Bump-up CD

Bump-up CD

A certificate of deposit granting the owner the right to increase its yield one time for the remaining term of the CD. The power is exercised by the owner in the event of an interest rate hike.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Bump-Up CD

A certificate of deposit in which the holder has the right to increase the interest rate paid on it if prevailing interest rates increase at some point over the term of the CD. The holder may only do this once; if interest rates decline, the new, higher rate on the CD remains the same. A bump-up CD protects the investor from some of the interest rate risk inherent to normal CDs.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
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