A CD, or certificate of deposit, is a type of savings account that has a specific term of time. These terms vary from months to years. Typically the interest earned is fixed across the term.
Compared to typical savings accounts, CDs earn higher interest in exchange for the fixed term. Typically longer terms earn higher rates than shorter terms.
The advantage of a CD for both the consumer and the bank is stability - with the rate fixed, both can predicate the amount earned over the life of the CD. However, the consumer must be careful during times of economic change. Holding a long-term CD with a fixed rate will work to ones advantage if the prevailing rates fall over time, but will work to the disadvantage if rates rise.