A callable certificate of deposit is a CD that can be redeemed early by the issuing bank at a predetermined price. Here's how they differ from traditional CDs.

Callable CDs should state a noncallable period, or the initial time when the CD cannot be called. For example, a five-year CD may have a one-year call-protection period.

Returning to our earlier example, let's look at your $10,000 one-year callable CD again. It's paying you 5%, but prevailing rates have jumped to 6% by the time the callable date hits.

Explore callable CDs. We'll dive into their potential for higher interest rates, the risks of being called back by a bank, and when to consider one.