What type of financial account typically pays higher interest rates than standard savings and checking accounts?

A Certificate of Deposit (CD) is a type of financial account that typically pays higher interest rates compared to standard savings and checking accounts. This is primarily because CDs require you to deposit your money for a fixed term, ranging from a few months to several years, during which you agree to not withdraw the funds. In return for this commitment, banks and financial institutions offer higher interest rates as a way to incentivize long-term savings.

The interest earned on a CD is generally locked in for the duration of the term, and you receive your principal along with the accrued interest at maturity. This fixed term and the promise of higher returns make CDs a favorable option for individuals looking to grow their savings over time without the risk associated with fluctuating interest rates found in other accounts.

In contrast, checking accounts are designed for everyday transactions and typically offer very low interest rates, if any. They prioritize liquidity and accessibility over interest. Standard savings accounts generally provide slightly better interest rates than checking accounts but still fall short of the rates offered by CDs. Options like "Certificate Program" and "Collateral" do not fit the context of traditional savings accounts and their interest rates. A "Certificate Program" might refer to educational programs and not financial accounts, while "Collateral" pertains to