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Updated on Monday, April 12, 2021
Conservative savers generally consider certificates of deposits (CDs) as sanctuaries where their money is kept safe and they enjoy a decent yield without stomaching the risk of investing in the stock market.
With a CD, you agree to deposit your money in a bank or credit union for a fixed amount of time (which can be as short as a few months or as long as several years) and get the satisfaction of knowing your money is likely earning a higher annual percentage yield (APY) than it would in a checking or savings account.
Jumbo CDs, which in most cases require a minimum deposit of $100,000, have traditionally promised even higher APYs for customers than regular CDs. But a combination of unsettled interest rates and fierce competition among banks — both online and traditional — for the deposits of customers have given rise to many normal CDs that offer a better return than jumbo CDs.
It’s not entirely clear why banks haven’t been similarly aggressive in offering higher-yield jumbo CDs, but one possibility is that they are interested in attracting more customers rather than big money deposits. In other words, banks would rather have the business of 100 customers each depositing $5,000 CDs than 10 customers depositing $500,000 jumbo CDs.
That said, if you feel the need to go big when it comes to your CD, check out how our top picks for jumbo CDs compare to the national average.
Regular 1-Year CD vs 1-Year Jumbo CD
Minimum opening deposit
Regular 3-Year CD vs 3-Year Jumbo CD
Minimum opening deposit
Regular 5-Year CD vs 5-Year Jumbo CD
Minimum opening deposit
As of April 2021
All rates expressed in annual percentage yield (APY) unless otherwise stated.
The top jumbo CD rates of April 2021
To determine the best CDs for your jumbo-sized deposit, we turned to the database found on DepositAccounts.com. For each common CD term, we assumed the customer was planning to deposit $100,000 in the account so as to include traditional jumbo CDs which typically have a higher minimum deposit needed to open. All the accounts included are also available nationwide.
You’ll notice as you read through the list of CDs we’ve selected, that some of them have minimum deposits of far less than $100,000. That’s because we’re focused on informing you of the best CD accounts for your money, and there are plenty of large minimum deposit CDs that still offer a great APY. You can rest assured we aren’t leaving out any good deals just because a financial institution’s marketing team decided not to call a CD “jumbo.”
Minimum opening deposit
Banks that offer the best jumbo CD rates
Advancial – 3-month CD, 0.71% APY; 6-month CD, 0.80% APY; 12-month CD, 0.85% APY; 18-month CD, 0.92% APY; 2-year CD, 1.00% APY; 3-year CD, 1.21% APY; 4-year CD, 1.50% APY; 5-year CD, 1.84% APY
As you can see, Advancial clearly takes the cake when it comes to offering the highest jumbo CD rates. Across all term lengths, the credit union currently has the highest rates for its junior jumbo CDs, which boast the following APYs for minimum deposits of $25,000: a 3-month CD with a 0.71% APY, a 6-month CD with a 0.80% APY, a 12-month CD with a 0.85% APY, a 18-month CD with a 0.92% APY, a 2-year CD with a 1.00% APY, a 3-year CD with a 1.21% APY, a 4-year CD with a 1.50% APY and a 5-year CD with a 1.84% APY.
Headquartered in Dallas, Advancial is a credit union that has roots dating back to 1937. While this credit union only has a handful of locations in Alaska, Texas, Oklahoma and Louisiana, membership is still open to anyone who joins Connex and pays a $5 fee.
Go jumbo or stick to regular CDs?
To be considered “jumbo,” a CD needs to require a large minimum deposit, usually $100,000, as opposed to a normal CD which may not even require a minimum deposit. The deal banks made with well-off depositors boiled down to ‘if you leave lots of your money with us in this jumbo CD, we’ll give you a higher yield than if you deposited it in a normal CD.’
It’s important to note the differences between a jumbo CD and regular CD aren’t set in stone and have more to do with how the bank or credit union markets their savings products than any hard and fast rule, says Ken Tumin, founder of DepositAccounts.com, another LendingTree-owned site.
“I’ve seen banks and credit unions with jumbo CD minimums as low as $10,000 and as high as $250,000,” Tumin told MagnifyMoney. “Even if a bank doesn’t offer jumbo CDs with high minimums, someone could still deposit a large balance into a regular CD. They just wouldn’t be earning any higher interest than someone depositing a small balance.”
As the difference in earnings from a jumbo CD and traditional CD has diminished (or disappeared completely), the drawbacks of parking so much money in a CD become more apparent. For example, the jumbo CDs with the highest APY usually require a longer period of time to mature, which means you have at least $100,000 exposed to inflation—which means you possibly end up earning less than you expected.
Withdrawal penalties on jumbo CDs
According to a recent survey, the penalties for withdrawing your money from your CD early could be serious. Some banks will even take part of your principal as a penalty.
Below are the most common penalties, according to the survey:
- 3 month CD: Three months of interest
- 6 month CD: Three months of interest
- 1 year CD: Six months of interest
- 2 year CD: Six months of interest
- 5 year CD: A year’s worth of interest
So, it’s important to be confident that you want to put your money in a CD. When you do this, you’re making an agreement with the bank to leave it there for a set period of time. If you’re unsure if you want to tie up your money for a long period of time, consider a high-yield savings account instead.
How jumbo CDs are taxed
It’s important to know that the interest you earn on your jumbo CD will be taxed as interest income, not as capital gains income.
This means that your bank or credit union will send you a 1099-INT form at the end of the year to show how much interest you earned in your jumbo CD and you will be taxed on that.
Are jumbo CDs safe?
According to the U.S. Securities and Exchange Commission: “Certificates of deposit are considered to be one of the safest savings options. A CD bought through a federally insured bank is insured up to $250,000.”
Some people prefer investing in the stock market over CDs because you can often get higher rates of returns; however, the stock market is a riskier bet, and returns are not guaranteed like those associated with CDs.
CDs are not affected by the whims of the stock market. The interest rate you agree on with your bank is the rate you will get. That interest rate, however, may not outpace inflation, meaning you may not really earn much, if anything, over time.
If you have over $100,000 and want to invest it in a jumbo CD, you have several options. Like the chart above shows, you can choose many different terms and durations for your jumbo CD. Just be sure to research the bank you invest with so you know you’re putting your money with a top-rated institution. Also, be sure that you’re comfortable with putting your money in a CD long-term because there are often penalties for withdrawing your money early.