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Personal Finances

What is an International CD?

Seasoned investors know the importance of developing a robust and diversified portfolio to maximize overall returns on investments. Venturing into the realm of international certificates of deposit (CDs) and engaging in significant international dealings for business or personal reasons, means the possibility of taking advantage of this sophisticated, high-return investment vehicle.

Let’s take a closer look at what exactly an international CD is and all the benefits it can provide to investors.

How Do International CDs Work?

An international certificate of deposit (CD) creates a compelling investment opportunity for two main reasons:

  1. Portfolio diversification
  2. Access to foreign currencies

An international CD establishes a formal contract between an investor and a financial institution. The investor agrees to deposit a specific amount of funds into an account with the financial entity for a predetermined length of time. During this period, the investor cannot liquidate the account until the term is completed according to the agreement set in place.

International CDs provide a secure way to generate returns while benefiting from currency diversification. In exchange for the investor’s loyalty, the financial institution pays substantial interest on the investment for the duration of the funds being in their possession. At the end of the term, the investor receives their original principal plus any interest accrued.

This arrangement essentially functions as a form of savings account with a fixed interest rate and term, typically ranging anywhere from 6 months to 5 years. However, the length of the term, interest rate, principal needed, and currencies offered depend on the agreement between the financial institution and the individual investors.

When considering an international CD, investors should think about the term length and the currency denomination, as these factors will influence the potential returns and risk exposure. If needed, an Amerant Bank expert can walk you through the specifics of the product based on your needs.

The Difference Between a Foreign CD and an International CD

Foreign CDs are investment products denominated in a currency other than the U.S. dollar, such as the euro or British pound. On the other side of the coin, international CDs are certificates of deposit issued by a foreign financial institution in the currency of the country where it is domiciled. This means that an investor’s capital is held within a sovereign jurisdiction, making international CDs an attractive option for global investing.

The Benefits of International CDs

International CDs offer a host of excellent benefits for investors. The three most commonly useful are:

Diversification: Allocating capital to international markets broadens an investor’s portfolio, reducing reliance on domestic markets for returns. This risk dispersion protects investors from the volatility of any single country’s currency and economic performance.

Access to a Wider Range of Markets: International investments provide access to an expanded array of foreign currencies and markets, potentially yielding higher returns compared to domestic investments.

Security: International CDs offer additional financial security since a financial institution in the country where they are domiciled issues them. This minimizes the risk of currency fluctuations and establishes them as a safe and secure way to generate returns while diversifying your portfolio.

Additionally, most international CDs offer tax benefits, such as the potential to avoid specific taxes on foreign income.

Do International CDs Compound Interest?

In short, yes. Interest accrued on an International CD will compound throughout the term of the CD.

Investors’ capital can grow more rapidly if they choose a long-term investment, as they will earn interest on both the principal and any accrued interest. However, be aware that some banks may impose additional fees or taxes if the CD is held for a certain duration, so consult with a bank before investing.

How to Ladder an International CD

Laddering is a strategy that allows investors to distribute their risk by allocating capital to CDs with varying terms. This optimizes capital utilization by capitalizing on both short-term and long-term interest rates. For example, investors might divide their principal into equal sums and invest them in CDs with varying terms over 6 months to 5 years. By having multiple maturity dates, the investor can take advantage of potential market changes while maintaining a steady level of returns throughout the term.

With actual numbers, the equation might look something like this:

Investor A has $50,000 that she wants to ladder. She divides this into five equal parts of $10,000 and invests them in CDs with varying terms starting from 6 months, then one year, two years, and so on.

This diversifies Investor A’s risk by ensuring that not all of the capital is locked in for the same duration. She can also take advantage of potential market changes by striking a balance between short-term and long-term returns while keeping her capital safe and secure in international CDs.

To ladder International CDs, first, identify the countries and currencies in which you want to invest; for example, Amerant Bank offers CDs in USD. Then, construct a ladder of CD terms in those countries and currencies, adjusting as necessary over time to exploit shifting interest rates and market conditions.

Can International Students Open a Certificate of Deposit?

Yes, International Students can open an International CD Account with most financial institutions. Make sure to check with the bank or institution that the account would be with, and what the specific requirements are to open an account. For example, Amerant Bank’s International CD offers flexible terms ranging from 3 to 60 months with a minimum opening balance of $10,000.

International CD vs. International Savings: Which is Better?

Both international CDs and international savings accounts allow investors to diversify their portfolios by allocating capital to foreign markets. The critical difference is that savings accounts are more liquid, allowing investors to withdraw their capital without penalty. However, international savings accounts generally offer lower interest rates than CDs and may not be backed by a financial institution, posing a higher risk of loss if the bank becomes insolvent or defaults on its obligations.

Ultimately, the choice between a CD or savings account depends on personal risk tolerance and financial objectives. If an investor prioritizes flexibility and liquidity, an international savings account might be the better option. Conversely, if one seeks higher returns and increased security, an international CD might be the ideal choice.


Investing in an international CD is a smart way to diversify portfolios and hedge against currency fluctuations while potentially reaping higher returns than domestic investments. With an international CD, investors can leverage varying terms and interest rates to ladder their investments, granting more control over the entire portfolio. The decision between a CD or savings account will depend on individual risk tolerance and financial goals, but either option can be an intelligent approach to diversify one’s portfolio.

At Amerant Bank, we understand that investing in international markets can be daunting for some investors. That’s why we have dedicated financial advisors at your disposal to guide customers through the process and offer personalized counsel tailored to their unique needs. Learn more at amerantbank.com and follow Amerant on Facebook, Twitter, Instagram, and LinkedIn @AmerantBank.

Amerant Editorial Team
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