Finally, you can also choose a CD that has a step-up coupon schedule. Alternatively you can choose Call Protection, which gives you more certainty of a rate of return over a defined period.
Your CD might be Callable or Call Protected, giving you the flexibility to choose a potentially higher rate now in exchange for the risk of the CD being called away from you. Brokered CDs also come with a variety of coupon payment frequencies. Like other fixed income securities, CDs with longer terms or maturities generally have higher yields. This allows you to choose between high degrees of liquidity, meaning you have the opportunity to reinvest your funds frequently, and stability, meaning you can lock in favorable interest rates for long periods of time. 5īrokered CDs come in a wide range of maturities-as little as 3 months and as long as 20 years. 4 Purchases (and sales) of secondary CDs incur a trading fee of $1 per CD (1 CD = $1,000 par value). New issue offerings are typically sold at par and investors do not pay a trading fee to purchase them. Investors typically will see 50–100 new issue offerings and as many as 2,000 secondary offerings at any point in time. 3" When purchasing a brokered CD through Fidelity, you may also take advantage of our Auto Roll Program, which can help you maintain your income stream by reinvesting the CD’s maturing principal, or investing in multiple CDs of varying maturities in a laddering strategy.įidelity offers brokered CDs through two main venues-as new issue offerings and from the secondary market. 1 Unlike a bank CD, a brokered CD can be traded on the secondary market, 2 meaning it doesn’t necessarily have to be held to maturity. Even if you own brokered CDs within multiple accounts, these holdings can be consolidated into a single account at one financial institution.
More important, both are FDIC-insured up to $250,000 (per account owner, per issuer), a coverage limit that was made permanent in 2010.īrokered CDs can also be purchased from multiple banks and held in a single account at Fidelity, allowing you to effectively expand your FDIC protection beyond the $250,000 limit.
Both are debt obligations of an issuing bank and both repay your principal with interest if they’re held to maturity. Both pay a set interest rate that is generally higher than a regular savings account. A brokered CD is similar to a bank CD in many ways.