Barksdale FCU’s 5-year CD (1.45% APY) remains in second place and Advancial Credit Union’s 5-year Jumbo CD (1.41% APY) remains in third place. All three held rates unchanged into February. The top nationally available 5-year CD rate from a bank is only 1.00% APY. This is available at the following three small banks: First National Bank of. Jumbo CDs, which in most cases require a minimum deposit of $100,000, have traditionally promised even higher APYs for customers than regular CDs.

A certificate of deposit, or CD, is a deposit account with us for a specified period of time. What is the minimum deposit amount to open a Chase CD? How is the Chase CD interest calculated? We use the daily balance method to calculate interest on your CD. This method applies a periodic rate each day to your balance.

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A certificate of deposit, more commonly known as a CD, is a type of bank account that pays interest in exchange for the depositor leaving their funds in the account until it matures. A jumbo CD functions in the same way, though they require a higher minimum balance to open. Interest rates are usually fixed, though some accounts offer variable rates or “bump-up” features. Jumbo CDs tend to pay higher interest rates than their standard counterparts. Although you can technically withdraw your money before the maturity date, there’s typically a hefty penalty associated with doing so.

Do you have questions about how to integrate a jumbo CD into your investment portfolio? Talk to a local financial advisor today.

What Is a Jumbo CD?

For all intents and purposes, a jumbo CD is exactly the same as a normal CD. You start by depositing money into the account and, in exchange for leaving your money untouched, you receive a higher interest rate than you would with most savings accounts. Interest is usually compounded in regular intervals (once a day or once a month) throughout the life of the CD.

The main difference between a jumbo CD and a regular CD is that the former typically has very high minimum balance requirements. More specifically, a bank may require you to deposit $100,000 or more at account opening. Interest rates on jumbo CDs are also typically higher than those of regular CDs, which should come as no surprise given the aforementioned minimums.

Pros and Cons of Jumbo CDs

Perhaps the best benefit of a jumbo CD is the fact that you’ll receive a higher interest rate than you would on a normal CD. Since CD rates are already higher than many savings accounts, jumbo CD rates can be especially great.

Jumbo CDs are also a risk-free investment. That’s because they’re insured up to $250,000 by the FDIC. Some jumbo CDs are also offered on a short-term basis, allowing customers with big sums of idle money to earn interest over periods of time as short as a week or a month.

Like any CD, the main drawback of a jumbo CD is the fact that your money is untouchable unless you’re willing to incur a large fee. While those who typically open a jumbo CD are far from short on cash, losing access to as much as $100,000 at once is nothing to scoff at.

Bottom Line

If you have the money to invest in a jumbo CD, it can be one of the best investments you’ll find at a bank. Since they’re available largely risk-free because of FDIC insurance, consider whether they’d be a good fit for your investment portfolio.

Talk with your bank to see what jumbo CD options they have available, if you’re interested in investing.

Banking Tips

• In addition to taking care of your banking needs, you should be investing and saving towards retirement. A financial advisor can help you manage these needs, and finding one doesn’t have to be hard. In fact, SmartAsset’s free tool matches you with up to three financial advisors in your area in five minutes. Get started now.
• CDs aren’t the only way you can grow your savings at a bank. Check out SmartAsset’s list of the best savings accounts to find a savings rate that can help you grow your assets.

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