A certificate of deposit (CD) that offers higher interest rates than usual types of certificates available in the market. These CDs are mainly offered by online banks/ credit unions or are mobilized online by brick-and-mortar banks. Online banking and online mobilization of deposits is typically associated with lower costs in comparison with traditional banking (brick-and-mortar type), mainly due to non-existence of costs to maintain branches or automated tellers. Such cost savings make the offering of high interest rates more affordable. A high-yield CD may provide well above 1% annual percentage yield (a CD rate usually is quoted as annual percentage yield, or APY, i.e., the interest rate that takes into consideration the effect of compounding.

A high yield CD usually doesn’t require high opening deposits, and a minimum doesn’t often exist.