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Brokerage CDs are different than bank CDs, and someone may have a reason to buy one instead of the other.
Brokerage CDs:
- More convenient to buy and keep track of if you have a brokerage account.
- May be bought after issue date or sold before maturity on the secondary market.
- Usually have a lower interest rate than what you would get by shopping around for the best bank or credit union CD available.
- Do not have the option to forgo the coupon payment to accrue interest.
- Don't automatically roll into another CD unless you stop it, usually at a ripoff rate.
- If you pay a brokerage service a percentage of assets for "advice" (which I don't recommend), the money in a bank CD doesn't count and you don't pay the percentage.
I personally suffer the extra inconveniences and buy bank CDs for the higher rates and accrued interest. But I see reasons some choose brokered CDs. I have brokered corporate and muni bonds, but my CDs are with four different banks and a credit union (admittedly inconvenient...).
Last edited by WolfTheCat July 5, 2024 at 04:11 AM.
What will SPAXX be paying in three years? Or even next month?
If I buy a CD, I can actually answer that question.
Ah, yes. It looks like interest rates will stay flat for the next 3 months at least, but for terms beyond that is when these CD's begin to look attractive, at least for me. And for anyone like me who got into I-Bonds over the last couple of years, I guess it could be a good move to move that money to CDs, give that the current I-Bond rate is 4.28%
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Brokerage CDs are different than bank CDs, and someone may have a reason to buy one instead of the other.
Brokerage CDs:
- More convenient to buy and keep track of if you have a brokerage account.
- May be bought after issue date or sold before maturity on the secondary market.
- Usually have a lower interest rate than what you would get by shopping around for the best bank or credit union CD available.
- Do not have the option to forgo the coupon payment to accrue interest.
- Don't automatically roll into another CD unless you stop it, usually at a ripoff rate.
- If you pay a brokerage service a percentage of assets for "advice" (which I don't recommend), the money in a bank CD doesn't count and you don't pay the percentage.
I personally suffer the extra inconveniences and buy bank CDs for the higher rates and accrued interest. But I see reasons some choose brokered CDs. I have brokered corporate and muni bonds, but my CDs are with four different banks and a credit union (admittedly inconvenient...).
agreed on ,ost points but in ffidelity, I am able to do a lot of things similar to bank ones... this has been mentioned previously. I buy new issue CDs only
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Brokerage CDs are different than bank CDs, and someone may have a reason to buy one instead of the other.
Brokerage CDs:
- More convenient to buy and keep track of if you have a brokerage account.
- May be bought after issue date or sold before maturity on the secondary market.
- Usually have a lower interest rate than what you would get by shopping around for the best bank or credit union CD available.
- Do not have the option to forgo the coupon payment to accrue interest.
- Don't automatically roll into another CD unless you stop it, usually at a ripoff rate.
- If you pay a brokerage service a percentage of assets for "advice" (which I don't recommend), the money in a bank CD doesn't count and you don't pay the percentage.
I personally suffer the extra inconveniences and buy bank CDs for the higher rates and accrued interest. But I see reasons some choose brokered CDs. I have brokered corporate and muni bonds, but my CDs are with four different banks and a credit union (admittedly inconvenient...).
If I buy a CD, I can actually answer that question.
If I buy a CD, I can actually answer that question.
Sign up for a Slickdeals account to remove this ad.
Brokerage CDs:
- More convenient to buy and keep track of if you have a brokerage account.
- May be bought after issue date or sold before maturity on the secondary market.
- Usually have a lower interest rate than what you would get by shopping around for the best bank or credit union CD available.
- Do not have the option to forgo the coupon payment to accrue interest.
- Don't automatically roll into another CD unless you stop it, usually at a ripoff rate.
- If you pay a brokerage service a percentage of assets for "advice" (which I don't recommend), the money in a bank CD doesn't count and you don't pay the percentage.
I personally suffer the extra inconveniences and buy bank CDs for the higher rates and accrued interest. But I see reasons some choose brokered CDs. I have brokered corporate and muni bonds, but my CDs are with four different banks and a credit union (admittedly inconvenient...).
Flagstar/mybankingdirect has 5.55