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20201103
20201103 (@guest_1380116)
May 12, 2022 14:09

I bought some of these (new issue) Brokered CDs for the first time recently. I noticed that a lot of the same ones appear at several brokerages. They seem to currently have the best rates for parking safe cash for a few years.

One point is that since these each have a CUSIP number (unlike direct bank CDs) you can ACATS them between brokerages if you are chasing bonuses.

Drew$$
Drew$$ (@guest_1380658)
May 13, 2022 12:37

What are the interest rates like?

Mike
Mike (@guest_1380766)
May 13, 2022 16:52

If you are interested in new issue brokered CD’s, I suggest checking the list at your brokerage firm often – at least daily. I use two different firms for this product and have seen many times when an attractive new offer is posted, it can be gone in one day, or sometimes just hours.

Also, if cash flow is a consideration, note how often the interest payments are made. They may be monthly, quarterly, semi-annual or at maturity (for shorter term CD’s).

robertw
robertw (@guest_1584341)
March 24, 2023 19:12

I did not know that. That is really good for those short term 3 month type bonuses. The money could be in a 3-4 month CD with a locked rate.

FlyingBoat
FlyingBoat (@guest_1768482)
January 1, 2024 15:52

The best rate doc site says Schwab has brokered CD’s up to 5.7% for 10 to 18 months. I don’t see anything on Schwab higher than 5.1% for 0 to 24 months. Am I not looking at it correctly?

Jay
Jay (@guest_1768494)
January 1, 2024 16:10

Because the latest rates have dropped significantly. The data in the post is dated in many places. Weeks matter with material news (Dec Fed meeting and Powell’s commentary).

varg
varg (@guest_1748970)
December 1, 2023 09:31

FYI they let you buy them in 1k increments but you’ll need significantly more to sell. I have one that requires 10k to sell them and another requiring 20k. Maybe it was in the fine print and I didn’t see it but I think that’s bs.

ExtraFiber
ExtraFiber (@guest_1539769)
January 22, 2023 14:03

I invested $4k into a new issue 4.7% CD on Schwab on Friday. The value is currently down $8.48. Obviously that’s an insignificant amount, but I don’t understand how a CD loses value. Can someone explain or point me in the right direction?

Mike
Mike (@guest_1539812)
January 22, 2023 15:05

You purchased a brokered CD. Brokered CD’s have market risk – bank CD’s have early withdrawal penalties. Neither of these matter if you hold the CD till maturity. If you own a bank CD (or credit union share certificate), and decide to cash it in before its maturity date, you will receive back your original amount less an early withdrawal penalty, which is normally several months worth of interest. If you decide to cash in your brokered CD before its maturity date, it is a different process. You place your CD for sale on the secondary market – its vale is determined mostly by what the now current interest rate is on a newly issued CD with the same duration as what remains on your brokered CD. If you plan on holding your brokered CD till maturity, don’t fret over its fluctuating value because you will receive back your entire amount when it matures.

ExtraFiber
ExtraFiber (@guest_1539865)
January 22, 2023 16:31

Very thorough–thanks!

Sunnyboy1234
Sunnyboy1234 (@guest_1452553)
September 25, 2022 23:12

might be worth an update…rates for brokered CDs are now ~4% for 6 months CDs. Is there a list of which brokerage firm allows Brokered CDs?

Mike H
Mike H (@guest_1452857)
September 26, 2022 12:23

Have never seen a list, but if it were my money, I would use one of the well known and respected brokers such as Fidelity, Vanguard, Merrill, Schwab, Ameritrade, etc. Make sure you are purchasing a bank issued CD that comes with FDIC insurance. Note; for products with short-term durations, you may do better with treasuries. Short term treasury interest rates are currently slightly higher than CD’s and there is the advantage of no state income taxes on the earned interest.

Eric
Eric (@guest_1435198)
August 31, 2022 00:54

I am bit confused about brokered CDs. So the article says that they are in increments of $1000. So if I look at Fidelity’s website and it says “quantity available” of 25,000, and if i decide to buy 10, that means I am buying $10K CD worth?

Snowbird
Snowbird (@guest_1435332)
August 31, 2022 07:42

Eric That is correct. They’ve also started offering a few fractional CD’s where you can by in multiples of $100, so if you wanted to invest $800, you would purchase 0.8.

Varg
Varg (@guest_1484881)
November 10, 2022 06:17

I just bought some at Vanguard, they do not allow fractionals. I could only buy in increments of 1k.

Lou
Lou (@guest_1418435)
August 1, 2022 21:11

Is it possible to buy CDs or any other investment vehicle with a visa/master gift card?

Mike H
Mike H (@guest_1418535)
August 2, 2022 00:32

Some brokerage firms might allow you to link the card to your account and then use the it to purchase securities? Would probably be easier to just sell the gift card for cash, and then use the cash.

Lou
Lou (@guest_1418610)
August 2, 2022 06:56

Thanks for your advice! Do you know if any brokerages that allow this?

Mike H
Mike H (@guest_1418690)
August 2, 2022 11:22

No, I have never looked into it.

Varg
Varg (@guest_1416777)
July 29, 2022 14:26

Not a good time to buy CDs. The fed is going to keep pushing the rates up. All these banks are pushing hard to lock people into CDs right now. I think late this year or early next year would be a better time. I’m going to stick my IRA into some of these via vanguard.

Burton
Burton (@guest_1402758)
June 30, 2022 15:54

Etrade has US Treasury bills in the same bond section that seem to have similar or better returns than the brokered CDs. Any drawbacks to those?

Mike
Mike (@guest_1402775)
June 30, 2022 16:24

No drawbacks that I can think of. Right now, short term treasury yields seem to be higher than brokered CD’s. As the durations get longer, the brokered CD’s yield more than the treasuries.

Alex
Alex (@guest_1403457)
July 1, 2022 17:36

Burton I’m looking Merrill’s offerings and confused as to what is a good deal (seeing “coupon rate” “offer price” and “yield to worst” and don’t understand what to look for exactly). Also, it looks like Merrill isn’t showing anymore brokered cds under their fixed income screener. Mike, is it possible that all the offers for brokered cds just disappear at some point like this?

Mike H
Mike H (@guest_1416793)
July 29, 2022 14:58

No drawbacks. And remember, the treasuries are generally exempt from state and local taxes. Consider that when comparing CD’s to treasuries.

Alex
Alex (@guest_1396502)
June 16, 2022 16:04

Can anyone explain how the value of these go down? I just purchased $20k of brokered cds from Merrill (no fees for purchasing) yet the next day the account balance is showing $19,996. How did it lose $4? Is that just the market price and I’ll still get principal + interest at maturity. Maturity is in about a month or so if that matters.

Mike
Mike (@guest_1396634)
June 16, 2022 19:48

Yes, yes and yes. The $19,996 is the market price, even though it is unlikely there would be a buyer. As it gets closer to the maturity date, the value will get closer to your purchase price of $20,000. At maturity, you will receive back your $20,000 plus any earned that had not previously been paid to you. These market prices can move in both directions. If interest rates on new brokered CD’s of the same duration would go down, the market value of yours could go up.

Alex
Alex (@guest_1397115)
June 17, 2022 15:52

Thanks for the reply. That’s what I thought but just wanted to be sure. Was a bit alarming purchasing these for the first time and it immediately going down in value.

Mike
Mike (@guest_1397145)
June 17, 2022 16:33

You are welcome. Glad I could help. BTW, I purchased two different ones this morning. They posted to my account after market close. One was down .015% and the other down .020%.

BigBadMoneyDaddy
BigBadMoneyDaddy (@guest_1383787)
May 20, 2022 17:44

I would not lock up money for 20 years. I would rather invest in commodities or real estate that should move up as dollar continues to inflate. Money can double after 20 years but who knows what the dollar will look like by then.