CD, time deposit, share certificate… What’s the difference?

By Sabrina Karl

If you shop for certificates of deposit in the newspaper or online, venturing beyond just your local bank, you’ll likely encounter some names for CDs that leave you wondering if you’re considering apples to apples.


CDs are what the banking industry calls “time deposits”, or sometimes “term deposits”. Those names signify that your deposit is made with an agreement that you will keep it at the bank for an established time period or term. This is different than checking, savings or money market accounts, where you can generally deposit and withdraw funds at any time of your choosing.


But while “certificate of deposit” and “CD” are fairly ubiquitous terms, not every U.S. financial institution uses those names, and shopping for the best CDs in the country will occasionally put a product in front of you that certainly looks like a CD but goes by some other name.


This most often happens at credit unions or community banks. Instead of CDs on their product menu, you might simply see “time deposits” or “term deposits”, such as “3-Year Time Deposit”. And at credit unions, where customers are members who hold a share in the credit union, you might see “share certificates” instead of CDs.


Does this matter? Essentially no. While some wonky banking rules specify minor differences in these products, they do not come into play for the vast majority of consumers. Whether it’s called a CD or a time deposit or a share certificate, it’s the same product: Deposit X dollars for a period of Y months or years and we’ll pay you Z percent interest.


So when you see X, Y, and Z in a deposit product’s description, rest easy that you are looking at that institution’s version of a CD, no matter the marketing name they’ve given it.