Jumbo CD Rates Offer Returns That Are Worth Locking Up Your Money

Jumbo CD rates are the kind of investments which a large investor would look for when in search of high interest rates from a secured and reliable venue. Regular CD’s are very appealing because of the way that they are set up. But jumbo CD’s are even more attractive because of the high interest rates that you can derive out of them.

You need to be aware that jumbo CD rates are not available to just any investor. You need to have deposit investments of over a $100000 to be eligible for the higher interest rates. This is a very serious investment option for people who have that sort of income and expendable money that can be put away for that long a period of time. but even while being high returns investments, jumbo CD’s are also risk free investments which will deliver no matter what the financial scenario because they are insured.

But you need to be aware that they are not FDIC insured. If your investment is anywhere between $100000 to $250000 it can be safe to assume that you can get FDIC insurance. FDIC is the federal deposit insurance corporation which insures all major certificates in this range. But if your deposit is beyond this range, then you will have to get separate insurance coverage. Or you will have to take the risk. And this is highly unadvisable given the fact that you are investing such a huge amount of money in the certificate. Hence you are putting yourself at more risk than any other regular certificate of deposit.

The basic concept behind these certificates is the same as any other regular certificate. The only difference is that there is much lower risk in other CD’s that are FDIC insured. But the risk in a jumbo CD is not on the levels of gambling. It is just that if the bank itself collapses in this tough economic scenario, you will not have anything to fall back on. You will get higher returns if you stay invested for a longer period. This is obvious. The term can range anywhere between six months to even six years some times. And it is obvious that a longer term will give you much better interest rates than a shorter term investment. So it’s much better to go for a long term investment if you are sure that you are not going to need the money pretty soon.

But do be aware that if you withdraw all or even some of the money from the certificate before it matures, you will lose out on a lot of interest and at times will run a loss. This is because the bank will put a penalty on you if you do this. You need to have a liquid or semi liquid certificate of deposit to be able to do this without any repercussions.

The only drawback of a jumbo certificate of deposit is that you will have to put a much higher amount of money in the fund at the beginning. But if you do have the ability to do this, then you can go ahead since it will make your money work for you while you sit and reap the benefits so accrued.