The traditional certificate of deposit remains the most popular type of CD, but a growing number of financial institutions are offering a variety of nontraditional CDs that have an element of flexibility. If you're willing to sacrifice some yield, you can find CD options that might better suit your financial needs.

Here are the more popular types of CDs.

Traditional
Deposit a fixed amount of money for a specific term and receive a predetermined interest rate. You have the option of cashing out at the end of the term, or rolling over the CD for another term.  

Bump-up
These allow you to take advantage of a rising rate environment. Suppose you buy a two-year CD at a given rate and six months into the term the bank is offering an additional quarter-point on two-year CDs. A bump-up CD gives you the option of telling the bank you want to get the higher rate for the remainder of the term.   

Liquid
These offer consumers the opportunity to withdraw money from the CD without incurring a penalty, although you may have to maintain a minimum balance in the account to get that privilege. 

Zero-coupon
Most investors have heard of zero-coupon bonds, but did you know there are also zero-coupon CDs? Just as with the bond, you buy the CD at a deep discount to par value (the amount you'll get when the CD matures). 

Callable
The bank that issues the CD can "call" it away from you after the call-protection expires, but before the CD matures. For instance, if you buy a five-year CD with a six-month call protection period, it would be callable after the first six months.

Brokerage
A brokerage CD is simply a CD sold through a brokerage. Some banks use brokers as sales representatives to find investors willing to purchase CDs from their banks. 

If you are considering Retirement Planning, call for a free consultation today.