CD is better known as Certificate of Deposit. It is a financial product and is based on time deposit, offered by financial institutions like credit unions and banks. Certificate of Deposit is very similar to savings account in banks. The difference is that, they are risk free since they are federally insured. The money put in CDs will be there in the bank itself. Two types of CDs are there. One is Bank CD which is insured by Federal Deposit Insurance Corporation (FDIC) and credit union CDs which are insured by National Credit Union Association (NCUA).

Another difference of Certificate of Deposit from that of savings bank is that it has particular term for getting matured and is accredited with a fixed rate of interest for the term till it is matured. The direction in which the federal rates or prime rates are moving will decide upon having higher or lower interest CD rates. When investing in CD make sure that you put the money for the stipulated time. If you are withdrawing the money before the maturity term, you might have to face penalties, which can result in eliminating your interest rates.

This article deals with knowing historical CD rates over the years and consists of average historical CD rates for 10 year window rates. The CD rates at the time of inception are not available although the data's from1993 to December 2006 is presently with us. The main point that we can analyze is that, majority of the people likes to put their money in short term CD investments. When you invest your money with 6 month CDs, it guarantees a return of 4.401%. The one year C D would get you a rate of 4.808%. At this point of the year the historical CD rates are below of what we presently have. At present the rates for 6 moth and 1 year CD s are 5.30% and 5.40% respectively. Knowing historical CD rates from 1994 to 2000 and from 2006 to 2007 were far better than the average rates given here is important. The historical CD rates were below average during the time period of 1993 to 2001 and also in 2005.

The analysis shows that it is better to invest money in long term CD investment policy. Knowing Historical CD rates for 3 year terms are 5.093%, for 4 years it is 5.2075 and for 5 year period it is 5.405%. You can see that there is almost a full point difference in the rates. Credit unions and banks offer good rates for CDs with long term investment policy. It is due to the risk the investor takes although he may have the economy moving against him. Currently short term CD investments are getting higher yields than the long term CDs to the banks, making them have an inverted yield curve.

Historical CD rates have shown that inverted curve appear when the rates are dropped. The banks and the credit unions are waiting for this drop to happen. So they are not offering CD rates for long Term CD investment. It is better to put forward a studied approach to investing in CDs. Knowing Historical CD rates help you decide which to choose better.