If you’re looking for a low-risk investment for your hard-earned savings, consider the benefits of a jumbo certificate of deposit. If you saved $100,000 and you won’t need it for a period of time, putting that money in a jumbo CD could be a wise investment.
You must not touch your money in a jumbo CD for its term — usually at least 12 months — but during this time you’ll earn interest at a locked-in rate. Take a closer look at where you can save your larger sum of money and how to get the highest CD rates.
How to Find the Best Jumbo CDs
Shop online and at traditional banks to find the best interest rate for a jumbo CD. Many online banks offer the highest jumbo CD rates, along with FDIC insurance, for your investment. Consult this table to find which financial institutions are offering the most attractive jumbo CD rates and traditional CD rates with minimum deposits ranging from $10,000 to $100,000.
|Best Jumbo CD Rates|
|Bank||CD||Term||APY||Min. Deposit Required for Rate|
|CIT Bank||Jumbo CD||2-Year||1.45%||$100,000|
|AloStar Bank of Commerce||Personal CD||2-Year||1.31%||$50,000|
|Bank of America||Featured CD||1-Year||0.07%||$10,000|
|TD Bank||Choice CD||2-Year||0.65%||$100,000|
|PNC Bank||Fixed Rate CD||2-Year||0.38%||$100,000|
|First Republic Bank||CD||2-Year||1.50%||$10,000|
|Rates accurate as of July 20, 2017, except for Chase, CIT Bank, Nationwide, Synchrony and TD Bank, which are accurate as of April 23, 2018.|
Related: 6 Tips for Choosing a CD Account
How to Open a Jumbo CD Account
When you’re ready to take advantage of promotional CD rates or get the best CD interest rates for your large investment, you’ll find that opening an account is straightforward. Follow the same steps you would take to open a regular CD account, but select a higher initial deposit amount to take advantage of jumbo CD rates.
Here’s what you’ll need to do to open a jumbo CD account:
- Set up a new deposit account. Speak with a personal banker or submit an online application for a CD account.
- Review rate details. Your bank will provide information about CD early withdrawal penalties and list its best jumbo CD rates.
- Make your deposit. Remember, whether you want to explore 10-year jumbo CD rates or commit your funds to a bank for a one-year term, you’ll have to part with a large sum of money for the term of the CD.
Related: Certificate of Deposit Guide
Advantages of Jumbo CDs
Jumbo CDs offer several advantages over traditional CDs. Understand what they are so you can make an informed decision about whether a jumbo CD will work for you.
- Attractive interest rates: Jumbo CD interest rates are higher than traditional CDs that feature the same terms. For instance, traditional CD deposits of less than $100,000 earn a national average of 0.40 percent for a two-year term, but jumbo CD rates earn an average of 0.44 percent for the same term.
- Low risk: If you don’t want to invest more than $100,000 in stocks or bonds, your money will likely be safer in an FDIC-insured CD account. Make the most of your CD investment by securing a jumbo CD interest rate.
- Fast loan approvals: If you have a good relationship with your bank and you invest more than $100,000 in a jumbo CD, you might be able to use your CD as collateral for a loan.
Disadvantages of Jumbo CDs
Although you’ll get a higher return on your jumbo CD, there are some drawbacks to this type of investment. Understand these disadvantages and how they could affect your financial goals.
- FDIC insurance limits: The FDIC insures your investment only up to $250,000. If you want to invest more than that, consider opening more than one CD — instead of putting it all into one account — to get the protection you need.
- Locked-in rate: Many consumers are drawn to CDs because they feature a fixed interest rate, but interest rates can fluctuate over one or two years. If interest rates rise significantly you’ll be stuck with the lower jumbo CD rate. Some banks offer CD terms that enable you to increase your rate without any penalties for a longer term, so check with your bank to see if you have this option.
- Early withdrawal penalties: If you must access your money before the CD’s term is up, be prepared to pay an early withdrawal penalty on your entire balance — and possibly even lose interest that you earned.
Take Advantage of the Best CD Interest Rates
Whether you’ve found some attractive credit union jumbo CD rates or a high-yield CD at your favorite bank, it’s important to calculate your potential return on your investment with different jumbo CD rates and terms to find the best CD account. Currently, the national average for a two-year jumbo CD is 0.44% APY, which would yield an ending balance of $100,882 if you initially deposited $100,000. The national average for a five-year rate on a jumbo CD of the same deposit amount is 0.84% APY, which would yield an ending balance of $104,271.
|Best Jumbo CD Rates and Terms|
|AloStar Bank of Commerce||2-Year||1.31%|
|Rates accurate as of July 20, 2017,|
except for CIT Bank, Nationwide and Synchrony, which are accurate as of today
See Also: The Highest CD Rates in Every State
Jumbo CD Rates for 2017 and 2018
Although it’s nearly impossible to foresee rates, experts predict the Federal Reserve to initiate at least two rate hikes in 2017, which means interest rates are on the rise. In addition, forecasters are expecting the Federal Reserve to increase rates every quarter in 2018.
Current national rates for jumbo CDs are as low as 0.07% APY for a one-month term and as high as 0.84% APY for a 60-month term. Compare the jumbo CD rates you find with these national average rates to determine if you’re making a wise investment decision.
|Current National Jumbo CD Rates|
|Jumbo CD Term||APY|
|Rates accurate as of July 20, 2017|
Keep Reading: Certificates of Deposit Risks and Returns
GOBankingRates is a personal finance and consumer interest rate website owned by ConsumerTrack, Inc., an online marketing company serving top-tier banks, credit unions, and other financial services organizations. Some companies mentioned in this article might be clients of ConsumerTrack, Inc., which serves more than 100 national, local and online financial institutions. Rankings and roundups are completely objective, and no institution, client or otherwise, paid for inclusion or specific placement. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone and have not been reviewed, approved, or otherwise endorsed by the companies included in the article. All fees and rates are subject to change at the insurers’ discretion, and some bonus offers might no longer be available on the insurers’ websites, depending on how you access the web page.
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