Certificates of Deposit (CDs) can be ideal vehicles for investing funds that you do not need in the near term. CDs are promissory notes issued by banks, credit unions or thrift institutions. They are time deposits usually having maturities ranging from 30 days to as long as ten years. The most popular terms are from 90 days to five years. Since they are time deposits, they usually offer higher interest rates than savings accounts, but they have penalties for early withdrawals.
Here is an example of CD maturities and interest rates:
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When choosing the maturity of a CD to buy, it is important to consider your liquidity needs and that interest rates will change over time. Buying a five year CD with a 0.85 percent interest rate may be attractive today, 
but if rates rise in the next couple of years, you are locked into that 0.85 percent interest rate until maturity. An alternative is to use a “laddering of maturities” strategy. For example, instead of buying one five year CD, buy equal amounts of one, two, three, four and five year CDs. As each CD matures, you then reinvest the proceeds into a five year CD. While you would not have as high of an initial rate, over time all your funds would end up in higher rate five year CDs and you would have annual liquidity of one fifth of your funds. If rates rise, you would take advantage of the higher rates with new purchases. If rates fall, you still have the initial higher rate CDs that you already own.
CDs offered by banks and thrift institutions are insured by the Federal Deposit Insurance Corporation (FDIC). There are ownership rules applied to determining the insurance limit and you should thoroughly investigate these rules if you are considering investing large amounts with a single institution.
Stop by a local Arvest Bank to learn about your CD options.