What does CD stand for? The two most common answers are compact disc, the shiny round disc that holds music or computer data, and certificate of deposit, a kind of savings account at a bank or credit union. Which one is meant depends on whether you are in a music store or a bank lobby.
A compact disc stores information as tiny pits read by a laser. A certificate of deposit holds your money for a set period, such as six months or five years, and pays a fixed interest rate in return. Same letters, completely different things.
Quick facts
Stands for (music, data)
Compact discStands for (banking)
Certificate of depositType
Initialism, said C DPlural
CDsSpelling
Disc with a c, not diskOther meanings
Cd for cadmium in chemistryRelated terms
Two main answers, and how to tell them apart
| Field | Stands for | Example |
|---|---|---|
| Music and computers | Compact disc | "The album came out on CD and vinyl." |
| Banking and savings | Certificate of deposit | "I put my bonus in a 12 month CD." |
| Chemistry | Cd, the symbol for cadmium | Written with a lowercase d on the periodic table |
| Software | CD-ROM, compact disc read-only memory | Old programs shipped on a CD-ROM |
Clues help. Talk of tracks, players or burning a disc means compact disc. Talk of rates, terms, maturity or penalties means certificate of deposit.
What does CD stand for in banking?
At a bank, a CD is a certificate of deposit. You agree to leave a sum of money in the account for a fixed term, and the bank agrees to pay you a set interest rate for that whole time. Terms range from a few months to several years.
- Fixed rate: your rate does not change during the term, even if other rates fall.
- Maturity date: the day the term ends and you can take the money out or roll it into a new CD.
- Early withdrawal penalty: taking money out before maturity usually costs you some of the interest.
- Insurance: CDs at insured banks are covered by the FDIC up to its limits, and credit union certificates have similar federal coverage.
Banks advertise CD returns as an APY, the annual percentage yield, which includes the effect of compounding. A CD can also be held inside an IRA.
The compact disc, explained
A compact disc is a 12 centimeter plastic disc with a thin reflective layer. Data is stored in a spiral track of microscopic pits and flat areas, and a laser in the player reads the pattern as digital information. A standard audio CD holds roughly 74 to 80 minutes of music.
CDs reached stores in the early 1980s and soon replaced cassettes as the main way people bought albums. Computer makers used the same format as the CD-ROM for software and games, and recordable versions called CD-R and CD-RW let people burn their own discs. The later DVD looks the same but holds far more data.
How people use CD in a sentence
A bank notice: "Your 18 month CD matures on the 15th. Reply to renew or transfer the funds." This reminds you that the term is ending and that you have a short window to decide before it may roll over.
- "My dad still keeps his old CDs in the car."
- "Can you burn the slideshow music onto a CD for the party?"
- "She opened a CD instead of leaving the money in checking."
- "The CD ladder plan spreads savings across several maturity dates."
Writing CD correctly
Say it as two letters, "C D," and write it in capitals. The plural is CDs, with a lowercase s and no apostrophe. Use "a CD," since the first sound is "see." In the music sense, the full form is compact disc with a c; disk with a k is the usual spelling for computer hard disks and floppy disks.
Do not confuse CD with CC, which marks a copy of an email, or with LP, the long playing vinyl record. More everyday letters are on our famous acronyms page.
Questions people ask
What does CD stand for in banking?
In banking, CD stands for certificate of deposit. It is a savings account that pays a fixed rate in exchange for leaving your money untouched for a set term.
What does CD stand for in music?
In music, CD stands for compact disc, the digital disc used for albums. It is read by a laser in a CD player or computer drive.
Can you lose money in a CD?
At an insured bank, your deposit is protected up to federal insurance limits. You may give up some interest if you withdraw early, and in some cases the penalty can be larger than the interest earned.
Is it compact disc or compact disk?
Compact disc, spelled with a c, is the standard name for the format. Disk with a k is used mainly for computer storage such as hard disks.
What is the difference between a CD and a savings account?
A regular savings account lets you withdraw money any time but its rate can change. A CD usually pays a fixed rate but expects you to leave the money in until the term ends.