certificate of deposit: meaning, definition, pronunciation and examples
C1Financial/Business/Technical
Quick answer
What does “certificate of deposit” mean?
A financial product issued by a bank to a customer, which is a time deposit paying a fixed rate of interest for a specified term.
Audio
Pronunciation
Definition
Meaning and Definition
A financial product issued by a bank to a customer, which is a time deposit paying a fixed rate of interest for a specified term.
A savings certificate with a fixed maturity date and specified fixed interest rate, offered by banks and credit unions, where funds cannot be withdrawn before maturity without penalty.
Dialectal Variation
British vs American Usage
Differences
UK: Often called a 'fixed-term deposit' or 'bond' in everyday speech, though 'certificate of deposit' is the formal term. US: Almost universally abbreviated to 'CD' in both formal and informal contexts.
Connotations
In the US, 'CD' is a common, widely understood retail banking product. In the UK, the term is more formal and associated with larger, institutional deposits.
Frequency
Much more frequent in American English due to the prevalence of 'CDs' in retail banking marketing. Less commonly used in everyday British conversation.
Grammar
How to Use “certificate of deposit” in a Sentence
[Subject] holds/owns/buys a certificate of deposit[Subject] invests in a certificate of depositA certificate of deposit [Verb: matures/earns/yields]Vocabulary
Collocations
Examples
Examples of “certificate of deposit” in a Sentence
verb
British English
- The bank does not certificate these deposits in a physical form anymore.
- We decided to certificate our savings for a two-year term.
American English
- She CD'd a portion of her inheritance.
- We're going to CD our funds to get the promotional rate.
adjective
British English
- The certificate-of-deposit market saw increased volatility.
- He reviewed the certificate of deposit rates online.
American English
- CD rates are rising.
- They offered a CD laddering strategy.
Usage
Meaning in Context
Business
The company parked its excess cash in a jumbo certificate of deposit to earn a higher yield.
Academic
The study analysed the yield curve for certificates of deposit as an indicator of short-term interest rate expectations.
Everyday
I'm thinking of putting some savings into a certificate of deposit for a year to get better interest.
Technical
The negotiable certificate of deposit (NCD) issued by the bank was subsequently traded in the secondary market.
Vocabulary
Synonyms of “certificate of deposit”
Strong
Neutral
Weak
Vocabulary
Antonyms of “certificate of deposit”
Watch out
Common Mistakes When Using “certificate of deposit”
- Using 'certificate of deposit' as a countable noun without 'a' (e.g., 'I have certificate of deposit' instead of 'I have a certificate of deposit').
- Confusing it with a 'bond' (which is a debt instrument issued by a government or corporation).
FAQ
Frequently Asked Questions
No. A savings account allows for withdrawals at any time, while a CD has a fixed term with penalties for early withdrawal, typically offering a higher interest rate in return.
In most developed countries, CDs issued by banks are insured up to a certain amount (e.g., by the FDIC in the US, FSCS in the UK), making them very low-risk. The main 'loss' comes from the penalty for early withdrawal or from inflation eroding the fixed returns.
Upon maturity, the bank returns the principal plus accrued interest to the depositor. Usually, the depositor will have a short grace period to withdraw the funds or instruct the bank to renew ("roll over") the CD, often at the current market rate.
A negotiable CD can be sold to another investor in a secondary market before its maturity date. This provides liquidity to the holder. Most retail CDs are non-negotiable.
A financial product issued by a bank to a customer, which is a time deposit paying a fixed rate of interest for a specified term.
Certificate of deposit is usually financial/business/technical in register.
Certificate of deposit: in British English it is pronounced /səˌtɪf.ɪ.kət əv dɪˈpɒz.ɪt/, and in American English it is pronounced /sɚˈtɪf.ə.kɪt əv dɪˈpɑː.zɪt/. Tap the audio buttons above to hear it.
Phrases
Idioms & Phrases
- “Locked in a CD”
- “CD ladder (a strategy using multiple CDs with staggered maturity dates)”
Learning
Memory Aids
Mnemonic
Think: CERTIFICATE (a formal document) OF DEPOSIT (money you've deposited). It's a document proving you've deposited money for a fixed time.
Conceptual Metaphor
FINANCIAL PRODUCT IS A CONTAINER (for money), INVESTMENT IS A JOURNEY (with a fixed endpoint/maturity).
Practice
Quiz
What is a key characteristic of a standard certificate of deposit?