Short Answer 
A certificate of deposit (CD) is a savings account that offers higher interest rates for a fixed deposit period, making it a low-risk investment secured by FDIC insurance. For Janelle, a CD would be an ideal choice to grow her savings safely while earning predictable returns.
Step 1: Understand What a Certificate of Deposit (CD) Is
A certificate of deposit (CD) is a type of savings account offered by financial institutions, such as banks, where customers deposit a lump-sum of money for a fixed period. In return, the bank pays a premium in the form of interest. This is a time-bound investment, meaning money must remain in the account until it matures to avoid penalties.
Step 2: Recognize the Benefits of a CD
The main advantage of choosing a CD over a standard savings account is the higher interest rate it typically offers. Banks use the deposited funds for profit-generating activities, allowing them to pay customers more. Other benefits include:
- Low-risk investment due to the secured nature of the account.
- Federal Deposit Insurance Corporation (FDIC) protection for deposits up to $250,000.
- Guaranteed returns at a fixed interest rate, providing predictable earnings.
Step 3: Make the Decision for Janelle
Given Janelle’s need to manage her savings effectively, a certificate of deposit (CD) would be an excellent option. By using a CD, she can enjoy higher interest rates while ensuring her money is safe and federally insured. This approach will help her grow her savings securely over time.