In Finance, what is a Yankee CD?

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  • Written By: Mary McMahon
  • Edited By: O. Wallace
  • Last Modified Date: 25 August 2019
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A Yankee certificate of deposit (CD) is a certificate of deposit issued by a foreign bank in the United States. Yankee CDs are typically used as investment instruments by big investors looking for low risk investments which can round out their portfolios. They can be sold on the derivative market and are considered a secure form of investment, although the rate of return on a Yankee CD is usually not very remarkable.

The New York market is one of the most common places to find Yankee CDs, because New York is a major city in the financial market in the United States. A Yankee CD usually has a minimum face value of $100,000 United States Dollars (USD) and may be purchased in a variety of denominations. The foreign bank operates through a branch of a bank in the United States which offers backing.

Like other certificates of deposit, the Yankee CD is structured with a maturity date. If someone opts to cash out a CD before the maturity date a penalty is usually imposed. Institutional and big investors can generally afford to keep a Yankee CD until it matures so that they can take advantage of the interest payments and avoid penalties. Individuals, however, should choose such investment instruments with care and make sure that they are unlikely to need to access the funds locked up in the CD until the maturity date.


The key advantage of the Yankee CD is that it is low risk. Investors are very unlikely to lose their money when it is invested in these instruments. However, the flip side of this is that it is also low interest. It is unusual to find low risk, high interest investments because high interest can usually only be obtained by generating a certain degree of risk. The Yankee CD is backed and secure, and thus returns a nominal rate of interest.

Rates on a Yankee CD vary. Banks which offer these instruments publish their rates, and people can also look up rates for CDs being traded in the derivatives markets. When looking at quoted rates, people should take care to determine whether the rates are fixed or adjusted. It is important to be aware that when interest rates in general are low, it is usually difficult to obtain a very good rate of return on investments such as Yankee CDs, and that the longer the term, the higher the interest rate.


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