Table Of Content
What Is A Jumbo CD And How Does It Work?
A certificate of deposit is a savings account that pays fixed or variable interest in exchange for depositors leaving funds in an account until a specified date.
A Jumbo CD is similar to a regular CD but does require a higher minimum deposit. It is very common for Jumbo CDs to have a minimum deposit of $100,000, but some institutions do offer a slightly lower minimum deposit. However, a jumbo CD can pay a higher interest rate with a higher minimum deposit.
Those who invest in Jumbo CDs invest at a fixed rate of interest, which helps stabilize their return in an investment portfolio, which helps offset the market risk.
Investors will deposit a large sum of money into the institution that will be locked up for a fixed time period. As the institution holds your money, you will be earning an agreed-upon interest rate that will typically be higher than a regular savings account.
Jumbo CD Examples
Below are a few examples of Jumbo CDs, including the deposits (usually high), APY, term, and the amount of interest earned.
Deposit | CD Term | APY | Interest Earned |
|---|---|---|---|
$100,000 | 3 Months | 3% | $742
|
$500,000 | 3 Months | 5% | $6,200
|
$100,000 | 12 Months | 3% | $3,003
|
$500,000 | 12 Months | 5% | $25,275 |
$100,000 | 36 Months | 4% | $12,564
|
What Are The Differences Compared To Traditional CDs?
There are two main differences compared to traditional CDs:
- Minimum Investment Point – Jumbo CD is that a regular CD does not have a minimum investment point, while most jumbo CD’s start at $100,000.
- Term Length – Further differences between the two types of investments are the length terms. It is common for jumbo CDs to have shorter or longer terms than a regular CD. Regular CDs range between three months and five years, while jumbo CDs can be as short as a few days or as long as a decade. However, it's this possible to use CD laddering with Jumbo CDs.
Are Jumbo CD Rates Higher?
With the higher point for investments, jumbo CDs do offer higher rates than regular CDs. Many banks or investment companies offer a higher rate for depositing a larger amount of money.
It is always best to conduct thorough research in order to find the best interest rates available to have the highest rate of return for their investment.
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Should I Get a Jumbo CD?
Due to the high point of investment, those looking to invest should thoroughly weigh the pros and cons of Jumbo CDs before having your money tied up for the duration of the length contract.
Pros | Cons |
|---|---|
Interest Rates | Deposit Requirement |
FDIC Insurance |
Withdrawal Penalty |
Big Savings Goals | Long Time Horizon |
Low Risk |
- Interest Rates
This is by far the highest interest rate possible for a savings account. It will be much higher than a regular CD, or just a typical savings account.
- FDIC Insurance
While it provides less interest than other “safe” investments such as treasury bonds, there is FDIC insurance, usually up to $250,00 in case your bank fall.
- Big Savings Goals
Jumbo CDs are an excellent choice for saving a large amount of money after a long period of time.
Consumers are able to open a 3-year CD in order to set aside extra cash over time. With the CD, consumers are able to earn more interest than a typical savings account.
- Low Risk
Unlike gold investing or volatile stocks, Jumbo CDs earn some interest on the money deposited with very little exposure to risk.
Furthermore, you are guaranteed the interest rate that is agreed upon in the contract as long as you meet all the terms of the contract.
- Deposit Requirement
The first negative of the jumbo CDs is the high deposit requirement.
Due to the high amount, many investors are turned away since not many people have $100,000 to have locked up in an account for a lengthy period of time.
- Withdrawal Penalty
The money that is deposited must be committed for the full term of the contract. If the money must be withdrawn, there will be a heavy penalty for early withdrawal.
- Long Time Horizon
CDs are the best option if you are looking more long term as consumers will typically have a higher rate of return if the money is invested in the stock market.
- Inflation Risk
As of 2025, the inflation rate is higher than the interest you can get with CDs. Therefore, your money loses value over time, even if you invest in a CD.
Where Can You Find Jumbo CDs?
Jumbo CDs may be open through many different banks and Federal Credit Units. Here are some institutions offering high rates on Jumbo CDs:
- Luana Savings Bank – The Luana Savings bank was founded in 1908 in northeastern Iowa and serves customers nationwide online. They do have an early withdrawal penalty of 3 months of interest on your account.
- Michigan State University Federal Credit Union – Anyone is able to join the Michigan State’s credit union with a $10 donation to the MSU Alumni Association and have at least $5 in their savings account. The early withdrawal penalty is three months of interest.
- Interior Federal Credit Union – Those wishing to invest through the Interior Federal Credit Union must first sign up for a free membership to the New Mexico Wildlife Federation, and keep $25 or more in a savings account. It also comes with a withdrawal penalty of 12 months of interest.
How To Choose A Jumbo CD?
Before you sign up for a Jumbo CD, you first have to find a CD that is right for you.
To do so, a good start would be to compare different interest rates online through federally insured banks and credit unions.
Besides interest rates, when comparing the banks and credit unions, there are three main factors to keep in mind: CD term, CD type, and who owns the CD.
- CD Terms – The terms will generally range from three months to five years, so you will have to decide how long your money will be locked up.
- CD Types – Many financial institutions offer specialty CDs like no-penalty or add-on CDs.
- Single or Joint Account – Just like other bank accounts, consumers are able to open a jumbo CD as a single account holder or with another individual. Single accounts are insured up to $250,000 but will be doubled for joint accounts.
How To Open A Jumbo CD?
After deciding which company offers the best rate of return on your money along with the terms and conditions that work best for you, you are now able to use the following steps to create a Jumbo CD account.
- Online or Offline – the first step is to figure out how you will apply for the CD: online, over the phone, or in person. If applying online, go to the institution's website, select Jumbo CDs, “Get Started”, and go through the application process. If you are going through the phone, you must call the branch and run through the application process over the phone. Finally, if you decide to go in person, you may go to the branch, approach a bank teller, and complete the process through them.
- Identification – Once you have decided how you will be applying, you will have to have one or two forms of ID, along with your residential address, and your contact information (phone number and email address).
- Interest Disbursed – You must also choose to either receive the interest at the end of the CD’s term, or disbursed regularly (monthly or annually). In order to fully maximize the interest earned, one should receive it at the end.
- Deposit – Once you have established your contract with the financial institution, you will then have to deposit the required amount to start the contract.
Can I Withdraw From My Jumbo CD Without Penalty?
Unfortunately there are federal laws that establish a minimum penalty on early withdrawal from CDs, but there is no set maximum penalty.
If you withdraw the money within the first six days after deposit, the penalty will at least be seven days of simple interest.
FAQs
Can I transfer a Jumbo cd to another bank
It is possible to transfer a CD from one bank to another, but you have to allow the CD to fully mature (full term of the contract) to avoid any penalties.
If you wish to immediately, you are able to withdraw the funds from the initial institution with an early withdrawal fee.
What's the difference between a Jumbo and traditional CD?
The main difference between a regular CD and a Jumbo CD is the length of time for the jumbo CDs are typically longer. Furthermore, Jumbo CDs require a higher minimum deposit as opposed to the regular CDs.
Can I convert jumbo CD to a traditional CD?
You are able to deposit your funds from a Jumbo CD into a regular CD depending on the amount in the Jumbo CD. There is a maximum amount allowed into a regular CD, so if the Jumbo CD is over the limit, you will not be able to put the funds into the regular CD.
