The more money you have saved up, the more options you might have.
Those with around $100,000 or more can consider depositing their money into a jumbo CD that is insured through a Federal Deposit Insurance Corp. (FDIC) bank or a National Credit Union Administration (NCUA) institution. Just make sure that the CD is within insurance limits and guidelines.
What is a jumbo CD?
A jumbo CD is like a regular CD but requires a higher minimum deposit, and in exchange, it can pay a higher interest rate. Jumbo CDs usually require a deposit of at least $100,000, though some banks may require less. A bank may offer you a higher rate for depositing more money with it, but savvy shoppers can look around for the best rate, whether it’s on a jumbo CD or on a regular CD.
Summary of Best Jumbo CD Rates for December 2020
Here are the top widely available rates for jumbo CDs. Compare these offers, then calculate how much interest you could earn when your CD comes due.
Best Jumbo CD Rates for 3-24 months
|Term||Institution||APY||Minimum deposit for APY|
|3 months||Navy Federal Credit Union||0.55%||$100,000|
|3 months||SchoolsFirst Federal Credit Union||0.45%||$100,000|
|3 months||Golden 1 Credit Union||0.30%||$100,000|
|6 months||Navy Federal Credit Union||0.65%||$100,000|
|6 months||SchoolsFirst Federal Credit Union||0.60%||$100,000|
|6 months||Golden 1 Credit Union||0.40%||$100,000|
|1 year||Navy Federal Credit Union||0.85%||$100,000|
|1 year||SchoolsFirst Federal Credit Union||0.75%||$100,000|
|1 year||Golden 1 Credit Union||0.60%||$100,000|
|18 months||Navy Federal Credit Union||0.90%||$100,000|
|18 months||SchoolsFirst Federal Credit Union||0.85%||$100,000|
|18 months||Golden 1 Credit Union||0.60%||$100,000|
|2 years||Navy Federal Credit Union||0.95%||$100,000|
|2 years||SchoolsFirst Federal Credit Union||0.90%||$100,000|
|2 years||Golden 1 Credit Union||0.85%||$100,000|
Best Jumbo CD Rates for 3-7 years
|Term||Institution||APY||Minimum deposit for APY|
|3 years||Navy Federal Credit Union||1.10%||$100,000|
|3 years||SchoolsFirst Federal Credit Union||1.01%||$100,000|
|3 years||Golden 1 Credit Union||0.95%||$100,000|
|4 years||Navy Federal Credit Union||1.15%||$100,000|
|4 years||SchoolsFirst Federal Credit Union||1.10%||$100,000|
|4 years||Golden 1 Credit Union||1.00%||$100,000|
|5 years||Navy Federal Credit Union||1.25%||$100,000|
|5 years||SchoolsFirst Federal Credit Union||1.20%||$100,000|
|5 years||Golden 1 Credit Union||1.15%||$100,000|
|7 years||Navy Federal Credit Union||1.25%||$100,000|
Note: The APYs (Annual Percentage Yields) shown are as of Nov. 27, 2020. The APYs for some products may vary by region.
Jumbo CDs are typically available for savers with at least $100,000 to deposit. In the past, these accounts provided a higher rate of return than traditional CDs. But with interest rates still at the low end of the spectrum, good deals on jumbo CDs can be hard to find.
The best 5-year jumbo CDs pay more than two times the 5-year jumbo CD national average of 0.42 percent APY, according to Bankrate’s most recent national survey of banks and thrifts.
Today’s top widely available jumbo CDs pay 1.25 percent APY. This may be a good place to invest if you’re saving money for a big ticket item or a large down payment on a house. Having a jumbo CD can also be helpful if you need collateral for a loan.
Best 5-year jumbo CD rates details
Navy Federal Credit Union – 1.25% APY, $100,000 minimum deposit for APY
Navy Federal Credit Union has more than 8.8 million members and is the world’s largest credit union. It has a global network of 340 branches. Navy Federal Credit Union has its headquarters in Vienna, Virginia.
Membership at Navy Federal Credit Union is open to all Department of Defense and Coast Guard Active Duty, civilian, contract personnel, veterans and their families.
In addition to CDs, Navy Federal Credit Union also offers checking and savings accounts, loans and credit cards.
SchoolsFirst Federal Credit Union – 1.20% APY, $100,000 minimum deposit for APY
SchoolsFirst Federal Credit Union was formed during the Great Depression in 1934. The credit union, created by school employees, has 50 branches.
SchoolsFirst Federal Credit Union has low minimum balances and CD terms from as short as 30 days to as long as five years. The more money you put in your CD, the higher the APY.
Golden 1 Credit Union – 1.15% APY, $100,000 minimum deposit for APY
Golden 1 Credit Union has one million members. Its main office is in Sacramento, California and has been around since 1933. Golden 1 Credit Union has 72 branches in California. Membership to Golden 1 Credit Union is open to all Californians.
Non-Californians can join Golden 1 Credit Union if they are a registered domestic partner or family member of an existing member. They can also join if they’re a member of one of the select employee groups.
The credit union changed its name to Golden 1 Credit Union in 1977. It was founded in 1933 as California State Employees’ Credit Union #1.
Finding the best jumbo CD rates
If you only go as far as your local bank to find CDs, you could be leaving money on the table. That’s why shopping around and comparing rates is key.
Online-only banks typically offer competitive CD yields because they have no branches to maintain. Credit unions often have favorable rates for savers as well. If you focus on the institutions that are federally insured, you’ll be able to reclaim your funds (up to $250,000) even if your bank shuts its doors.
Generally, longer CD terms offer higher yields. If you’re looking for the best jumbo CD rates, start by checking out accounts that mature within five years.
Jumbo CD FAQs
Jumbo CD vs. regular CD
A jumbo CD refers to the large account opening balance required for these types of CDs. Usually, a jumbo CD has a minimum account opening balance of $100,000, but that isn’t always the minimum amount.
“Some of those … lower minimum deposits on jumbos are a vestige of back when the FDIC insurance limit was $100,000, rather than ($250,000),” says Greg McBride, CFA, Bankrate chief financial analyst. “So a jumbo CD would be issued for $95,000 to leave a little headroom for the interest earnings without breaching the FDIC insurance gap.”
A regular CD may not even have a minimum deposit and could potentially have a higher APY than a jumbo CD.
The pros of a jumbo CD
Here are two benefits of jumbo CDs.
- Potential higher APY: Sometimes a jumbo CD may offer a higher APY than a regular CD. If you can get a higher APY in a jumbo CD, then you should consider this option. If you’re going to put a large amount of money in a jumbo CD, make sure it offers the best APY possible. Some banks will have tiered CDs and will reward the amount of money that you deposit, to a certain limit.
- Safety: A jumbo CD is a safe option if it’s through an FDIC bank or an NCUA credit union – as long as you follow their insurance guidelines and are within insurance limits.
Each depositor at an FDIC-insured bank is insured to at least $250,000 per FDIC-insured bank. At an NCUA institution, the standard share insurance amount is $250,000 per share owner, per insured credit union, for each ownership category.
The cons of a jumbo CD
Here are some downsides to consider.
- Inflation can be a concern: Jumbo CDs require a large minimum balance. In what’s still considered to be a low-rate environment, in some cases it might not make sense to put a jumbo deposit into a CD for a long period of time.
- Non-jumbo CDs may have a better APY: Sometimes non-jumbo CDs may actually have better APYs and lower minimum balance requirements than jumbo CDs.
Are jumbo CDs safe?
The biggest risk to a jumbo CD is if you put a large amount of money into it – for a long period of time – and that money is not keeping up with inflation. The risk is not that you will lose principal, but that you’ll lose purchasing power if inflation is ahead of the APY you’re earning on the jumbo CD.
Another risk is that if an emergency occurs, you may have to pay an early withdrawal fee to access your money. Those can be severe enough to cause you to lose some of your principal.
Is a jumbo CD a good investment?
A jumbo CD is a good investment if the APY and the time horizon fit your needs. It’s possible to get a CD that isn’t a jumbo CD that has both a lower minimum balance and higher APY. If this is the case, then the jumbo CD is not necessary.
Jumbo CD penalties
Penalties vary depending on the bank or credit union you choose. At CIT Bank, for example, the following penalties apply:
- CDs one year or less: three months simple interest.
- CDs more than one year to three years: six months simple interest.
- More than three years: 12 months simple interest.
Are jumbo CDs usually short-term or long-term?
A jumbo CD can be either for short-term or long-term savings. Jumbo refers to the minimum balance needed to open the CD. Since you’re keeping a large amount of money, make sure that you get the best APY possible.
“You’d be surprised how often banks pay the same rate on a jumbo as they do on a much smaller deposit,” McBride says.
So compare jumbo CDs, minimum balance requirements to get a certain APY, the APY that you’ll earn on the CD and the CD term length to make a decision.
How do jumbo CDs affect taxes
Having a jumbo CD could leave you with a giant tax bill. The interest you earn will be taxed as ordinary income.
Calculate your potential tax bite and decide whether you should put part of your money elsewhere. Capital gains are taxed at a lower rate, so investing some of your savings in stocks and other securities could reduce what you owe Uncle Sam.
CDs that generally need to be held by the account holder until they mature are non-negotiable. Generally, jumbo CDs you can purchase at a bank fit this description.
On the other hand, negotiable CDs can be sold to another party, who then has the option to resell the CD, according to the Richmond Federal Reserve. Negotiable CDs are traded in the secondary markets. A brokered CD is an example of a CD that you can sell on the secondary market.
Brokerages and independent salespeople are sometimes able to negotiate a higher rate. This may be possible if they can promise to deliver a specific dollar amount to the financial institution, according to the SEC.
What are the alternatives to a jumbo CD?
Savers have a few alternatives to a jumbo CD.
Some banks may not offer any extra interest for a jumbo CD. In that case, it may make sense to go with a regular CD instead.
In other cases, you may be able to hunt for a high-yield savings account, but note that the yield is subject to change, unlike a CD’s yield. Savvy shoppers look around for the best rate, even if it means going with another bank.
Bankrate’s Best 5-Year Jumbo CD Rates for December 2020:
- Navy Federal Credit Union: 1.25% APY, $100,000 minimum deposit for APY
- SchoolsFirst Federal Credit Union: 1.20% APY, $100,000 minimum deposit for APY
- Golden 1 Credit Union: 1.15% APY, $100,000 minimum deposit for APY
Learn more about other CD terms:
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