The Fair Market Value of Certificate of Deposit

Banks are typically the most common issuers of certificates of deposit

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Certificates of deposit are one of the plainer investments offered by banks and brokerage firms. In most cases, as long as the CD is issued by a bank insured with the Federal Deposit Insurance Corporation, the CD is insured against loss of principal up to the insurance limits of the FDIC. CDs also have a fair market value, which can fluctuate based on a number of factors.

Interest Rates

The market value of a CD is affected like any other investment, but is very similar to a bond in terms of the factors which can be key. The interest rate that the CD pays is a prime factor in determining the fair market value of the CD. If you have a CD locked in for a longer term, at an interest rate higher than what a comparable CD can be purchased for today, the market value on that CD will likely be higher than the amount of the deposit. The higher interest rate makes your CD in more demand, because of the higher earnings potential.


Certificates of deposit from local or stronger banks are less likely to be sold than other types of CDs, making the fair market value lower. This is due to the fact that these banks value loyalty, and the CDs may not have many of the features that make sale of these instruments attractive. In some cases, particularly with a CD paying a very low interest rate over a long term, the fair market value may be lower than the deposit amount of the CD. The same is true if the CD has a higher penalty for early withdrawal.


A CD sold through a brokerage is more likely to fluctuate in fair market value. This is because the brokerage may have purchased a larger number of CDs at a higher interest rate than what most banks offer the regular investor who purchases a CD on his own. The higher interest rate will drive the fair market value up, provided the rate is above the rate that a CD can be replaced at. Some brokerages also agree to buy your CD back if you need the cash as well. Such buyback agreements can increase the fair market value, as the CD can be converted to cash at any time.

Selling Your CD

If you want to sell your CD, contact the issuing bank first. If the CD is at a higher rate, the bank may be willing to waive any penalties for early withdrawal, because it is in the banks best interest to reduce the interest rates that it is paying on its CDs. If the bank penalty is too high, you can attempt to sell your CD on the open market. You can either do this on your own, by advertising the CD and finding a buyer, or you can use a brokerage firm to find a buyer for your CD.