Lauren Smith, WalletHub Staff Writer
@laurenellesmith
A jumbo CD is a type of certificate of deposit that requires a large initial deposit – usually $100,000 or more. Because the deposit is so significant, jumbo CDs often compensate investors by offering a higher annual percentage yield (APY) than traditional CDs.
Pros of Jumbo CDs
Potentially Higher Interest Rates: Because of the sizable investment required, jumbo CDs may offer more attractive interest rates than traditional CDs, maximizing returns on significant sums of money.
Government-Backed Insurance: Jumbo CDs are insured by the Federal Deposit Insurance Corporation (FDIC) or National Credit Union Administration (NCUA), up to $250,000 per person at each financial institution.
Predictable Return: Similar to traditional CDs, jumbo CDs offer a fixed interest rate for the duration of their term, ensuring you can anticipate the exact return on your investment.
Cons of Jumbo CDs
Higher Deposit Requirement: The defining characteristic of a jumbo CD is its large minimum deposit requirement, which can start at $100,000 or more. This high threshold might be prohibitive for many investors.
Insurance Limitations: While CDs are insured by the FDIC or NCUA, it's crucial to note that the coverage is only up to $250,000 at each financial institution. If your total investment amount exceeds the threshold, you must spread the funds across CD at different financial institutions so all of the money is insured.
Significant Withdrawal Penalties: Withdrawal penalties are usually a number of days of interest. Given the substantial deposit required for jumbo CDs, the penalties for withdrawing money early can be much larger than with traditional CDs.
Examples of Jumbo CDs
| Bank or Credit Union | Term Length | Minimum Balance | APY |
| 3 months | $100,000 | 1.50% | |
| 6 months | $100,000 | 4.00% | |
| Credit One Bank | 12 months | $100,000 | N/A |
| Southside Bank | 6 months | $100,000 | 3.75% |
| Quorum Federal Credit Union | 36 months | $100,000 | N/A |
You can compare the best jumbo CDs here at WalletHub.
People also ask
Do jumbo CDs pay more interest?
Yes, jumbo CDs typically offer higher interest rates than regular CDs. This is because they require a larger minimum deposit, usually $100,000 or more.
Banks and financial institutions offer these higher rates as an incentive for customers to lock in a substantial amount of money for a set period.
Jumbo CDs can be a good option if you have a significant amount of money to save for an extended time. However, for most people, regular...
read full answer by Ramses Delgado, Banking ModeratorWhat is the difference between a jumbo CD and a regular CD?
The key difference between Jumbo CDs and regular CDs is the minimum deposit amount. Understanding this key difference helps you choose the account that aligns best with your saving goals and liquidity needs. Here is how they differ:
Jumbo CDs typically require a higher minimum deposit, often $100,000 or more, making them suitable for investors with significant cash reserves. Meanwhile regular CDs have lower minimum deposits, starting from $100 or even no minimum, making them more...
read full answer by Ramses Delgado, Banking ModeratorHow much does a $10,000 CD make in a year?
A $10,000 certificate of deposit (CD) can make as much as $538 in a year right now, assuming a 5.38% APY and monthly compounded interest. Note, the highest one-year CD yields range between 5.0% and 5.5%, while the average is just under 2.0%.
1-Year CDs with the Highest APY
| Issuer | APY | Minimum Deposit |
| 5.38% ... | $10,000 |
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