Negotiable CD: Are CD Rates Negotiable?

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You might be wondering, “Are CD rates negotiable?” Certificates of deposits are timed financial deposits. To get the best CD rates, generally the term of the CD should be longer. Investors “purchase” a CD and over a fixed period of time they are guaranteed a predetermined rate for their investment. CDs are considered a low risk investment, and the FDIC will protect them against loss for up to $250,000 (the regular coverage is $100,000 but the maximum was raised due to the current economy). Negotiable CD rates are similar to traditional CD rates but they are taken one step further.

Negotiable CD Basics

Like traditional CDs, negotiable CDs are also a timed financial deposit and as long as they are on deposit at an FDIC insured bank, the same rules of insurance apply to negotiable CDs. It is important to note that the FDIC does not separately distinguish negotiable CDs from traditional CDs. The factors that make negotiable CDs unique from their counterparts is that the investment amount is much larger with minimums of $100,000 and although they can be sold in a highly liquid secondary market, they cannot be cashed in before their maturity date. They also usually offer the best CD rates available.

Negotiable CDs Are Lower Risk

Because of the large dollar amount minimum investment, most negotiable CDs are purchased by companies and large institutional investors, not individuals. Negotiable CDs are favored as safe investments for the large investors being that they are low risk. Because of the lowered risk factor, the financial gains that can be made off of negotiable CDs are limited as they are low interest earning investments.

If you have substantial amounts of cash and want to store your money safely, you can always check with your bank to see if they can offer you a negotiable CD with the best CD rates possible. It is not common, however, there are individual investors who favor negotiable CDs as those instruments compliment their conservative approach to investing. Your best move would to be to speak to a banking representative directly to see what options for negotiable CDs they may be able to offer you.

About the Author

These articles are written by the in-house GOBankingRates team.