This page will explore the types of CDs (certificates of deposit):
- CD sin penalización
- CDs de choque
- CDs Step up
- CD rescatables
- CD complementarios
- CDs Jumbo
- CD intermediados
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Investors can select the best opciones de inversión based on aspects like investment horizon, liquidity demands, and interest rate forecast by being aware of the many types of certificate of deposit.
Regular CDs
A regular CD typically features a fixed interest rate and an early withdrawal penalty, and only permits a single initial deposit.
Specialized CDs
Specialized CDs deviate from these standard CD characteristics. Some prevalent types of specialized CDs include:
CD sin penalización
These CDs allow you to withdraw funds from the account one or more times before the maturity date without a penalty fee.
While providing more flexibility, they may offer lower rates compared to other CDs.
CDs de choque
With a bump-up CD, you have the chance to increase the CD’s rate of return.
If rates go up, you can request the bank to raise your CD rate, usually limited to one rate increase per term.
CDs Step up
Similar to bump-up CDs, step-up CDs enable you to benefit from rising rates.
In contrast to bump-up CDs, the bank automatically increases the interest rate by a predetermined amount.
CD rescatables
Callable CDs typically offer higher interest rates than standard CDs but come with an added risk, where the bank may “call” or terminate the CD before the term ends.
This is especially the case if interest rates decrease.
CD complementarios
Unlike other CD types, an add-on CD allows additional deposits after the initial one.
This feature enables continuous growth of your savings as more funds become available for investment.
CDs Jumbo
Essentially similar to standard CDs, jumbo CDs have a higher minimum deposit requirement, usually $100,000 or more.
Jumbo CDs tend to offer slightly higher average rates compared to standard CDs.
CD intermediados
In general, CDs are offered by organizations such as banks or credit unions, and sometimes they may be offered by a third party.
If a third party, such as a brokerage firm, offers a CD, then it is known as a Brokered CD. On the other hand, CDs provided by banks are known as Bank CDs.
Brokered CDs can be sold or bought on a secondary market and pay interest regularly, while bank CDs have the facility to acquire compound interest.
Some of the types of CDs mentioned above are specific to the US, but there is a possibility for those to exist in your country as well. Probably with another name.
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