A certificate of deposit (CD) that pays a variable interest rate. In other words, the rate adjusts upward or downward over the lifespan of the certificate. The variable rate gets paid periodically based on a specific benchmark rate or reference rate (e.g., LIBOR).

Variable rate certificates have a maturity that ranges between a few months to a number of years (up to 5 years). Savers resort to these certificates to lock in the rate anytime over the course of their terms.

It is also known as an adjustable rate certificate of deposit or floating rate certificate of deposit.