CD Rates
 

In today's Sun I see an advertisement by Edward Jones offering 12 month CD's with a rate of 4.65%. Is anyone on the forum familiar with this offering and how they can offer so much more than a bank. Thank you in advance.

Probably you will need to open a brokerage account with them and probably with a high deposit. Another broker made a similar offer to me 2 months ago.

Overview of Edward Jones CDs
Edward Jones is a brokerage service. When it comes to CDs, that means Edward Jones is not creating its own CDs the way traditional banks do. Instead, it buys CDs from other banks in large volumes and then resells them to customers at competitive rates. The CDs that Edward Jones sells are known as brokered CDs.

One advantage of brokered CDs is that it’s possible to buy CDs from multiple banks through Edward Jones. The FDIC will insure your CDs up to $250,000 at every institution you bank with. So getting CDs from multiple banks (through Edward Jones) will allow you to insure potentially more than $1 million. This isn’t relevant to everyone, but it provides some more security if you are putting a lot of money into CDs.

Edward Jones has 10 CD term options available. Term lengths range from three months to 10 years. As with most brokered CDs, the interest rates are competitive. However, it’s important to note that Edward Jones does not compound your interest. You will receive interest payments based on how many days you hold a CD and the annual percentage yield (APY).

If your CD term is one year or less, you will receive an interest payment when your CD reaches maturity. If your CD term is more than one year, Edward Jones will send you an interest payment monthly, quarterly, semiannually or annually (as well as when your CD reaches full maturity). The exact schedule for your interest payments will depend on your CD. Make sure to check the schedule before you open an account.

When your CD earns interest, payments will go straight into your money market account (MMA) or another bank account that you have with Edward Jones. The interest payment will send on the same day that it is paid. Similarly, Edward Jones will transfer your principal to another account when your CD reaches maturity. This differs from traditional banks, which renew your CD for another one of the same term length after your maturity date.

There are also some potential fees you should consider. Unlike with traditional bank CDs, brokers sometimes charge a commission for buying and selling CDs. These fees often come out of your interest payments and can cut into your earnings.

You were Mr. Helpful, great analogy.:ho:

Also make sure the cd is call protected. The last thing you want is for rates to drop and your cd called early.

Also, must you investigate if you move forward............................At some brokers, if you buy a CD thru them and you need your cash early, they sell your CD on the market, with fees and with market pricing......which may not be good. Unlike buying from a "bank", you lose some interest for early withdrawal.

Could be a good opportunity,,,,,,,,,,,,,,,,,,,,,,,,,jus go in with eyes wide open and ask questions.

OP, you need to shop around. That is not a great rate. Fidelity Investments is offering 12 month CDs that are paying 4.7 percent and 24 month CDs paying 4.9 percent. They are new issue FDIC insured, non-callable, bank CDs. No fees at all. If you open a Fidelity brokerage account, they will buy the CDs and manage them in your account. And, they have an office in Lake Sumter. Stay away from local banks for CDs.

12 month US treasury bill auction last week has a yield of 4.7%+. You can purchase directly from the government on line. $100 minimum $10 million max. Next 12 month auction Nov 29th.

Not an EJ fan, but they are offering the same 4.9% rate.
4.65% v 4.70%........minor.

Several banks are paying more than 4% on 12 month CD'S. Check Bankrate.com

True. But, to me, it is much easier to set up a brokerage account with Vanguard or Fidelity, and have access to hundreds of new issue and market based CDs and Treasury bills that are held and managed in your account. They will purchase these products and resell them for you anytime you want. Why bother with the hassle of dealing directly with the Federal Government?

My point was that the Edward Jones newspaper ad is nothing to get excited about.

Just checked Schwab which has 1 yr CD @ 4.85 %; 2 yr CD @ 5.0%. 1 year treasury pays 4.8%.

Get better rates on Treasuries. Check your broker

Fidelty

Thank you for taking time writing a very detailed answer to my inquiry. I am now armed with a number of good questions to ask.