What is Jumbo CD?

Jumbo CD is a deposit certificate in a very large designation, usually at least $ 100,000. These large investments are also called tradable deposit certificates and are considered to be low -character and stable investments for large investors.

Jumbo CD has the same basic features as the traditional deposit certificate. They are considered “time deposits” because they lock the investor's director for a specified period of time, usually ranging from three months to six years. In exchange for binding Principal, the investor receives a guaranteed return for a specified percentage rate locked at the time of purchase. This yield is due when the CD ripens or reaches the end of the predetermined period of time.

As a traditional CD, JUMBO CD is considered a very low -range investment. The certificate of deposit is insured by FDIC and therefore guarantee the return of the principal. However, FDIC insurance will cover up to $ 100,000 for this type of investment, and therefore the Jumbo CDS bridge and any revenues are not insured by FDIC. This objection from your foundationAty increases its investment risk to higher than the risk of traditional CDs.

As with smaller CD denominations, JUMBO CDs can usually provide a higher return rate than comparable cash investments such as money market accounts or savings accounts. The level of return on the certificate directly correlates with the time that the director remains locked. The longer it takes the CD to mature, the higher the return rate. For example, a six -year CD will have a higher interest rate than the same amount of principal locked on a six -month CD. Due to the obligation of such a large amount of money, the CD Jumbo rate is better than the smaller CD with a due date.

2ry. Obtaining the main early results in fines or forfeiture of part of the revenue and these sanctions may be particularly serious with JUMBO CD.

Due to the large director involved, the Jumbo CD tends to be a cash tool for institutional investors like JSOU banks or pension funds, both organizations with significant capital looking for a stable investment. JUMBO CD can also have a value for individuals with a high net value with large cash possessions looking for a guaranteed return without having to approach the main horizon in the short term.