Specialty Certificates of DepositHere are some of the most popular variations on certificates. This list is by no means exhaustive.
- Credit union share certificates (or certificates of account) are negotiable certificates issued by credit unions.
- Stock-index CDs have rates based on the Standard & Poor's 500 Stock Index. For the period during which the CD is held, the issuing financial institution takes the average percentage increase in the S&P 500 level and doubles it, then pays this figure out as interest or dividends. Thus, if the S&P 500 grew by 3.5 percent, the interest/dividends paid would be 7 percent.
- Add-on CDs are those that allow the investor to deposit money into them after they have been set up.
- Variable-rate CDs are instruments whose rates move up or down according to changes in interest rates. They were created to keep up with volatile short-term interest rates. A third party sets new rates every 30 days.
- Discount CDs are sold for less than their face values. When they mature, the investor receives the face value. The difference between the face value and the discount price is treated as earnings. For example, a $500,000 CD can be sold for $475,000. When it matures, the investor will receive $500,000, and the $25,000 difference will be treated as earnings.