Key takeaways

Certificates of deposit (CDs) are a savings option that can provide a predictable return when you agree to leave your money deposited for a specific period.

• CDs offer predictable returns, with a fixed interest rate over a set term.
• CD terms vary, ranging from short periods to several years. Term length typically influences the interest rate.
• CDs typically limit liquidity: Early withdrawals may result in penalties.
• Edward Jones offers brokered CDs from multiple banks, giving you access to CDs issued by different institutions in one place.

CDs are a type of savings vehicle

that allow you to invest your money for a set period, or “term” — ranging from months to years — to earn a fixed interest rate. In exchange for leaving your money invested until the CD matures, you generally receive a higher interest rate than you might with a traditional savings account. Unlike with traditional bank accounts, you can’t withdraw your funds on demand. If you do, you’ll likely pay a penalty. Otherwise, you have to wait until your CDs mature or "come due." For this reason, CDs can be useful for money you don’t need immediately and want to invest for a defined period.

At Edward Jones, you can buy bank-issued, FDIC-insured CDs from multiple banks in one place. Your financial advisor will help you evaluate your options and select CDs that fit your portfolio and overall financial strategy, considering terms, rates, maturity dates and other features.

How do brokered CDs work?

The CDs offered by Edward Jones are brokered CDs. A brokered CD is issued by a bank but purchased through a brokerage firm rather than directly from the bank. A brokerage firm can offer brokered CDs from multiple banks, allowing investors to diversify across institutions while staying within Federal Deposit Insurance Corporation (FDIC) insurance limits.

Some brokered CDs may be callable before maturity, meaning the CD can be redeemed by the issuing bank prior to maturity at a stated time frame and at a set call price. Most often, a callable brokered CD is called when interest rates are falling, which allows the issuer to stop paying CD holders higher than the prevailing rates. If you're interested in purchasing callable brokered CDs, it's important to talk with your financial advisor about whether they're suitable for your situation.

How does a CD ladder work?

You can build a "CD ladder" by buying a series of CDs that mature at different, sequential dates in the future — like one month, three months, six months, nine months and 12 months out. As one CD matures, you can either use that money if you need it or buy another CD representing the next rung on your ladder. This strategy can help you potentially earn more consistent returns while helping reduce interest rate risk and providing access to a portion of your money in case of an emergency. Your financial advisor can give you more details on our CD laddering strategy.

What are the benefits of purchasing a CD through Edward Jones?

Edward Jones offers access to CDs from multiple banks, along with services designed to make managing your CD investments more convenient.

• Because Edward Jones is a broker, CDs from multiple banks can be offered so you can diversify your CD holdings.
• CDs are held for safekeeping by Edward Jones but can be sold in the secondary market on any business day.
• Any interest your CDs pay can go straight into your money market or insured bank deposit account at Edward Jones on the same day it's paid.

What are current certificate of deposit interest rates?

Get up-to-date information on current bond, CD and money market rates. Find out more about our market views in our Quarterly Market Outlook.

Here to help

Your Edward Jones financial advisor can help you determine how CDs may fit into your financial plan, taking your overall financial picture into account when making recommendations.

Frequently Asked Questions

What are the advantages of a certificate of deposit?

CDs generally offer competitive interest rates, making them an attractive investment for investors who want to earn interest. Also, CDs are considered to be a lower-risk investment option.

Do you pay taxes on CDs?

If your CD is in a tax-advantaged account, you will not pay taxes on the income until withdrawals are made from the account. However, interest on CDs outside tax-advantaged accounts is taxed as ordinary income in the year interest is earned.

How much money do you need to open up a CD investment?

Opening a CD usually requires at least $1,000, though specifics vary based on the issuer. Edward Jones requires a $1,000 minimum.

Do CDs pay interest monthly or yearly?

CDs make the stated periodic fixed interest payments, which vary by issue, on the face amount. For CDs with maturities less than one year, interest payments are usually made at full maturity.

Are Edward Jones CDs FDIC insured?

Certificates of deposit offered through Edward Jones are federally insured up to $250,000, subject to applicable conditions and limits. Edward Jones is not a bank or FDIC-insured institution. Instead, FDIC insurance for brokered CDs offered by Edward Jones is provided by the FDIC-insured banks that issue the CDs on a “pass-through” basis, which requires certain conditions to be met for coverage to apply.