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
Subject to applicable limits.
Bank deposits and CDs are guaranteed (within limits) as to principal and interest by an agency of the federal government.
All investing is subject to risk, including the possible loss of the money you invest.
Diversification does not ensure a profit or protect against a loss.
There may be other material differences between products that must be considered prior to investing.
All brokered CDs may fluctuate in value between purchase date and maturity date. CDs may be sold on the secondary market, which may be limited, prior to maturity subject to market conditions. Any CD sold prior to maturity may be subject to a substantial gain or loss. Vanguard Brokerage does not make a market in brokered CDs. The original face amount of the purchase is not guaranteed if the position is sold prior to maturity. CDs are subject to availability. As of July 21, 2010, all CDs are federally insured up to $250,000 per depositor, per bank. In determining the applicable insurance limits, the FDIC aggregates accounts held at the issuer, including those held through different broker-dealers or other intermediaries. For additional details regarding coverage eligibility, visit fdic.gov. Vanguard Brokerage imposes a $1,000 minimum for CDs purchased through Vanguard Brokerage. Yields are calculated as simple interest, not compounded. Brokered CDs do not need to be held to maturity, charge no penalties for redemption, and have limited liquidity in a secondary market. If a CD has a step rate, the interest rate of the CD may be higher or lower than prevailing market rates. Step-rate CDs are subject to secondary market risk and often will include a call provision by the issuer that would subject the investor to reinvestment risk. The initial rate of a step-rate CD cannot be used to calculate the yield to maturity. If a CD has a call provision, the issuer has sole discretion whether to call the CD. If an issuer calls a CD, there is a risk to the investor that the investor will be forced to reinvest at a less favorable interest rate. Vanguard Brokerage makes no judgment as to the creditworthiness of the issuing institution and does not recommend or endorse CDs in any way.
For additional information with respect to CDs, see the Certificate of Deposit Disclosure Statement (PDF).
Additional information is available at fdic.gov.
Vanguard Brokerage Services (VBS) has provided availability to the alternative trading systems operated by Tradeweb Markets LLC ("Tradeweb") and to other content provided by Tradeweb. Tradeweb provides access to certain municipal bond information from DPC DATA. Tradeweb and DPC DATA are third parties and are not affiliated with VBS. While VBS provides access to Tradeweb's alternative trading systems, VBS has no control over actions taken by Tradeweb.
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Securities in your brokerage account are held in custody by Vanguard Brokerage Services, a division of Vanguard Marketing Corporation.
Vanguard Marketing Corporation is a member of the Securities Investor Protection Corporation (SIPC), which protects securities customers of its members up to $500,000 (including $250,000 for claims for cash). Explanatory brochure available upon request or at www.sipc.org.
VBS maintains additional coverage through an insurer. Account protection, either under SIPC or the additional insurance maintained by VBS, does not cover fluctuations in the market value of the investments in your account.
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