What are CDs?
Vanguard Brokerage offers brokered CDs, which are issued by banks for customers of investment and brokerage firms. CDs are bank deposits that offer an interest rate for a certain period of time. The issuing bank agrees to return your money on a specific date.
Benefits of CDs
Note: Brokered CDs also carry risk. For more information on these risks, refer to the "What are the risks of certificates of deposit?" and "Can I lose money when I invest in brokered CDs?" questions below.
We offer a variety of FDIC-insured brokered CDs with different maturity terms and rates
We offer a variety of FDIC-insured brokered CDs with different maturity terms and rates. Find the right one for you.
| Maturity term | 1-3 months |
4-6 months |
7-9 months |
10-12 months |
13-18 months |
2 years | 3 years | 4 years | 5 years | 7 years | 10+ years |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Yield | — | — | — | — | — | — | — | — | — | — | — |
| Maturity term | Yield |
|---|---|
| 1-3 months | — |
| 4-6 months | — |
| 7-9 months | — |
| 10-12 months | — |
| 13-18 months | — |
| 2 years | — |
| 3 years | — |
| 4 years | — |
| 5 years | — |
| 7 years | — |
| 10+ years | — |
Certificate of deposit fees and minimums
We offer 2 ways to buy brokered CDs through our platform:
- New issues
- Secondary trades
New issues are purchased directly from banks.
Investment minimum: $1,000, with additional purchases in increments of $1,000
Fee: $0
Secondary trades are transactions with another market participant, not the issuing company or agency. It's similar to buying a used car. When you sell a security, you get the proceeds. But if you buy one, the proceeds go to the seller.
Investment minimum: $1,000, with additional purchases in increments of $1,000
Fee: $1 transaction fee per $1,000 CD ($250 maximum)
Note: Vanguard Brokerage charges an additional $25 broker-assisted fee for secondary trades placed over the phone. See the commission & fee schedules for exclusions.
We offer 2 ways to buy brokered CDs through our platform:
New issues are purchased directly from banks.
Investment minimum: $1,000, with additional purchases in increments of $1,000
Fee: $0
Secondary trades are transactions with another market participant, not the issuing company or agency. It's similar to buying a used car. When you sell a security, you get the proceeds. But if you buy one, the proceeds go to the seller.
Investment minimum: $1,000, with additional purchases in increments of $1,000
Fee: $1 transaction fee per $1,000 CD ($250 maximum)
Note: Vanguard Brokerage charges an additional $25 broker-assisted fee for secondary trades placed over the phone. See the commission & fee schedules for exclusions.
- New issues
- Secondary trades
Want to explore cash alternatives?
How to buy a brokered certificate of deposit
When does a brokered CD pay interest?The issuing bank determines when it will pay interest on the brokered CD. Generally, interest is paid at maturities of one year or less. Sometimes banks pay interest monthly. For maturities beyond one year, banks may pay interest semiannually, quarterly, or monthly. To see the payment schedule, select the issuing bank and review the description. |
What happens when my brokered CD matures?Your principal and interest go into your settlement fund and become available as cash. The brokered CD will no longer appear in your account as a holding. |
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Frequently asked questions
The answer depends on the interest rate of the product you're investing in. For example, if a hypothetical investment product earns 5% interest in 1 year, at the end of that year, your investment would be worth $10,500. (Your initial $10,000 investment plus $500 in interest.)
We ensure that any brokered CD we offer passes a credit-quality test and is FDIC insured.
Yes, you'll get coverage for up to $250,000 in brokered CD purchases from each bank that sells you brokered CDs through us. You're responsible for monitoring the total assets you hold at each bank for FDIC coverage and limitations. FDIC deposit insurance protects bank customers in the event that an FDIC-insured depository institution fails. Additional information is available at fdic.gov.
Brokered CDs face both inflation and interest rate risk. Inflation risk means the rate at which you earn money through a CD could be lower than the rate of inflation. Interest rate risk is the risk that you might earn less money from your CD if interest rates go up after you've locked in your money at a lower rate.
Yes. If you stay invested until term maturity, you won't lose your principal. But if you look to get out early, you could lose money.
Brokered CDs don't have early withdrawal penalties like bank CDs. To get out of a brokered CD early, you have to sell it. Brokered CDs' values can change based on the interest rate environment. So if your brokered CD has decreased in value when you go to sell it, you will lose money.
Brokered CDs are like bank CDs, but instead of being purchased directly through the issuing bank, you buy them through brokerage firms like Vanguard Brokerage. Key differences include:
- Secondary market trading
- Potentially higher APY
- May cost more or come with higher fees
Vanguard Brokerage sells brokered CDs only. Individual banks may offer CDs, but they're not brokered CDs. If the CD isn't a brokered CD, Vanguard Brokerage can't purchase or hold the security. At Vanguard Brokerage, brokered CDs are bought and sold through a dealer network, which has over 100 dealers nationwide.
Callable refers to the right of an issuing bank offering a brokered CD through Vanguard Brokerage to terminate the CD on a date prior to maturity. If the brokered CD is called, you'll receive your principal plus any accrued interest from the settlement date up to, but not including, the call date. For a noncallable brokered CD, if you hold it until term maturity you'll receive your full principal plus any accrued interest from the settlement date up to but not including the maturity date.
Your brokered CD generates simple interest based on the payment frequency of the issuing bank. Once the interest is earned it goes directly into your settlement fund in the account in which you purchased the brokered CD.
Brokered CDs start accruing interest on the settlement date. That's the date on which the money from your settlement fund is sent to the issuing bank to complete your purchase.
Yes. The minimum dollar amount to purchase a brokered CD is $1,000, and you can purchase them in $1,000 increments. Vanguard Brokerage does not charge a commission for brokered CDs purchased on the primary market, although it may receive a concession from the issuer. Commissions will be charged for transactions on the secondary market. Sales of existing CD positions are commission-free.
Note: Vanguard Brokerage charges an additional $25 broker-assisted fee for secondary trades placed over the phone.
See the commission & fee schedules for exclusions