demand certificate of deposit

A demand certificate of deposit (CD) is a receipt from a bank acknowledging a deposit of money that is payable on demand. These are primarily used by contractors as evidence of good faith when submitting a bid or as a guarantee of performance. They can also serve as collateral to secure a loan. Demand CDs typically do not earn interest.1

In contrast, time certificates of deposit bear interest and are payable on or after a specific date. These typically offer higher interest rates than regular savings accounts, but withdrawing funds before the maturity date usually results in a loss of interest. In the United States, bank-issued CDs are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per depositor, per account.123