Best Jumbo CD Rates for November 2023

Frequently Asked Questions

• What Is a Jumbo CD?

  A jumbo CD is a CD that requires a much higher initial deposit. Traditionally, the term "jumbo" has referred to CDs requiring an investment of at least $100,000. But since no banking rules or regulations stipulate what an institution can call a jumbo CD, banks and credit unions apply the term liberally according to their deposit and marketing strategy. As such, the marketplace includes jumbo CDs, or sometimes "mini jumbos," requiring just $25,000 or $50,000. Jumbo CDs work the same as regular CDs where you deposit a lump sum to receive a fixed rate of interest after a certain period of time.

• What Is the Difference Between Regular, Jumbo, and IRA CDs?

  Aside from higher deposit requirements, jumbo CDs function in the same way as regular CDs. The depositor chooses a CD term based on how long they are willing to commit their funds and decides how much to deposit. The bank or credit union then provides an agreement documenting how much interest they will pay on the CD, what the compounding period will be, and what the penalty policy is for any withdrawals made prior to the CD's maturity date.

  The main difference to consider, therefore, between most conventional and jumbo CDs is the rate you can earn. Though institutions are, in theory, willing to pay higher interest on larger deposits than smaller ones, this is often not the case, with the top standard CD rates often beating out the best jumbo rates. For that reason, CD shoppers are wise to research the top current rates for both types to determine which institution's product will provide the highest return for their deposit amount.

  As for IRA CDs, these are certificates that behave in all the same ways as regular or jumbo CDs except that they are tax-sheltered according to the IRS' rules for IRA accounts. They are simply another type of retirement account or vehicle, and they often are used for funds a saver wants to be invested more conservatively than a securities investment offers and with a focus on capital preservation since CD balances generally do not lose principal.

  As tax-favored retirement products, IRA CDs involve an additional penalty policy for any withdrawals made before retirement age, along the same lines as an early withdrawal from any other kind of IRA account.

• What If I Need My Money Before the CD Reaches Maturity?

  Anytime you open a certificate of deposit, the terms of your agreement with the bank or credit union will include their policy on how they'll calculate a penalty should you request to withdraw the funds before the maturity date. Most typically, the early withdrawal penalty is defined as a certain number of months of earned interest, which will be deducted from your balance when you cash out.

  Early withdrawal penalties are typically the same whether the CD is a standard or jumbo CD. However, the penalty calculations across various institutions vary incredibly widely. Also be sure you've reviewed the early withdrawal terms before signing on the dotted line, so you can be sure the penalty is within reasonable boundaries. For instance, avoid any CD whose penalty can eat into your original principal.

• How Safe Are Jumbo CDs?

  An investment in a jumbo CD is just as safe as a deposit made in a regular CD or any other account at the bank. That's because FDIC insurance (and NCUA insurance for credit unions) doesn't distinguish the types of deposit products it covers. Its limits are strictly defined by a dollar threshold, which is $250,00 of coverage from both the FDIC and NCUA.

  Note, however, that the $250,000 limit applies per person and per institution. So coverage can be increased significantly by spreading deposits across accounts held by more than one person (like two spouses) or at more than one institution.

  In any case, it's important to be aware of any situation where you might approach the $250,000 threshold. If you open two $100,000 CDs at one bank, for instance, but also have another $100,000 in checking and money market accounts at that same institution, $50,000 of your deposits would be unprotected by the FDIC should the bank fail. Whether the funds are in regular or jumbo CDs will have no bearing.

• How Do Regular, Jumbo, and Super Jumbo CD Rates Compare?

  If comparing a regular CD and a jumbo CD at the same institution, the jumbo certificate rate will usually be higher, if only by a small amount. However, what matters most to the savvy CD shopper is how much the best regular CDs in the country pay vs. the best jumbo CD, regardless of institution. And this is where standard CDs have an advantage.

  The number of banks and credit unions that offer regular CDs nationwide runs above 200. In contrast, only about 50 institutions market nationally available jumbo CDs. So the standard CD marketplace—and the rate competition—is about four times the size of the jumbo market.

  In addition, the best CD rates in the country are often special promotions and limited-time CD offers. For instance, a bank may offer one or two CD terms as specials, with an elevated rate compared to its regular array of certificates. In contrast, it is rare to encounter a jumbo CD special.

  Super jumbo CDs are even less common than jumbo CDs, with only a few major institutions offering a product by that name. The biggest player with a super jumbo CD on their product menu is USAA Bank, which offers regular CDs with a minimum of $1,000, jumbo CDs at $95,000, and super jumbo certificates at $175,000. There are also jumbo CDs with larger minimums than $95,000 or $100,000, even if the institutions that offer them don't call them super jumbos. The most common tier above $100,000 is a minimum deposit of $250,000.

• Are Jumbo CDs Negotiable?

  Whether or not a CD is negotiable is typically a function of how the CD was acquired, rather than whether it is standard or jumbo in size. CDs opened directly with a bank or credit union are held in the depositor's name and are rarely negotiable. They can be liquidated only according to the bank's policy on early withdrawals and the associated penalty.

  Alternatively, CDs can be opened through brokerage firms, and these certificates, called brokered CDs, are bought and sold on a secondary market. Instead of going to a bank to open one of these certificates, you do so via your account at a brokerage house (e.g., Vanguard, Fidelity, etc.), and multiple CDs from more than one institution can be held in a single brokerage account, making the process of tracking and managing more than one certificate much simpler.

  The trade-off for this convenience is two-fold. First, the rates of return on brokered CDs are usually less competitive than direct bank CDs. Second, if you want to withdraw your funds from a brokered CD, you cannot simply liquidate it and pay the bank a penalty. Instead, you must put the CD up for sale on the secondary market operated by the brokerage, and the price you receive (which depends on the current rate environment) is far from predictable.