Promotional CD rate (Bonus CD rate)

AAA

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.

RELATED TERMS
  1. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. ...
  2. Next Generation Fixed Income (NGFI) ...

    A Next Generation Fixed Income (NGFI) manager is a fixed income ...
  3. Next Generation Fixed Income (NGFI)

    Next generation fixed income is an innovative approach to investing ...
  4. Class 3-6 Bonds

    Several classes of noninvestment grade bonds held by an insurance ...
  5. Impact investing

  6. Direct Bidder

    An entity that purchases Treasury securities at auction for a ...
RELATED FAQS
  1. My certificate of deposit (CD) has just matured and I plan to contribute $10,000 ...

    Your regular Roth IRA contribution can't exceed $4,000 annually. If you are at least age 50 by Dec 31, 2005, you can contribute ... Read Full Answer >>
  2. Why do longer term CDs pay a higher rate than the short-term CDs?

    To address this question, let's employ the concept of distance. In the city, a short taxi ride from your hotel to a convention ... Read Full Answer >>
  3. I have several CDs in my IRA with different maturities. Can I roll them over to another ...

    The limitation on rollovers applies on a per IRA basis. In general, if an IRA is involved in an IRA-to-IRA rollover, it cannot ... Read Full Answer >>
Related Articles
  1. Bonds & Fixed Income

    How To Earn The Most From CDs When Interest Rates Are Low

    Certificates of deposit might not seem like a good place to keep your money when interest rates are low, but they do offer security and stability. And with laddering and studying promotional ...
  2. Stock Analysis

    Did J.C. Penney’s Turnaround Plan Work Out?

    J.C. Penney has wrapped up another year of its turnaround plan: ultimately, to make money in a stock, the underlying business has to make money, too.
  3. Mutual Funds & ETFs

    PIMCO vs. BlackRock: Weighing Mega Fund Managers

    A look at the world's biggest bond manager and the world's largest asset manager.
  4. Investing

    Is Caterpillar Here To Stay?

    Because Caterpillar is the largest construction and mining equipment manufacturer in the world, investors can count on it to keep paying dividends.
  5. Investing

    Is J.C. Penney Fighting An Uphill Battle?

    J.C. Penney's revenue is once again on the ascent, its free cash flow is closing in on positive territory, and its gross margin has rebounded sharply.
  6. Investing

    What Is The Real Picture Of Linn Energy?

    Numbers don't always tell the full story. Take, for example, the long-term chart for LINN Energy which was expected to be down more than 40%.
  7. Bonds & Fixed Income

    Why Didn't Quantitative Easing Lead To Hyperinflation?

    Hyperinflation is an exponential rise in prices and tends to occur not when countries print too much money, but is instead associated with a collapse in the real underlying economy.
  8. Bonds & Fixed Income

    Figuring Out How To Cover Your Liability Bases

    Whenever we talk about the asset-liability approach to portfolio management (ALM), the concepts of immunization and cash flow matching come into play.
  9. Economics

    What Would Happen If Interest Rates Rise?

    This time around, while U.S. long-term yields have rebounded from their January lows, rates have generally been lower than where they ended 2014.
  10. Investing

    The Impact Of A Stronger Dollar In The Markets

    The economy continues to improve, but also demonstrated that some areas of the stock market are more vulnerable to an increase in interest rates.

You May Also Like

Hot Definitions
  1. Efficiency Ratio

    Ratios that are typically used to analyze how well a company uses its assets and liabilities internally. Efficiency Ratios ...
  2. Fixed Cost

    A cost that does not change with an increase or decrease in the amount of goods or services produced. Fixed costs are expenses ...
  3. Subsidy

    A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy ...
  4. Sunk Cost

    A cost that has already been incurred and thus cannot be recovered. A sunk cost differs from other, future costs that a business ...
  5. Technical Skills

    1. The knowledge and abilities needed to accomplish mathematical, engineering, scientific or computer-related duties, as ...
  6. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
Trading Center