A debt instrument (specifically a time deposit) that is issued by a bank or depository institution (like a credit union) to a customer who has deposited a certain amount of money in that bank. Certificates of deposit (CDs) are usually of a relatively short duration and pay a fixed rate of interest until a specific maturity date. In general, maturities range from a few weeks to several years. The vast majority of CDs have maturities under a year, with three months being the norm (a 91-day maturity). In the US, the yields for these CDs are linked to the 13-week Treasury bill rate.

At maturity date, the deposit is returned with earnings (interest, as in conventional banking, or profits as in Islamic banking). When a CD matures, its holder has a window of several days to instruct the bank what to do next. Usually, the bank will automatically reinvest (roll over) into a new CD if not given any alternate instructions.

Small denomination CDs are typically issued to individual or retail investors, and in some countries are covered by deposit insurance (in the US, for example, CDs are secured by federal insurance up to USD100,000 per account). CDs are considered one of safest investment vehicles thanks to the fact that investment risk is virtually nonexistent or at its lowest in money-market instruments. Actually, CDs are like savings accounts, but typically offer higher earnings. Furthermore, bank CDs can be tailored to meet individual requirements of investors.