A certificate of deposit is a bank product that offers a set interest rate for a defined period of time. This length of time is determined by you and many banks offer rates at various time lengths. A CD can offer more of a return than a basic savings account, is FDIC insured, and there are many different offerings to choose from.
See below for recent offerings from various banks or to contact our office for more information on how to get started. Remember, these rates are subject to change at any time and the information below are examples of rates as of the time of this posting.
A CD is federally insured for up to $250,000.
Higher Return Than Savings
CD rates offer on average a higher interest rate than most interest-bearing savings accounts.
Important Considerations for Brokered CDs
1. Brokered CDs may be covered by FDIC insurance for up to $250,000, per person, per account type, and per institution. However, customers need to make sure that the purchase of Brokered CDs does not result in their exceeding coverage limitations.
2. There is a limited secondary market for these CDs. If a customer wishes to sell the CD, before maturity date, it is possible that the sale could result in a loss. This type of loss is not covered by FDIC insurance.
3. Brokered CDs often include call provisions that would permist the issuing bank or depository institution to redeem your CD, prior to maturity, at a given price, and at the sole discretion of the issuer.
4. Like many other fixed rate investments, the customer is also exposed to a reinvestment risk (the risk that the prevailing interest rates have dropped, and reinvestment of funds will be at a lower rate in the future.)
5. Brokered CDs may also have "step-up" or "step-down" provisions. A brokered CD with a step-down provision will pay an above market rate for a period of time and then "step-down" to a lower rate until maturity. Conversely, a "step-up" CD will generally pay below market rate initially, and then step-up to a higher rate until maturity. These provisions also may have call features associated with them.
6. Brokered CDs may also contain a provision that would permit the issuing institution to redeem the CD, at par, in the event of the customer's death, prior to maturity.
7. A structured CD may be tied to the performance of one or more index which may under perform a fixed interest rate CD.
For more information: https://www.fdic.gov/
*Tim Holloway offers securities and investment advisory services through Royal Alliance Associates, Inc (RAA), member FINRA and SIPC. RAA is separately owned and other entities and/or marketing names, products, or services referenced here are independent of RAA.
*Sales of CD's prior to maturity may result in loss of principal invested. Federal deposit insurance generally covers deposits of up to $250,000 in the aggregate for each depositor in each bank, thrift, or credit union. A customer should ensure that purchasing any insured CD will not bring his or her aggregate deposit over $250,000 FDIC insurance limit. Investors should be aware that there is no FDIC insurance coverage for any principal losses that may be incurred