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Definition: Callable Certificate of Deposit
A callable certificate of deposit (callable CD) is a investment with a bank or financial institution for a specified time that can be called by the issuing bank before the stated maturity date usually within a specified time frame and call price.
Like a regular CD, it is also a certificate of deposit that pays a fixed interest rate till its maturity. The difference between a callable CD and a traditional CD is that the issuing bank owns a call option and can redeem, or "call," the CD for the full amount before its maturity date. Usually, the issuer pays the investor a little over par value in order to have the provision to call the CD.
It is the date on which the issuing bank can call your certificate of deposit. For example, the call date is twelve months, this means that twelve months after you buy the CD, the bank can decide whether it wants to call the CD and return the money with interest. Every twelve months after the call date, the bank will have that same option again.
The maturity date specifies how long the issuer can keep the money. Farther the maturity date, higher the interest rate you should expect to receive. The maturity date is different from the call date.
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