A negotiable unsecured money market instrument issued by a bank evidencing a time (term) deposit with that bank, typically in book-entry form, usually at a fixed rate, with a maturity of seven days to several years is a certificate of deposit (CD) – known as a "negotiable certificate of deposit" (NCD) in the US domestic market.  In the US market and the Eurozone, the minimum size of a CD is $100,000 and €100,000, respectively.  While most are issued with terms of one, three or six months, CDs with maturities of one to five years are not uncommon; broken dates are also possible.  As an add-on instrument, interest is payable at the end of a CD’s term, while those with a maturity of more than one year pay interest annually.  CD rates are quoted as an annual percentage yield (APY).

US CD Rates of a Broker as per 8 Aug 2017
3-Mo 6-Mo 1-Yr 2-Yr 3-Yr 4-Yr 5-Yr
1.20% 1.40% 1.55% 1.70% 1.90% 2.10% 2.35%

CDs are typically issued upon request, with their size and maturity tailored to investor needs.  Domestic banks may also issue CDs in foreign currencies – Euro-certificates of deposit (Euro-CDs).

Outside the United States, the term “certificate of deposit” is normally only used to refer to a negotiable certificate of deposit, as opposed to a clean deposit – a nonnegotiable (nontradable) time deposit.  An advantage of CDs over clean deposits is that CDs are negotiable.  In return for this advantage, CD investors accept a lower yield than on equivalent maturity nonnegotiable (illiquid) time deposits.

The yield of CDs is higher than that of treasury bills but lower than the yield of commercial paper (CP) of the same market and maturity due to their higher credit and liquidity risk.  As unsecured debt, its yield depends on the credit rating of the issuing bank.

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