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Add-On Certificate of Deposit
Money deposited into a certificate of deposit after the initial deposit. Suppose one places $1,000 in a certificate of deposit and places a further $500 into the same account later. One refers to the $500 as an add-on. Only some financial institutions allow add-on certificates of deposit because they receive the same interest rate as the previous deposit, a fact that would be disadvantageous to the financial institution when interest rates are declining.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
Funds that are added to a certificate of deposit after its date of purchase and that earn the same rate of interest as funds deposited with the original certificate. The add-ons allowed by some savings institutions provide a real benefit to investors during periods of declining interest rates.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.