what is a variable rate certificate of deposit cd 
a variable rate certificate of deposit cd is a type of savings account offered by banks and credit unions also sometimes called a flex cd this certificate locks up your money for a fixed length of time term but provides a fluctuating interest rate based on different factors such as the prime rate the consumer price index cpi treasury bills or a market index the federal deposit insurance corp fdic protects variable rate and other cds 1understanding a variable rate cda variable rate cd allows investors to put their money into a secure protected account where it will earn interest over the life of its term the earned interest is usually inaccessible to the account holder until the cd matures 2 variable rate cds tend to have both limited choices of terms and longer terms such as a 12 24 or 36 month term finding a variable rate cd can also be more challenging compared to other cd types you may need to research options at smaller or community banks and credit unions a variable rate cd pays an interest rate that can go up and down throughout the life of the security the exact factors determining the interest rate of a variable rate cd will vary depending on the institution a bump up cd could be considered a type of variable rate cd and is offered by more banks and credit unions with a bump up or step up cd rates only go up not down but typically you must initiate the change and there are limits on how many times the rate can change usually only once or twice in contrast to either a variable or step up cd the widely available fixed rate cd has a locked in interest rate so the rate remains the same throughout the entire term fixed rated cds tend to offer more terms to choose from such as 3 month to 5 year cds a cd is generally considered one of the safer ways to invest your money especially as your money is insured by the fdic up to 250 000 1 cds overall are among the most reliable low risk investment options available they appeal to conservative risk averse savers and investors investing in cds is also an excellent way to diversify the risk of your portfolio for new or cautious investors a fixed rate cd may be preferable but consumers comfortable with increasing the risk just a little bit may want to consider a variable rate cd if rates are predicted to rise variable rate cds typically require a minimum of 500 or more special considerations of a variable rate cd