What is a CD in terms of banking?

Question

Also how much will I get if I open a CD account with $4000 with a rate of 2.57% for a year?

Answer 1

this is the safest investment but lowest return.

Answer 2

a CD is basically handing over (in your case) $4000 to the bank for a year, and you aren't allowed to withdraw any money from it or add money to it for a year.  They invest it and do whatever they please with that $4000, and after a year is up, they give you your $4000 back plus interest.  so $4000+(4000x 0.0257) = how much they give you.  

it depends on how long your CD is though, if it's less than a year, then you'll get less than that amount.  it'd be more like $4000+ (number of months it's in the bank/12)(4000x0.0257)

and generally it's a pretty good deal because they give you higher interest rates than if you just stuck it in your savings account.

if you decide to take the money out early, they usually charge you a fee.