CD Passbooks

If you’re looking for a secure investment with a guaranteed return, a certificate of deposit (CD), may be the right choice for you. Since CDs are protected accounts that are usually insured by the FDIC or NCUA, they are considered one of the safest places to put your money in an uncertain economy.


A CD is a type of time deposit, which means that when you take out a CD from your financial institution, you do so for a specific, fixed term – for example, one, five, or ten years. When you put money in a CD, you are making a commitment to let the bank hold your money for the entire length of the specified term. This differentiates it from a passbook savings account in that, unlike in a savings account, you are not allowed to withdraw funds at will from traditional time-deposit CDs. Withdrawal of funds from a traditional CD before its maturity date is called “early withdrawal” and is generally accompanied by financial penalties which wipe out any gains you may have made in accumulated interest.

A “passbook” is something that records the transactions you make on a traditional checking or savings account – which is why those accounts are sometimes called passbook savings or passbook checking. Technically, with a traditional CD you don’t need a passbook because you are not going to be withdrawing your money from the CD before its maturity date.

However, some banks offer a variety of CD options including liquid CDs, “bump-up” CDs, or Passbook CDs, which will offer you the advantages of a CD rate without the disadvantages of a traditional CD. Some passbook CD accounts may offer a higher rate than passbook savings, while offering the liquidity of a passbook savings account. Shop around and check with various institutions to get the best CD rates available to you.