Understanding the significance of jumbo CD rates

A certificate of deposit may very well be defined as a financial product offered to the consumers by the banks or financial institutions, in the form of time deposit. The jumbo CD is a high yielding certificate of deposit with a high principal amounting to a hundred thousand dollars and it can also amount to a higher figure than this.

The rates of the interest usually undergo an amendment every week according to the rates offered in the money market. A consumer can negotiate with a jumbo CD, and get it transferred to a different person, even before its maturity period. Though jumbo rates can be negotiable, nowadays most of them are not negotiable. The main clientele of jumbo certificate of deposit are corporations, pension funds and financial institutions who aspire to get higher market return within a short time.

The jumbo CD has a variety of functions, for instance a jumbo CD is usually time bound and because of this it normally draws huge penalties during moments when it’s liquidated before its maturity period. The jumbo certificate of deposit has a higher interest rate than other certificate of deposits. This is due to the fact that it has got high value than other normal certificate of deposits.

The rates of the jumbo CD are determined by the length of the deposit, that is whether it is short term or long term. The jumbo certificate of deposit is a very beneficial asset to have owing to the fact that it has very attractive interest rates, because of its financial distinction unlike other certificate of deposits.

Due to the fact that this certificate of deposit is time bound, the account holder does not have to deal with the adversities that come along with rate fluctuations. Because of the huge amount involved while acquiring this certificate of deposit, the investor has the advantage of bargaining a good interest as well as good services from the bank or financial institutions.

The jumbo CD has got rather astonishing features as well; this certificate of deposit cannot be withdrawn before the maturity period. It is also a negotiable instrument which can be transferred to another owner. Insurance cover is also not provided in instances whereby the amount is more than a hundred thousand dollars.

Before investing in such a huge amount of money, it would be wise for the investor to ensure that he does not need to withdraw it in the near future. Investors should also consider the other alternative forms of investment before taking up the jumbo investment. An investor should bear in mind that a jumbo CD is a very conservative form of investment, and hence would give conservative yields, unlike the other alternative options.

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