variable-rate certificate of deposit

(redirected from Variable-Rate CD)

Variable-Rate Certificate of Deposit

A certificate of deposit for which the interest rate changes according to some formula at set intervals. Investors use variable-rate certificates of deposit when they want a low-risk investment but expect prevailing interest rates to rise during the life of the CD. See also: Variable-rate bond.

variable-rate certificate of deposit

A certificate of deposit that pays a rate of interest that changes at predetermined intervals according to a specified formula or a key interest rate. This savings instrument is most appropriate if the investor expects short-term interest rates to rise before the certificates mature.
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Some banks are experimenting again with hybrid, variable-rate CDs that are tied to an index, such as Standard & Poors, Nasdaq, certain foreign markets or particular domestic stock sectors.

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