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CD glossary
Every term a bank might put in front of you, explained in one line each — with the calculator that turns it into a number.
Banking vocabulary is small but load-bearing: the gap between APY and APR decides which offer wins, “grace period” names the short window that stops your money auto-renewing at a worse rate, and “ownership category” is the phrase that decides whether a large balance is genuinely insured. Skim the list once and the fine print on any CD disclosure becomes readable.
APY
Annual percentage yield — the yearly return once compounding is included. The one figure that compares CD offers fairly.
APY ↔ APR Converter →APR / nominal rate
The rate as quoted, before compounding. Convert it into APY before comparing anything.
APY ↔ APR Converter →Term
The length of the commitment, running from three months to five years or more. Match it to the date you need the money.
CD Interest →Maturity
The date on which the term ends and the money becomes available penalty-free.
Maturity Date →Grace period
The 7–10 days following maturity in which you can withdraw or move the money before it auto-renews.
Maturity Date →Auto-renewal
A rollover into a fresh identical term at the current posted rate when you do nothing at maturity.
CD Renewal →Early withdrawal penalty
A charge worth a fixed number of months of interest for closing a CD before maturity — it never shrinks as maturity nears.
Early Withdrawal →Principal bite
What happens when the penalty outstrips the interest earned, so the bank takes the rest from your deposit.
Early Withdrawal →No-penalty CD
A certificate you can close early free of charge, usually in return for a lower rate.
No-Penalty CD →Bump-up CD
A CD that permits one mid-term rate increase should the bank raise its rates.
CD Renewal →Add-on CD
A CD that takes further deposits after opening, at the rate originally locked.
Add-On CD →Jumbo CD
A certificate carrying a high minimum — usually $100,000 — and sometimes a premium rate.
Jumbo CD →Brokered CD
A bank CD sold through a brokerage; you exit by selling at market price instead of paying a penalty. How it differs from a bank CD.
No-Penalty CD →Zero-coupon CD
Bought at a discount, pays face value at maturity, and taxed on its accrual every year.
Zero-Coupon CD →Phantom income
Interest taxed before it reaches you — the yearly accrual on a zero-coupon CD.
Zero-Coupon CD →CD ladder
Several CDs held with staggered maturities, so a portion frees up each year. Why and how to build one.
CD Ladder Builder →Rung
A single certificate inside a ladder.
CD Ladder Builder →Blended APY
The weighted average yield across every CD you hold.
CD Ladder Builder →FDIC insurance
Federal deposit insurance that covers $250,000 per depositor, per bank, per ownership category.
FDIC Coverage →NCUA share insurance
The credit-union counterpart to FDIC coverage, carrying the same limits.
FDIC Coverage →Share certificate
What a credit union calls a CD.
CD Interest →1099-INT
The tax form that reports interest of $10 or more credited to you during a year — below that it is still taxable.
CD Tax →Real return
Yield once inflation is removed — what your purchasing power genuinely gained.
Real Return →