Variable-Rate Certificate Of Deposit

AAA

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.

RELATED TERMS
  1. Personal Finance

    All financial decisions and activities of an individual, this ...
  2. Fixed Interest Rate

    An interest rate on a liability, such as a loan or mortgage, ...
  3. Maturity Date

    The date on which the principal amount of a note, draft, acceptance ...
  4. Prime Rate

    The interest rate that commercial banks charge their most credit-worthy ...
  5. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. ...
  6. Variable Interest Rate

    An interest rate on a loan or security that fluctuates over time, ...
Related Articles
  1. Bonds & Fixed Income

    Certificates Of Deposit

    Safety is a hallmark of the traditional certificate of deposit (CD) sold by a bank or credit union.
  2. Credit & Loans

    Mortgages: Fixed-Rate Versus Adjustable-Rate

    Both of these have advantages and disadvantages depending on your financial needs and prospects.
  3. Investing Basics

    Callable CDs: Check The Fine Print

    These offer higher returns than regular certificates of deposit, but there's a catch.
  4. Investing Basics

    How Interest Rates Affect The Stock Market

    Whether you're buying lunch, a home or a stock, you're influenced by interest rates.
  5. Active Trading

    How Companies Use Derivatives To Hedge Risk

    Derivatives can reduce the risks associated with changes in foreign exchange rates, interest rates and commodity prices.
  6. Options & Futures

    Getting To Know The Money Market

    If you need liquidity and safety on a sum of money, don't forgo potential interest by keeping the funds as cash.
  7. Options & Futures

    Home-Equity Loans: The Costs

    Learn the factors to consider when comparing the different programs offered by various lenders.
  8. Economics

    Understanding Cash and Cash Equivalents

    Cash and cash equivalents are items that are either physical currency or liquid investments that can be immediately converted into cash.
  9. Professionals

    Why Investors Should Consider Cash Right Now

    With so many market watchers thinking that the current stock rally is getting long in the tooth, investors might considering upping their cash holdings.
  10. Investing

    Payroll Processors, Regional Banks await Rate Hike

    Short-term interest rates are creeping higher, which is good news for money market fund managers, payroll processors and consumer banks.
RELATED FAQS
  1. Why is my 401(k) not FDIC-Insured?

    401(k) plans are not FDIC-insured because they are typically composed of investments rather than deposits. The Federal Deposit ... Read Full Answer >>
  2. What are some examples of money market funds?

    Money market mutual funds are designed to offer savers low-risk, liquid and short-term investments. They are normally offered ... Read Full Answer >>
  3. For what types of accounts are demand deposits available?

    There are essentially three types of accounts available as demand deposits: checking accounts, savings accounts and money ... Read Full Answer >>
  4. What is the difference between a demand deposit and a term deposit?

    Demand deposits and term deposits differ in terms of accessibility or liquidity, and in the amount of interest that can be ... Read Full Answer >>
  5. Under what circumstances would someone enter into a repurchase agreement?

    In finance, a repurchase agreement represents a contract between two parties, where one party sells a security to the other ... Read Full Answer >>
  6. How does the velocity of M2 money supply change?

    According to economic theory, the velocity of money is the number of times a unit of currency changes hands over a set period ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Stock Market Crash

    A rapid and often unanticipated drop in stock prices. A stock market crash can be the result of major catastrophic events, ...
  2. Financial Crisis

    A situation in which the value of financial institutions or assets drops rapidly. A financial crisis is often associated ...
  3. Election Period

    The period of time during which an investor who owns an extendable or retractable bond must indicate to the issuer whether ...
  4. Shanghai Stock Exchange

    The largest stock exchange in mainland China, the Shanghai Stock Exchange is a nonprofit organization run by the China Securities ...
  5. Dead Cat Bounce

    A temporary recovery from a prolonged decline or bear market, followed by the continuation of the downtrend. A dead cat bounce ...
  6. Bear Market

    A market condition in which the prices of securities are falling, and widespread pessimism causes the negative sentiment ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!