Business and Personal Finance Dictionary

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• CD LINE OF CREDIT
  
  A depositor can take out a loan for up to 100 percent of the CD amount, secured by the CD itself. Because the loan is secured by the cash in the account, the interest rate to the borrower is low -- typically the annual percentage rate of the CD plus some index the bank uses. The loan is paid back during the term of the CD. If the customer defaults on the loan, the bank can seize the money invested in the CD. If the loan is not repaid by the time the CD expires, the depositor can renew the CD.
  
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