A callable CD, also known as a zero-coupon CD, is a type of CD that does not pay periodic interest payments like a regular CD. Instead, the CD issuer agrees to pay the holder a specific amount of money when the CD matures. This amount, called the principal or par value, is usually greater than the amount of money originally deposited.

Callable CDs can be especially attractive to investors who believe interest rates will decline in the future, since they give the holder the option to redeem the CD early at the original interest rate. If interest rates have in …