Variable-Rate Certificates of Deposit

Variable-rate CDs are certificates of deposit with rates that move up or down according to changes in interest rates. They were created to keep up with volatile short-term interest rates. Below are some of the most common forms of variable-rate CDs.

Though most CD rates are set by banks, some rise with interest rates. CDs with this feature are called rising-rate CDs.

Stock-index CDs offer rates based on a formula that follows a specified index. For example, the bank may pay a rate calculated at 120 percent of the quarterly average growth rate in the S&P 500 Stock Index.