CDSs, however, also played a pivotal role in the 2008 financial crisis. In this post, we’ll discuss how credit default swaps work, how they’re used, and the risks and benefits to consider.

Credit default swaps (CDSs) provide protection for investors in the event that the borrower defaults on their debt or loan. Here's what you need to know.

A credit default swap is, essentially, insurance purchased against the possibility of default. Credit default swaps became famous (or, rather, infamous) during the financial crisis of 2008-09.

Credit default swaps are like insurance for investors. Buyers pay a fee to protect themselves in case the borrower — in this case the U.S. government — can't repay their debt.

Credit default swaps are like insurance for investors. Buyers pay a fee to protect themselves in case the borrower — in this case the U.S. government — can't repay their debt.

Credit default swaps are like insurance for investors. Buyers pay a fee to protect themselves in case the borrower — in this case the U.S. government — can't repay their debt.

Credit default swaps are like insurance for investors. Buyers pay a fee to protect themselves in case the borrower — in this case the U.S. government — can't repay their debt.

The cost of insuring exposure to U.S. government debt has been rising steadily this year, hovering near its highest level in two years.

Credit default swaps are like insurance for investors. Buyers pay a fee to protect themselves in case the borrower — in this case the U.S. government — can't repay their debt.