A certificate of deposit (CD) that provides its holder (account holder) with a high introductory rate that, later on, steps down, or decreases, to the market interest rate at specified intervals. In other words, the certificate offers a fixed-interest rate for a certain period (usually 6 months or one year). Thereafter, the interest rate automatically starts to decrease down (at the step-down date) to a predetermined interest rate. However, in the event that rates start to decrease before the step down date, the holders do not get the opportunity to benefit from this decrease.

At maturity date, the certificate will be redeemed at par (its face value, or the amount that was initially deposited).