Question by  Wiredfae (6)

What is the difference between a callable cd and a regular one?

Is it a risky investment?


Answer by  Billy25 (104)

When you invests in a traditional CD its held until maturity, at which point you receive the principal of the CD from the bank. If you invests in a callable CD, the bank can pay back the principal you invested at any time, to avoid paying future interest payments. Provided your callable CD is FDIC insured, your principal is safe.


Answer by  zippythepinhead (46)

A callable CD is one that can be redeemed by the issuing bank before the stated maturity date. Since banks tend to call CDs when interest rates drop appreciably, the investor will likely then have to reinvest his funds in an instrument earning far less than the original CD. The principal has the same FDIC protections as a regular CD.


Answer by  Vladlen (358)

Callable CD (Certificate of Deposit) has option to be called back by issue bank before maturity, were regular one has no such option. So callable CD has an advantage for issue bank. Risk of CDs depends on issue bank.

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