What exactly is a CD (not the music disk, I mean the kind from the bank)?

I know they have a high interest rate and they also do not allow you to withdraw your money (with out a fee) earlier than the time you set it for (like 1 yr, 2 yr, 5 yr 10 yr) but that is about all I know. I hear they're a good investment, but I'm wondering why? Would a regular ING savings account be just as good (im considering opening the CD with ING as well) Thanks!

It's short for 'Certificate of Deposit'. The banks offer you a slightly higher rate of interest because -- unlike savings accounts -- you lock your money up for a fixed amount of time. CDs from banks are approximately as safe as savings accounts -- which is to say, very safe.

However, because banks compete these days on international terms (thanks to the Internet!), the highest-paying savings account you can find is probably better than the lowest-paying CD -- there is a lot of overlap between the ranges. So shop around! I would check sites like

http://www.bankrate.com/brm/rate/deposit...

to see if I was getting a good deal for my money.

What you know is really most of what you need to know.

A CD is a Certificate of Deposit. In exchange for not having easy access to your funds (at least not without a penalty) they give you a higher rate than savings - generally.

There are a lot of online savings accounts, like the one you mentioned that gives you much easier access to your money with no minimums that have competitive rates to CDs and is worth checking out.

It usually pays higher interest rate than a savings account. If you have a bank that you do business with on a regular basis they may consider trying to "beat" the rate of area banks, but you have to ask.
You cannot not lose money on a CD as you can with many other investments.
Hope it helps!

Its like a reg. savings acct only you have a penalty for removing your money before the allotted time. Most banks cd terms are like this 3m, 6m, 9m, 1yr, 2y.....They pay out a larger intrest rate b/c you are should keep you money in for however long you set the acct up for, its a good investment if you can let money sit, a normal savings pays a lower rate but you can w/draw your money at anytime w/o a penalty!

cd=certificate of deposit

A CD is a time deposit with a bank. In exchange for you agreeing to leave you money in the bank for a defined period of time, they give you a higher interest rate that an account you have unlimited access to. The FDIC allows the bank to hold a lower level of reserves for this type of account as compared to a checking or saving account, so it allows the bank greater leverage with the assets for their investments ie: mortgages or business loans.

High yield savings or money market accounts such as the one offered by ING are usually backed by short term investments such as commercial paper, so the actual yield may fluctuate.

As for CD's being a good investment, that all depends on your specific time line for needing the funds, as well as your level of comfort with a higher risk / return trade-off.

I used to have about a dozen CD's with varying lengths of maturity. Now, when they mature I move them to Vanguard.com and invest them in their money market funds or mutual funds for much higher interest rates. I've been averaging 20% interest and won't ever go back to bank CD's where I was lucky to get 5%.

CD = Certificate of Deposit. I think you got all the basics. You get a little higher interest rate in exchange for agreeing not to want to use your money for a set period of time.

I believe bank CDs are typically insured under FDIC up to $100,000, so they are pretty safe.

Are CDs a good investment? I don't consider CDs an investment. CDs are a medium term place to stash your cash. I generally go by this rule of thumb:

Cash I need today - Checking account or pocket
Cash I'll need in less than 5 years (to buy a home or car, etc) - Money market or CD, although the money market accounts are usually offer competitive rates.
Cash I'll need more than 5 years out - Investment

You probably aren't losing much going with the ING account.

I hope this helps.

see other answers for Certificate of Deposit explanation

i don't think it's a good idea to purchase a CD at this time. Money market rates are much higher and the funds are more liquid. The argument can be made that money-market accounts have risk of liquidity as well... runs on banks, bad investment choices by firms, etc... In either case, is more than $100,000 is being invested? spread the wealth, SIPC insurance and FDIC only covers up to that number per person.