Deposit Notes Financial Glossary

What is it? A form of bank obligation that is similar to a deposit. Deposit notes are typically issued with terms from two to five years. Like CDs, deposit notes are issued for specified terms at either specified rates or specified rate formulas. Unlike CDs, deposit notes are sold in a predetermined amount for a predetermined time period. The deposit note terms are usually described in an offering circular similar to an offering of securities. For investors, the primary difference between bank CDs and bank deposit notes is the way in which interest is calculated. Like many government agency securities and corporate bonds, interest rates for deposit notes are typically calculated using accrual methods that assume a 360-day year comprised of months that all have 30 days. Deposit notes may be rated by a nationally recognized statistical rating organization (NRSRO).

Finance Term Definition Added By: Kate

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