Elena Terrazas Chesney
Looking for places to store your cash to beat inflation? One risk-free option to consider is a jumbo CD. You can find jumbo CD rates up to 4.35%.
CD rates have fallen slightly after the Federal Reserve lowered interest rates twice this year. With more rate cuts possibly ahead, now is an excellent time to lock in higher rates.
The best part about CDs? They come with fixed interest rates. Even if you lock one in and the Fed reduces rates, it won't affect your returns. I'll explain how a jumbo CD works, the best options available and how much you can earn with one.
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What is a jumbo CD?
A jumbo CD account is practically the same as a regular CD account, with one main difference — jumbo CD accounts require a higher minimum deposit to open.
Typically, most banks require a deposit of $100,000; however, this amount varies from bank to bank. You'll also have shorter maturity dates, ranging from six months to one year, although some banks offer longer terms.
As you can see from the Bankrate tool, you can earn excellent rates on these CDs:
Why I like jumbo CDs
There are a few reasons why I suggest savers consider a jumbo CD:
- Shorter maturity terms: Jumbo CDs don't always require you to tie up your money for years at a time. That means you'll have the flexibility of pivoting to other investments if inflation goes higher.
- A safe investment: Your account should be FDIC or NCUA insured, so your money stays safe even if your bank or credit union fails. The FDIC protects up to $250,000 in individual deposit accounts, and the NCUA protects up to $250,000 per credit union member.
- Higher rates: Jumbo CDs offer some of the best rates among CDs and savings accounts. This means that with the higher deposit requirements, you can earn more money quickly.
Here are some of the top-earning jumbo CD accounts available for a range of term lengths:
Account | APY | Min. Deposit | Term |
|---|---|---|---|
4.35% | $100,000 | 12 months | |
4.15% | $75,000 | 12 months | |
4.10% | $50,000 | 6 months | |
4.10% | $100,000 | 15 months | |
3.95% | $50,000 | 6 months | |
3.90% | $100,000 | 12 months | |
3.55% | $25,000 | 12 months |
Key considerations with a jumbo CD
A jumbo CD works like other CDs in that you must pledge to keep your money in it until its maturity date. If you decide to break it open early, you'll lose months of earned interest, which can be hundreds of dollars with a higher deposit.
Another thing to keep in mind is that many banks autorenew CDs. That means you should set a reminder on your phone's calendar a week before maturity to investigate options.
The good news is you can always let the CD autorenew. However, if the Fed cuts rates again, it will lower your earnings the next time around as the interest rate will likely be lower on the renewal than your original rate.
How much can I earn with one?
One of the benefits of a jumbo CD is that while it requires a large deposit, you're also earning more in a short window.
If you have $100,000 you're earmarking for a short-term project, like a significant home improvement, here's how much you can earn with some top accounts:
- ECFU Financial: $4,350 in earned interest for one year
- Finworth: $2,053.91 in earned interest for six months
- State Department Federal Credit Union: $5,151 in earned interest for 15 months
Bottom line on the best jumbo CD rates
Jumbo CDs are an excellent option for risk-averse savers. You'll earn a guaranteed rate of return, and even if the Fed lowers rates again in the future, locking one in now won't impact you.
Remember that if you need your money before your term expires, banks charge penalties for closing your CD before your maturity date. Only buy a jumbo CD if you're confident you won't need the money before the term expires.
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