What Is a Negotiable Certificate of Deposit?

Negotiable Certificate of Deposit (CD), referred to as CD, refers to the issuance of a time deposit certificate of a transferable nature issued by a bank to the holder. The voucher contains the issued amount and interest rate, and the date and method of repayment. If the deposit certificate has a term of more than one year, interest can be paid mid-term. In the New York currency market, units with a nominal deposit of US $ 1 million are usually issued with a term ranging from 30 days to 5 years or 7 years, and the term is usually 1-3 months. All payments will be made on the maturity date.

Negotiable time deposit

Negotiable Certificate of Deposit (CD), referred to as the CD, refers to the issue of a bank transferable

In essence, the deposit certificate is still bank

Transferable time deposit certificates are new in the past 30 years

The negotiable time deposit certificate issued by the bank still belongs to the nature

The interest rate on certificates of deposit is fixed. When the holder of the certificate of deposit sells the certificate of deposit, the actual market interest rate may not be consistent with the agreed interest rate on the certificate of deposit, may be higher than the agreed interest rate, or may be lower than the agreed interest rate. Those who purchase certificates of deposit on the secondary market are required to calculate at the prevailing interest rate at that time. Because if he does not buy the certificate of deposit on the secondary market, but buys the original certificate of deposit directly at the bank, he can only rely on the prevailing interest rate. When the certificate of deposit on the secondary market expires, the bank pays the interest at the agreed rate. For example, when the certificate of deposit is transferred, the market interest rate is 10%, and the certificate of deposit rate is 9%. The market interest rate is 1% higher than the negotiated rate of the certificate of deposit. The interest from the date of issue of the certificate of deposit to the date of maturity goes to the buyer. Because the market interest rate is higher than the agreed interest rate on the certificate of deposit, the seller of the certificate of deposit has to subtract the difference between the two interest rates of the buyer of the certificate of deposit from the interest he received. That is to say, if the market interest rate is higher than the negotiated deposit rate, the seller of the certificate of deposit has a certain loss; if the market interest rate is lower than the negotiated rate of deposit, the buyer of the certificate of deposit has to pay the difference between these two rates to the seller. At this time, the seller of certificates of deposit benefits.