Certificate of Deposit

Sam · Posted: Wed Mar 31, 2004 4:25 am Post subject: Certificate of Deposit

Certificate of Deposit (CD) is a certificate of confirmation on savings account issued by a bank or any other financial institution. It includes the institution's promise to return the deposit, plus gains at a specific interest rate within a specified period. The bank may charge penalty on any withdrawal form this account before the maturity period.

Customers agree to lend money to the institution for certain period of time as due to a secure way of earning interest amount on the investment.

A certificate of deposit with an investment under $1,00,000 is called ''Small CD'' whereas that with an investment above $1,00,000 is known as ''Large CD'' or ''Jumbo CD''.

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what are callable certificate of deposits, is there any difference between them and traditional certificate of deposits

carnahandavid · Joined: 21 Dec 2006 Posts: 239 58.40 Dollars($)

Hi Lerman,

Callable Certificate of deposit is different from traditional certificate of deposit in the sense that with such CDs, the bank keeps its rights to call (buy back) the investment.

There is an initial non-callable time period, after which the bank has the right to buy back the certificate of deposit.

As these are callable they also have high interest rates. On the due call date the bank which had issued the callable CDs determines whether it will be better to replace or leave the investment outstanding.

David

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