Will Certificate of Deposit rates beat the stock markets? First, what exactly are these certificates? Abbreviated as CD, these certificates verify that you deposited a given amount in a bank for a given time in return for a guaranteed interest rate. CD's offer guaranteed returns, no risk, insured accounts, and no rollover penalties.

You're Guaranteed To Make Money

The bank promised to pay you a fixed interest rate for your C-D deposit. The bank uses your deposit to help other customers, and pays you the interest in return. C/D rates are often much higher than standard savings and checking interest rates. You may earn 3%, 5%, or even more annually. Online banks sometimes offer slightly higher returns. There may be fees or penalties of the deposit is withdrawn prematurely, so leave it alone! Deposit terms can be half a year, one year, or several years. Banks will often pay more if you choose a longer period for your deposit.

You Won't Lose A Penny

The rollercoaster stock market can make or break a fortune, as the market zooms up and down. Market investments can change value very rapidly. There is no such volatility with Certificates of Deposit, because you know up front how much you'll earn. Stock investing simply cannot provide the peace of mind offered by deposit certificates.

The Government Protects Your Money

The FDIC guarantees that depositors of U.S. banks will not lose their money. In the event of a bank failure, you can withdraw all your funds up to the FDIC limit. When a company fails, however, its stock becomes worthless and your investment is lost.

Rollover Safety

When your CD matures, you can immediately roll it over into another CD, with no money lost. You'll then be earning interest of both the initial principal, plus the interest you earned before. IRA and 401(k) rollovers are subject to losing value when rolled over, if the rollover occurs on a day when the stocks are down.

Long term investors like the conservative benefits of the CD. For these reasons, Certificate of Deposit rates offer safer and steadier gains than volatile stock investments.