or CD?

Certificate of Deposit or CD
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