If you’re looking for a low-risk way to get a return on a large sum of money, you may want to consider a “jumbo” certificate of deposit (CD). Like a regular CD, jumbo CDs require locking up some of your cash for a predetermined period of time, usually between 6 months and 5 years, in exchange for the highest interest rates in the financial industry. The only difference is that jumbo CDs typically — but not always — require a deposit of at least $100,000.
|Bank||Max APY||Account Minimum|
|Veridian Credit Union||2.20%||$100,000|
|CommonWealth One Federal Credit Union||3.16%||$100,000|
|Signature Federal Credit Union||2.95%||$100,000|
What is a Jumbo CD?
A jumbo CD is simply a larger-than-normal certificate of deposit, usually with a minimum deposit of at least $100,000. Like other CDs, jumbo CDs provide investors with higher-than-normal interest rates in exchange for keeping money in the CD for its entire term. Jumbo CDs can be a wise investment if have a large lump-sum of cash you won’t need to access for a predictable period of time. While certificates of deposit can offer a great return on investment, you’ll pay a stiff penalty fee if you withdraw money before the term of the CD expires, so make sure to choose the right amount at the right term.
Jumbo CDs vs Regular CDs
The decision between a jumbo CD vs. a regular CD just boils down to how much money you want to invest. While these products tend to have similar loan terms, the minimum deposit amount on a jumbo CD is much higher. Most regular CDs only require a deposit amount of $500 to $1,000, or even no minimum deposit requirement at all, while jumbo CDs usually start at $100,000.
Jumbo CDs vs High-Yield Savings Accounts
As the name suggests, high-yield savings accounts offer higher interest rates than traditional savings accounts. Still, the rates they offer are not usually as high as what you might find with a CD, particularly a jumbo CD. However, high-yield savings accounts are much more flexible than CDs. While you can only make six withdrawals per month with a savings account, you can make withdrawals whenever you want instead of waiting for a CD term to expire. Savings accounts are better if you’ll need to access your cash during the period of time you would otherwise invest in a CD. You should only use a jumbo CD when you’re 100% sure you won’t need to touch your invested cash for the entire term.
Jumbo CDs vs Money Market Accounts
Money market accounts are similar to savings accounts: while there are limits on the amount of withdrawals you can make per month (six), as long as you stay within those limits, there are no penalties for accessing your money. At traditional banks, money market accounts also tend to have a slightly higher yield than even high-yield savings accounts. Plus, some money market accounts come with the ability to write checks or access your money via a debit card. Obviously, a Jumbo CD comes with none of these benefits, but will often provide a higher interest rate in exchange for locking up your cash for a period of time.
The Best Jumbo CDs of 2019
GTE Financial’s 24 branch locations are all in Florida, but online membership is open to anyone nationwide. Fortunately, joining is as easy as paying a one-time $10 fee. Once you’re a member, you’ll have access to jumbo CDs ranging in terms from 6 to 60 months, with rates ranging from 1.51% APY to 3.30% APY. As with most banks, the longer you plan to keep your money in the CD, the greater the yield rate will be.
Veridian Credit Union
Veridian Credit Union is the second-largest credit union in the state of Iowa and the 49th largest credit union in the country. Membership is open to everyone who lives or works in Iowa or several counties in Nebraska, as well as registered users of Dwolla (a bank transfer app) no matter where you live in the United States. Once you’re a member, you’ll gain access to jumbo CDs ranging in term from 7 to 41 months with APY rates from 1.41% to 2.20%. Veridian Credit Union also offers a special “bump-up” feature that allows investors to convert their CDs to a higher rate once per term.
Advancial Federal Credit Union is headquartered in Dallas, but membership is open to anyone willing to pay a $5 fee to join Connex, a larger credit union. Advancial offers jumbo CDs with terms as short as three months all the way up to five years. Its APY rates range from 1.98% to 2.67%, trending upward the longer you keep your money in the CD. The one big advantage of Advancial is the minimum deposit on its jumbo CDs is only $50,000, much lower than the average $100,000.
CommonWealth One FCU
CommonWealth One is a federal credit union with physical branches across the D.C. area, but membership is open to citizens across the country if you meet one of its eligibility requirements. CommonWealth One FCU offers some of the highest jumbo CD rates in the industry, between 2.10% and 3.16% APY on terms ranging from 12 to 60 months.
Signature Federal Credit Union
Though it’s based in Virginia, Signature Federal Credit Union is open to new members nationwide. Its jumbo CDs aren’t as flexible as some of the other providers listed above — it only offers terms between one and five years. But Signature’s rates are very competitive, from 2.20% to 2.95%, with a minimum deposit of $100,000.
The Impact of a 0.1% Change in Your CD Rate
The APY rate on your CD can make a big difference on your potential return on investment. Believe it or not, even a 0.1% difference in rate can make an impact on how much money your investment makes over the term of your CD. For example, let’s say you put $100,000 in a jumbo CD for five years with a 3.00% APY. After the CD term expires, you’ll earn $15,927 in interest. But if your rate was just 0.1% higher, you’d net $16,491 instead. That’s why it’s crucial to find the highest rate possible at a financial institution you can trust.