Promotions

• Banks typically have at least one promotional rate CD each month that you see advertised in local newspapers as well as online. While you need to deposit $5,000 or $10,000 to receive the promotional rate, you can deposit less, in which case you receive a much lower rate of interest. When the promotional rate on a CD ends, that CD normally rolls over into a new term with a much lower rate. Many CD customers move their funds from one promotional rate CD to another every time the CD term ends.
  
  

Jumbo CDs

• Banks typically offer the highest interest rates on jumbo rate CDs. These are accounts that require a minimum deposit of at least $100,000. In the past, federal deposit insurance only extended to $100,000 so people who bought jumbo CDs did not have federal insurance on the interest that their account accrued. However, in 2008, the Federal Deposit Insurance Corporation increased deposit insurance to $250,000 per account owner, which means full deposit insurance coverage for jumbo CD owners.
  
  

CD IRA

• If you are under the age of 50, you can only invest up to $5,000 per year into an Individual Retirement Arrangement, and you can deposit no more than $6,000 per year if you are over that age. Income limits apply to Roth IRA contributions that mean many high earners can only make partial Roth contributions. Consequently, banks accommodate IRA account holders by waving minimum deposit requirements on most CD IRA and Roth CD IRAs.
  
  

Brokerage CDs

• Brokerage firms often buy CDs from banks and allow brokerage customers to buy and hold these CDs as securities. Brokerage CDs normally have minimum balance requirements of at least $100,000, but the CDs are very often sold in increments of $1 million or more. Brokerage CDs, unlike regular bank CDs, are nonrenewable and most have term times that last for just six months. Mutual fund companies often buy these high dollar CDs as safe alternatives to bonds during market downturns.