What financial product is similar to savings accounts but offers higher interest rates and fixed terms?

Certificates of Deposit (CDs) are indeed similar to savings accounts in that they are both types of deposit accounts offered by banks and credit unions. However, CDs typically offer higher interest rates compared to standard savings accounts. This is largely because they require you to lock in your money for a fixed term, which can range from a few months to several years.

The benefit of this fixed term is that the financial institution can use your money for longer periods, allowing them to offer a higher return compared to the more flexible savings accounts, which allow for withdrawals at any time without penalty. While options like money market accounts and high-yield savings accounts may offer competitive rates, they do not provide the same fixed-term commitment and typically have more flexible access to funds.

Retirement accounts, on the other hand, primarily focus on saving for retirement and involve different rules and purposes, making them distinctly different from the nature of a CD. The structure and benefits of CDs make them an attractive option for individuals looking for a stable and predictable investment with a higher yield than traditional savings accounts.