Promotional CD rate (Bonus CD rate)

Definition of 'Promotional CD rate (Bonus CD rate)'


A limited-time offer of a higher rate of return on a certificate of deposit (CD) offered by banks and credit unions to attract new deposits. Promotional rates are usually available only on short-term CDs and can require a higher minimum investment. Like all CDs, they guarantee a minimum rate of return and provide the security of FDIC insurance. 

Investopedia explains 'Promotional CD rate (Bonus CD rate)'


Promotional rates are also referred to as bonus rates. They can be a great way to maximize returns for customers who are willing to move their money frequently. Investors who don't want their money tied up for a long time should look into them. Promotional rates usually only apply to new funds, not rollover CDs. Bonus rates can nearly double CD returns, and longer-term CDs don't always yield better than shorter-term ones when the bonus rate is factored in. Often, shorter term CDs can yield better than one-year CDs [sometimes 2-3 times the regular average annual percentage yield (APY)]. Credit unions tend to be the best source for the most generous bonus rates.


Filed Under: ,

comments powered by Disqus
Hot Definitions
  1. Benchmark Bond

    A bond that provides a standard against which the performance of other bonds can be measured. Government bonds are almost always used as benchmark bonds. Also referred to as "benchmark issue" or "bellwether issue".
  2. Market Capitalization

    The total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying a company's shares outstanding by the current market price of one share. The investment community uses this figure to determine a company's size, as opposed to sales or total asset figures.
  3. Oil Reserves

    An estimate of the amount of crude oil located in a particular economic region. Oil reserves must have the potential of being extracted under current technological constraints. For example, if oil pools are located at unattainable depths, they would not be considered part of the nation's reserves.
  4. Joint Venture - JV

    A business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task. This task can be a new project or any other business activity. In a joint venture (JV), each of the participants is responsible for profits, losses and costs associated with it.
  5. Aggregate Risk

    The exposure of a bank, financial institution, or any type of major investor to foreign exchange contracts - both spot and forward - from a single counterparty or client. Aggregate risk in forex may also be defined as the total exposure of an entity to changes or fluctuations in currency rates.
  6. Organic Growth

    The growth rate that a company can achieve by increasing output and enhancing sales. This excludes any profits or growth acquired from takeovers, acquisitions or mergers. Takeovers, acquisitions and mergers do not bring about profits generated within the company, and are therefore not considered organic.
Trading Center