What are the various types of CDs you can consider investing in?

A CD or certificate of deposit is a type of time deposit given by banks and credit unions to consumers. Identical to savings accounts, they typically involve no risk. A CD has a fixed term that may range from three months to five years and consumers are usually suggested to a hold a CD until it matures. Upon maturity, the amount can be withdrawn at one go along with the amassed interest. There are many different types of CDs, a few of which we’ve detailed below.

A CD that features a huge denomination is called as a jumbo CD. The minimum amount involved here is usually $100,000 and this is typically of the negotiable type. This type of investment has minimum risk and is known to be stable and hence is favorable for large investors. Identical to a conventional CD, these are ‘time deposits’ mainly because they hold up a principal amount for a certain period of time. A guaranteed return is anticipated after the set time has reached.

Next, a callable CD is again similar to a conventional one save for the fact that the bank holds all the rights to take ‘call’ the investment. The bank is empowered to purchase back the CD after the starting non-callable period. This type of CD involves a premium interest rate. As for brokered CDs, these are offered by brokerage firms and can include a higher interest rate. This is only after assuring to bring a particular number of deposits to the financial institution.

Short-term CDs are also a great investment choice. Investors may first however need to weigh its pros and cons. The most advantageous thing about a short-term CD is that it enables investors to earn funds in a very short amount of time. This further gives them access to their invested money as and when they require it.

Lastly liquid CDs are kinds of fixed rate certificate of deposits that permit consumers to bail out a certain part of the original deposit in the course of the term without having to shell out a penalty. There could be certain limits on when exactly the money can be withdrawn. In liquid CDs, the amount that can be withdrawn is also sometimes set to a certain number and consumers may not be able to cross that amount limit. What’s more, users may be allowed only a certain number of different withdrawals with this kind of CD.

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