Lock-up CDs

CDs that are issued with the tacit understanding that the buyer will not trade the certificate. Quite often, the issuing bank will insist that it hold the certificate for safekeeping by it to ensure that the buyer holds the understanding.

Lock-Up CD

A certificate of deposit that the depositor agrees not to trade for the duration of the CD. Because this is not legally binding, a bank issuing a lock-up CD may require the depositor to keep the certificate of deposit at the bank to physically prevent the depositor from trading it. It should not be confused with a lock-up agreement, which is a different concept altogether.

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