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When a Broker Offers a Bank CD: It Pays to Do Some Research


From the FDIC

A certificate of deposit account (CD) at an FDIC-insured bank is one of the safest, most reliable investments available because it provides a predetermined fixed- or variable-rate interest computation for a set time period (usually three months to five years) and deposit insurance protection of up to at least $250,000 per depositor.

Recently, you may have seen or received advertisements from deposit brokers offering FDIC-insured CDs. While using deposit brokers has grown in popularity because brokers often can negotiate higher interest rates, the CDs they sell may involve more risks than working directly with an insured bank.

FDIC Consumer News has previously cautioned readers to be careful when buying CDs from third parties, but given the increased consumer interest and ongoing reports of complaints, we offer our latest tips and information:

  • Use a reputable deposit broker.

  • Be skeptical if the interest rate on a brokered CD is significantly higher than other advertised rates.

  • Make sure all of your deposit will be fully insured.

  • Learn whether your only option to withdraw early from a brokered CD is to sell it.

Get more tips and advice and learn what to do if you have a problem with your CD from the FDIC.