Best Jumbo CD Rates – What is a Jumbo CD
A jumbo CD, or jumbo certificate of deposit, is a CD that is issued in a very large denomination. Jumbo CDs typically have a minimum required deposit of $100,000. A jumbo CD could also be referred to as a negotiable certificate of deposit if it is traded in the secondary market. These large CDs, typically purchased by large investors, are considered to be low risk and stable investments. Jumbo CDs typically offer the best CD rates.
Similar to Regular CDs
Jumbo CDs possess the same characteristics as regular certificates of deposit. As they can tie up investors’ funds for long periods of time – typically between three months to over five years, they are considered “time deposits.” And, in return for investing their principal, investors are paid a set, guaranteed rate of return for a specific period of time.
Jumbo CD Interest Rates
Jumbo certificate of deposit rates are typically higher than CDs of smaller denominations. This is because jumbo certificates of deposit require larger amounts of principal from investors. Because of the commitment of larger sums of money, jumbo CD interest rates tend to be better than smaller certificates of deposit with the same maturity date. And, similar to regular CDs, you will find that the high interest certificates of deposit with jumbo CDs are the ones with longer term maturities.
You should research several financial institutions in order to find the best jumbo CD rates. Some institutions may offer better interest rates – even on jumbo CDs with similar denominations and maturities.
Why Purchase a Jumbo Certificate of Deposit
If you are looking for maximum returns, yet require safety of your principal, then a jumbo CD investment may be a good choice. These high yield certificates of deposit have rates that are typically compounded with the interest deposited back to your account on a monthly or quarterly basis.
Like regular CD investments, jumbo CDs can provide you with a known amount of regular income for a fixed period of time.
FDIC Insurance on Jumbo CDs
Like other bank deposits, jumbo certificates of deposit are FDIC insured. This coverage is capped at $250,000 per depositor in different categories of taxable accounts in each bank.