Make the most of your extra cash with brokered CDs
Brokered CDs are fixed income investments that you can use to lock in yield and get predictable returns.
You can purchase newly issued brokered CDs or brokered CDs from the secondary market through your J.P. Morgan Wealth Management investment account and earn interest on your FDIC-insured deposit over the lifetime of the brokered CD.
Learn about brokered CDs
What is a brokered CD?
- Traditional banks issue brokered Certificates of Deposit to be purchased and held in brokerage accounts
- Like traditional bank CDs, brokered CDs pay a set rate of interest over a fixed period of time
- You can purchase brokered CDs through your financial advisor or through a J.P. Morgan Self-Directed Investing account
- J.P. Morgan offers both primary (new issue) and secondary market CDs
What are the benefits?
- More flexibility than traditional bank CDs
- You can access your money early by selling on the secondary market without penalties (transaction fees may apply)
- FDIC-insured up to $250,000 per deposit, per bank, per ownership capacity. You may be able to expand your coverage by purchasing multiple CDs from different banks
- You can consolidate several brokered CDs issued by multiple banks within a J.P. Morgan Self-Directed Investing account
What are the risks of brokered CDs?
- Unlike traditional bank CDs, brokered CDs are subject to interest rate risk, since they’re treated like bonds. Longer-term bonds are more prone to price fluctuations than shorter-term bonds
- Brokered CDs may be callable (the issuing bank has the right to redeem them before their maturity date)
- If you sell a brokered CD before maturity, if interest rates fall, you may make a profit but if they rise, you may sell at a loss
- Interest earned on a brokered CD is not compounded, as it is with a bank CD
Brokered vs. bank CDs at a glance
Brokered CDs
- Purchased through your brokerage account (transaction fees may apply)
- Can hold several CDs issued by multiple banks in a single brokerage account
- Can be sold on the secondary market, but are subject to current market prices, which means you may sell at a loss or a gain
- Upon maturity or sale, proceeds are deposited as cash back into your brokerage account. You can buy a new brokered CD based on what’s available
Bank CDs
- The account is opened directly at a bank with no additional fees
- Must open a separate account for each new CD you purchase
- Potential early withdrawal penalties if you take out money before the maturity date
- May automatically roll into a new CD with the same maturity date and the same rate, unless you cancel
Here’s how we can work together
Invest on your own
Build your investment portfolio on your own with unlimited $0 commission online trades. Footnote 1Opens overlay
Invest on your own
Build your investment portfolio on your own with unlimited $0 commission online trades. Footnote 1Opens overlay
Invest with our advisors
Work 1:1 with a J.P. Morgan advisor to receive tailored guidance and build a financial strategy based on what’s important to you.
Invest with our advisors
Work 1:1 with a J.P. Morgan advisor to receive tailored guidance and build a financial strategy based on what’s important to you.
Frequently asked questions
The main difference between primary and secondary CDs is the seller. In the primary market, you buy a CD directly from the issuer—such as a bank—and you’re the first owner of the new issue security. In the secondary market, you buy a CD from another investor or trader.
Like other fixed income investments, the principal and interest paid by the brokered CD are deposited as cash into your brokerage account at maturity.
Yes, a brokered CD holder selling it at market price on the secondary market prior to maturity may experience a loss or a gain.
The rates on brokered CDs tend to be competitive because the financial institution is competing directly with other institutions for your deposit.