CDB, LCI and LCA are three of the most common fixed-income investments offered by banks and brokerages — and it is easy to confuse one with another when choosing where to put your money.
CDB (Certificado de Depósito Bancário — bank certificate of deposit)
It is a security issued by banks to raise funds. When you buy a CDB, you are lending money to the financial institution in exchange for a return, which may be fixed-rate, floating-rate (tied to the CDI, Brazil’s interbank deposit rate) or hybrid.
LCI and LCA (Letras de Crédito Imobiliário and do Agronegócio — real estate and agribusiness credit notes)
They work similarly to the CDB, but the funds raised must be directed to financing the real estate (LCI) or agribusiness (LCA) sectors. Because of government incentives for these sectors, these securities are usually exempt from Imposto de Renda (Brazilian income tax) for individuals.
The role of the FGC (Fundo Garantidor de Créditos — Brazil’s deposit guarantee fund)
CDB, LCI and LCA are usually covered by the FGC guarantee up to a certain limit per CPF (individual taxpayer ID) and per financial institution. This guarantee reduces (but does not eliminate) credit risk, and the current limit should always be checked directly on the FGC website before investing.
Comparing only the rate offered is not enough — it is also worth considering the lock-up period, liquidity and whether or not there is an Imposto de Renda exemption when comparing the products.
How to compare the options in practice
A common way to compare them is to convert the net return (after IR, where applicable) so that CDB, LCI and LCA are on the same basis, and then assess which option actually yields more for the period you plan to keep the money invested.