A jumbo CD is a certificate of deposit that requires a high minimum deposit -- typically $100,000 -- compared with a few hundred dollars or so for a standard CD. Because of its large minimum deposit, a jumbo CD pays a higher interest rate, or APY, than a standard CD. According to CNET’s sister site Bankrate, the national average for a five-year jumbo CD is 1.21%, compared with 1.16% for a standard CD. That might not seem like much, but consider that the top-yielding jumbo CDs are paying four times higher than their national average.
Like a standard CD, a jumbo CD pays a fixed rate of interest in exchange for the account holder’s agreement to keep their money in the account untouched for a specified period of time until maturity. What’s more, a jumbo CD is a safe place to stash and grow your large sum of cash, as it’s federally insured for up to $250,000 per depositor.
If you have a substantial sum of money you want to keep safe while earning a respectable yield, then a jumbo CD might be worth considering. Check out CNET’s list of the best jumbo CDs, which includes some conventional CDs that have no maximum deposit limit.
CNET’s picks for the best jumbo CD rates
| CD term | EFCU | Credit One Bank | Navy Federal Credit Union | Luana Savings Bank | SchoolsFirst Federal Credit Union | Golden 1 Credit Union |
|---|---|---|---|---|---|---|
| 1 year | 4.70% | 4.60% | 4.45% | 3.92% | 3.60% | 1.40% |
| 3 years | 4.70% | N/A | 4.25% | 4.34% | 4.10% | 1.90% |
| 5 years | 4.70% | 4.55% | 4.25% | 3.25% | 4.35% | 2.60% |
| 7 years | N/A | N/A | 4.25% | 2.84% | N/A | N/A |
| Min Deposit | $100,000 | $100,000 | $100,000 | $100,000 | $100,000 | $50,000 |
Whether you’re comparing a jumbo CD to a standard one-year or five-year CD, you’ll see that APYs vary by bank or credit union. The following table shows CNET’s top picks for traditional CDs, some of which offer competitive rates and no minimum deposit limit.
Compare to CNET’s picks for the top traditional CD rates
| Term | Bread Savings | Marcus by Goldman Sachs | Barclays | Pentagon Federal Credit Union | Synchrony Bank |
|---|---|---|---|---|---|
| 1 year | 4.50% | 4.30% | 4.25% | 4.25% | 4.30% |
| 3 years | 4.50% | 4.00% | 4.30% | 4.05% | 4.30% |
| 5 years | 4.50% | 3.80% | 4.30% | 3.90% | 4.30% |
| Min Deposit | $1,500 | $500 | $0 | $1,000 | $0 |
| Max Deposit | None | $1 million | None | $1 million | $3 million |
Annual percentage yields (APYs) shown are as of Jan. 9, 2023. APYs may have changed since they were last updated and may vary by region for some products.
EFCU Financial
- APY
- 3.70%-4.70%
- Min. deposit to open
- $100,000
Early withdrawal penalty: Six months of dividends
Membership eligibility: People who live, work, worship or attend school in one of nine Louisiana parishes are eligible for membership. For more details visit EFCU Financial.
Credit One Bank
- APY
- 4.00%-8.00%
- Min. deposit to open
- $100,000
Early withdrawal penalty: 90 to 365 days of simple interest
About the bank: Credit One Bank is a Las Vegas-based financial services firm. It offers a full suite of credit card products and FDIC-insured, high-yield certificate of deposit accounts. Online accounts are available to customers nationwide.
Navy Federal Credit Union
Read Navy Federal Credit Union Review- APY
- 0.50%-4.45%
- Min. deposit to open
- $100,000
Early withdrawal penalty: 90 to 365 days of dividends earned based on term, withdrawal date and the amount withdrawn
Membership eligibility: Membership is restricted to active duty military, retired, veterans, their family members or Department of Defense civilian employees. Visit the Navy Federal Credit Union website for a complete list of eligibility.
Luana Savings Bank
- APY
- 2.63%-4.34%
- Min. deposit to open
- $100,000
Early withdrawal penalty: Six months of interest
About the bank: Luana Savings Bank is the tenth largest bank in Iowa, catering to agricultural customers in Northern Iowa. You can open an account in person at one of the six branches or on the bank’s website and app.
SchoolsFirst Federal Credit Union
- APY
- 0.95%-4.35%
- Min. deposit to open
- $100,000
- Early withdrawal penalty: 90 to 180 days of dividends on principal amount withdrawn
- Membership eligibility: Membership is limited to current or retired school employees, immediate family members or employees of select businesses. For complete details, visit the SchoolsFirst FCU website.
Golden 1 Credit Union
Read Golden 1 Credit Union Review- APY
- 1.10%-2.60%
- Min. deposit to open
- $50,000
- Early withdrawal penalty: At least 180 days of dividends on the amount withdrawn
- Membership eligibility: Membership is restricted to residents of California, people who work in California or members of select employee groups. Visit the Golden 1 Credit Union website for details on membership eligibility.
What is a jumbo CD and how does it work?
As the name implies, a jumbo CD is just like a standard certificate of deposit account but requires a larger minimum deposit, generally $100,000, though some banks and credit unions require lower thresholds. Jumbo CDs are less common than traditional CDs; only about 50 US banks and credit unions offer them. Though there are jumbo CDs that offer competitive APYs, there are plenty of standard CDs that offer a higher APY than those marketed as jumbo CDs.
The major benefit here is a fixed rate of interest -- but there’s risk, too: When interest rates are increasing, a CD puts you at risk of tying up your money in an account that doesn’t tap into higher yields. Otherwise, CDs are considered a safe, conservative investment when bought through a bank or credit union because they’re insured.
Jumbo CDs vs. standard CDs
Jumbo CDs are similar to standard CDs, but the major difference is that the minimum deposit for a jumbo CD is $100,000, compared with a standard CD whose minimum deposit can range from a few hundred dollars to a few thousand dollars.
Both jumbo and standard CDs require that you deposit your lump sum of cash for a specific period of time in exchange for a fixed rate of growth. Both charge a penalty fee if you withdraw money before the maturity date. The average APYs for both CDs are higher than traditional savings accounts. According to Bankrate, the average APY for a one-year CD is 1.39% and 1.44% for a one-year jumbo CD -- considerably higher than the 0.20% average yield for savings accounts nationwide.
Pros
Jumbo CDs offer a fixed interest rate.
The average one-year jumbo CD offers a much higher interest rate than the average savings rate -- 1.44% APY compared with 0.20%.
Jumbo CDs bought through banks and credit unions are insured by up to $250,000, minimizing risk of loss of the original principal.
Cons
You can lose a significant amount of the interest you’ve earned if you withdraw before the maturity date.
If interest rates continue to rise, the APY is locked into the rate set at the time of purchase which will cause you to miss out on additional growth.
The CD term restricts access to cash that you may need. If you withdraw early, a penalty will diminish your return.
How to choose the best jumbo CD
As with any financial product, savers should shop online and compare features available across a variety of banks, credit unions and financial institutions such as brokerage firms. First, determine how much time you can leave your money in a jumbo CD without having to access it. Next, compare the APYs offered to find the best available rate. Finally, understand any penalties associated with the account. For instance, how much money would you forfeit if you had to withdraw your funds from your account before the maturity date expires. As long as you have the required minimum deposit and the rates you find are favorable, a jumbo CD can be an effective savings option.
How to buy a jumbo CD
1. Compare rates, terms and conditions for jumbo CDs from banks, credit unions and brokerage firms to find the most favorable options.
2. Complete an application. You’ll need to verify your identity with a government issued ID, social security number and account numbers used to fund the jumbo CD.
3. Deposit or transfer the required minimum amount.
FAQs
Technically, no, unless you prematurely withdraw your funds before the maturity date of the CDs term, incurring early withdrawal penalties.
Jumbo CDs bought through a bank or credit union are insured by either the FDIC or NCUA for up to $250,000 (including compounded interest). If you’re looking to make a larger deposit, you may need to buy CDs at multiple institutions to ensure your total investment is insured.
The major risk with a jumbo CD in the current low rate environment -- and especially one with a longer term -- is that inflation will erode your return.
CD terms vary from three months to five years. Usually, jumbo CDs with longer terms pay higher interest rates. However, there are other types of accounts to consider, including savings accounts, high-yield savings accounts and I bonds.
Simple interest doesn’t take into account compounding over time. Many banks will determine the penalty based on the interest rate in effect on the CD at the time funds are withdrawn. Dividends are profits earned and are determined monthly or quarterly.
Yes, the IRS will tax interest earned on a CD that exceeds $10.
Jumbo CDs typically have terms ranging from one year to five years (although there are some with terms as short as a few months and as long as a decade). And like standard CDs, jumbos can also be renewed once the maturity date expires, meaning that a new term can be initiated with the same account after a grace period ends. That said, a short-term investment can stretch out over a longer period.
Methodology
CNET Reviews CD rates based on the latest APY information from issuer websites. We evaluated CD rates from more than 50 banks, credit unions and financial companies. We selected the CDs with the highest APY for one-year terms from among the organizations we surveyed, and considered rates for shorter terms if one-year terms were identical or unavailable.
Banks surveyed include: Alliant Credit Union, Ally Bank, America First Credit Union, American Express National Bank, Axos Bank, Bank of America, Bank of the West, Bank5 Connect, Barclays, BMO Harris, Bread Savings, BrioDirect, Capital One, CFG Community Bank, Citizens Access, Colorado Federal Savings Bank, Connexus Credit Union, Consumers Credit Union, Credit One Bank, Discover Bank, First Internet Bank of Indiana, First Tech Federal Credit Union, FNBO Direct, GO2bank, Golden 1 Credit Union, HSBC Bank, Huntington Bank, Lake Michigan Credit Union, LendingClub Bank, Live Oak Bank, M&T Bank, Marcus by Goldman Sachs, Merrick Bank, Nationwide (by Axos), Navy Federal Credit Union, NBKC, OneUnited Bank, Pentagon Federal Credit Union, PNC, Popular Direct, PurePoint Financial, Quontic Bank, Rising Bank, Salem Five Direct, Sallie Mae Bank, Santander Bank, SchoolsFirst Federal Credit Union, Synchrony Bank, TAB Bank, TD Bank, TIAA Bank, Truist Bank, U.S. Bank, UFB Direct, Union Bank, USAA Bank, Vio Bank, and Wells Fargo
The editorial content on this page is based solely on objective, independent assessments by our writers and is not influenced by advertising or partnerships. It has not been provided or commissioned by any third party. However, we may receive compensation when you click on links to products or services offered by our partners.
