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.

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RELATED FAQS
  1. What are the typical durations for a certificate of deposit?

    Investing in a certificate of deposit offers individuals the ability to earn interest on idle funds with less risk than stock ... Read Answer >>
  2. How are yields taxed on a certificate of deposit (CD)?

    Learn how interest earned on a certificate of deposit is taxed and how this may reduce the total return of an investment ... Read Answer >>
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    Explore the various options available with certificates of deposit and discover how to find the most lucrative rates for ... Read Answer >>
  4. Can certificates of deposit (CDs) lose value?

    CDs are FDIC insured, so they do not lose face value, though broker-issued CD accounts do carry risks. Read Answer >>
  5. How safe an investment is a certificate of deposit?

    Discover certificates of deposit, their basic makeup and numerous variations, and understand why they are some of the safest ... Read Answer >>
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