Looking for a fixed, predictable and safe return on your savings? You could benefit from opening a certificate of deposit (CD), and a jumbo CD may be the way to go if you have significant funds to protect.
Rates on savings accounts, including 1-year CDs, 3-year CDs and 5-year CDs, rose over the last year as the Federal Reserve sought to fight inflation by raising interest rates. Jumbo CD rates were also on the rise, with many accounts offering over 5% on deposits. However, as the Fed ends its rate hiking campaign, the growth of CD and high-yield savings account rates has also come to an end.
At its latest meeting, the Federal Reserve held interest rates steady for the seventh consecutive time, keeping the federal funds rate at a target range of 5.25% to 5.5%, the highest it’s been since 2001. When the Federal Reserve decided to initially hold interest rates steady, savings rates started to fall. And rates are expected to fall even more when the Fed begins cutting interest rates later this year. Previously, three interest rate cuts were projected by year-end, but due to higher-than-expected inflation, officials now estimate just one quarter-point cut for the year.
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For this reason, make sure to lock in rates while they're still high. You can use our tool below to compare today's CD rates.
What is a jumbo CD?
Depending on how much cash you're looking to invest, you could be eligible to open a jumbo CD account. 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, but this number varies from bank to bank.
How do you find the best jumbo CD rates?
To find the best jumbo CD rate, you need to follow a few steps, including choosing the right bank and deciding what factors work best for you.
- Choose an online bank: Typically, online banks offer more competitive rates than those found at traditional banks. For this reason, you’ll likely have to forgo a brick-and-mortar bank for an online one if you’re looking to open one of the top-earning CD accounts available.
- Make sure your cash is secure: Make sure your account is 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.
- Compare APY across accounts: While many jumbo CD accounts offer impressive rates, you could potentially find higher yields among other CD accounts, with varying deposit requirements and term lengths.
- Choose the right term: If you withdraw funds from your CD account before the term is through, you'll likely be charged a withdrawal fee that can offset any interest you’ve earned on your savings (unless you have a no-penalty CD). Therefore, when choosing an account, make sure you won't have to access your cash until the CD matures.
Here are some of the top-earning jumbo CD accounts available for a range of term lengths.
Lennox Employees Credit Union
APY: 5.61%
Term: 18 months
Minimum balance: $100,000
My eBanc
APY: 5.45%/5.38%
Term: 6 months/12 months
Minimum balance: $50,000
State Bank of Texas
APY: 5.40%
Term: 12 months
Minimum balance: $50,000
Justice Federal Credit Union
APY: 5.35%
Term: 9 months
Minimum balance: $100,000
Finworth
APY: 5.35%
Term: 12 months
Minimum balance: $50,000
KS State Bank
APY: 5.30%
Term: 9 months
Minimum balance: $100,000
Creighton Federal Credit Union
APY: 5.25%
Term: 7 months
Minimum balance: $25,000
CD Bank
APY: 5.25%
Term: 6 months
Minimum balance: $100,000
State Department Federal Credit Union
APY: 5.20%
Term: 12 and 15 months
Minimum balance: $100,000
Alliant Credit Union
APY: 5.10%
Term: 12 months
Minimum balance: $75,000
Luana Savings Bank
APY: 5.06%
Term: 6 and 12 months
Minimum balance: $100,000
ECFU Financial
APY: 4.85%
Term: 18 and 24 months
Minimum balance: $100,000
Greenville Heritage Federal Credit Union
APY: 4.60%
Term: 12 months
Minimum balance: $101,000
GTE Financial
APY: 4.33%
Term: 12 months
Minimum balance: $100,000
Bottom line on jumbo CD rates
While jumbo CD accounts require much higher deposits than standard CD accounts, in many cases they also offer a higher APY. Because they offer some of the highest saving rates on the market, jumbo CD accounts are a good option for individuals who want to earn a guaranteed rate of return on their savings — without the risk. Although CD accounts offer comparatively lower returns compared to higher-risk investment options, like stocks or ETFs, they’re a better choice if you’re looking for a fixed, predictable and safe return on your money.
Before opening a jumbo CD account — and locking up at least $25,000 for an extended period of time — take into consideration when you’ll need access to your cash. You don’t want to be hit with hefty withdrawal fees for accessing your cash before the maturity date on the account. For this reason, CDs aren't good options for savings you could potentially need quick access to, like an emergency fund.
If you decide that a jumbo CD is, in fact, the right savings vehicle for your hard-earned cash, lock in rates before they drop later this year.
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