Uninsured Certificate Of Deposit

A typical certificate of deposit works like a souped up bank account. You get a higher rate of interest (compared to the nearly-nothing you'd get with a regular savings account), but you have to tie up your money for some set period of time. Like a bank account, though, you can't lose anything. The CD comes with a guarantee against losses.

An uninsured certificate of deposit doesn't have that guarantee. It doesn't carry the insurance, which means you could conceivably lose money. That circumstance creates greater downside for the investment.

However, there is increased potential upside as well. The uninsured CDs typically carry a higher yield than their safer counterparts, compensating you for the increased risk.