An insight into some CD types to choose from

More often than not CDs need a minimum deposit and could proffer consumers a higher rate of interest for huge amounts. Commonly, a CD may comprise only of a book entry along with an item displayed in the consumers’ bank statements periodically. It may not in reality involve a certificate as such.

A bear CD has two main uses namely hedging or speculation. It typically involves the investor putting a bet on the market dropping down or falling in the course of the CD’s life. It may also help to dodge the position of the market in reality. Generally investors prefer using their excess cash in a bear CD, especially if they boast of a standing position which could be linked to the guiding market index.

A Bull CD on the other hand is the kind of CD employed by investors who could be looking at a safe way of investing in the stock market. The interest rate included in this type of CD does not specifically lose its value even if the market drops in value. This is mainly because only a minimum rate has to be shelled out by the investor.

A step-up CD is also known to be a flex CD and usually includes a fixed interest rate for a certain period of time. The time period is more often than not one year after. After this time has elapsed, the interest rate involved scales up to a rate set earlier. A Yankee CD on the other hand is one dispersed in the U.S. and is done so by a foreign bank’s branch. These instruments are of the negotiable type and can include a minimum face value reading at $100,000.

Much unlike standard CDs which involve the payment of a fixed interest rate, a variable CD depends on the market index’s result. The interest that investors would earn at the end of maturity depends on the percentage of profit or loss that they obtain starting from the Initial index to the end Index value.

The CD ladder mechanism is one used by consumers in longer investment terms that result in much higher rates of interest. Such kind of an investment usually holds up the chances of higher interest rates in an economy that is always rising. Using CD ladders, investors typically apportion the amount deposited over a certain time of few years. The main aim is to have the entire money deposited for the longest term and hence enhanced rates. But distribution in the above mentioned manner allows part of its maturity annually.

Leave a Reply



Account Type:

Select Amount:

Select term:


  • No minimum balance
  • Competitive rates, No risk


  • High rates, Access to money
  • FDIC Insured