Search results
Results from the WOW.Com Content Network
A callable certificate of deposit (CD) is an investment that pays more interest and presents more risk than a traditional CD. When you purchase a callable CD, the CD’s issuer (usually a bank or ...
Unlike with a non-callable CD, the issuer of a callable CD can call (or pay back) the CD before its maturity date. If it does, the issuer pays the CD holder a set amount and closes out the account.
This transfer of risk allows step-up callable CDs to offer a higher interest rate than currently available from non-callable CDs. If prevailing interest rates decline, the issuer will call the CD and re-issue debt at a lower interest rate. If the CD is called before maturity, the investor is faced with reinvestment risk. If prevailing interest ...
CDs are similar to savings accounts in that they are insured and thus virtually risk-free; they are "money in the bank" (CDs are insured by the FDIC for banks or by the NCUA for credit unions). They are different from savings accounts in that the CD has a specific, fixed term (often three months, six months, or one to five years), and, usually ...
If you're a savvy investor, you're likely looking for ways to diversify your investment portfolio. Callable certificates of deposit (CD) are a way to invest your money for several years with a ...
Callable CDs: Callable CDs typically earn higher interest rates than standard CDs, but they come with an extra risk factor — the bank may cut short or “call” the CD before the term is up ...
The participation rate is the percentage at which a market-linked CD's annual return will correspond to the performance of the index it is tied to. [8] For example, an index sees a 20 percent gain, but the indexed CD has a participation rate of 80 percent. The CD will produce a return of 16 percent, which is 80 percent of 20 percent.
A variable-rate CD — also called a flex CD — is a type of certificate of deposit with an interest rate that can fluctuate periodically over the term of the CD based on market conditions.