Brokered CD

A certificate of deposit (CD) purchased through a brokerage rather than a bank. Brokerage firms can pick and choose from dozens or even hundreds of banks around the country and therefore usually pay higher rates than bank-issued certificates. In addition to higher rates, brokered CDs are more liquid than bank CDs because the broker can always sell the certificate on the open market. There's also no penalty for selling prior to maturity, which gives brokered CDs another advantage over bank-issued certificates. And, since banks issue the CDs themselves, the Federal Deposit Insurance Corp. (the same fund that insures a CD you buy directly from your bank) insures them for up to $100,000. Your broker probably won't charge you a commission when you buy or sell a CD. The bank will pay the commission instead.

 

 

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