What is a foreign currency CD?

A foreign currency CD allows an accountholder to invest in a time deposit denominated in a currency other than the U.S. dollar. Investment is possible via a U.S.-based financial institution that offers foreign currency CDs or a foreign bank that establishes accounts with foreign investors.

How much money can you put in a foreign currency CD?

Let's say you decide to deposit $10,000 into a foreign currency CD tied to the British pound. With an exchange rate of 0.77, you place 7,700 pounds into the CD with a term of two years and an interest rate of 2.5%. The interest may earn you about 400 pounds, so you finish with a total of 8,100 pounds.

Can I invest in a foreign currency CD?

It’s possible to invest in a CD denominated in a foreign currency—that is, not U.S. dollars. To do so, you can find a U.S.-based financial institution that offers foreign currency CDs or look for a bank abroad that will allow you to open one directly. Foreign currency CDs are far riskier than those held in U.S. dollars.