DEFINITION of 'Liquid Certificate Of Deposit'

A certificate of deposit (CD) that allows withdrawls to be made, without penalty, from the account. The major upside to this type of CD is that your money is accessible to you if you need it throughout the term. The downside is that the interest rate is generally lower than that of a traditional CD.

BREAKING DOWN 'Liquid Certificate Of Deposit'

In order to make a withdrawl from the CD, many institutions require notice of the withdrawl. Also, it is often necessary that a minimum balance be in the account. Finally, be sure to read all terms and conditions of the CD as there may be a limited amount of withdrawls that can be made during a period.

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