Can you explain how short term CDs work?

Short term CDs, or certificates of deposit, are a type of savings account with a fixed term and interest rate. You deposit money for a specific period, usually ranging from a few months to a few years, and in return, you earn interest. The longer the term, the higher the interest rate typically is. Once the term is up, you can withdraw your initial deposit plus the interest earned. If you withdraw before the term ends, you may incur a penalty.