Variable-Rate Certificate Of Deposit

DEFINITION of 'Variable-Rate Certificate Of Deposit'

A certificate of deposit (CD) with a variable interest rate. The rate can be determined by a number of mediums, such as the prime rate, consumer price index, treasury bills or a market index. The amount paid out is usually based on a percentage difference between the beginning index and the final index.

BREAKING DOWN 'Variable-Rate Certificate Of Deposit'

A certificate of deposit is generally considered to be one of the safer ways to invest your money. It is the perfect choice for the conservative investor, or to diversify the risk of your portfolio. When looking to step up the risk just a little bit, considering a variable rate CD may be a good place to start.