It can sometimes be quite challenging to save money for an extended time. It gets confusing when you factor in the fact that numerous places offer certificate of deposit services, although they all have different risk levels.
This post sheds more light on the comparison between bank certificates of deposits otherwise known as Bank CDs and the brokered certificate of deposit. You should have a more clear perspective on these two forms of deposits to help you make the right decision for your money.
Bank CDs and Brokered CDs
The first thing that comes to mind when you hear about CDs is probably Bank CDs. You can easily purchase this certificate of deposit on the internet or through your bank.
Brokered CDs, on the other hand, are first acquired by brokerage companies who then sell them to their clients. With brokered CDs, there is always a significant amount of risk attached, not to mention their heftier fees.
What Do Brokered CDs Bring to the Table?
Perhaps the most significant advantage of brokered CDs is that you can make larger deposits across several banks. However, you will be doing so with the help of the brokerage firm which opens you up to the risk of making massive losses, especially if you decide to sell off your certificate of deposit early.
This is primarily as a result of the higher interest rates accrued through this CD. The differentiating factor between brokered CDs and Bank CDs is in the way in which they’re marketed. The banking institutions themselves market bank CDs while the brokered CDs have to pass through a brokerage firm.
How Do Bank CDs Work?
Acquiring bank CDs is easy. All you have to do is visit your local bank and purchase Bank CDs. Alternatively, you could choose to acquire them through online platforms from virtual banking institutions. However, when the time comes when you want to get out early, you will have to part with a portion of the interest.
The good thing is that you will end up with all your capital. It would be necessary to first enquire about a CD before committing yourself to a purchase. For instance, some have a minimum limit for investment, usually between $500 and $1000. Having such knowledge is vital in understanding where you’ve put your capital.
Bank CDs are the Sure Way to Go
Choosing a brokerage firm would require you to invest a considerable sum of money for you to have grounds to go that way. However, for most customers, bank CDs offer way more security hence their growing popularity. Heritage Bank is here to equip you with all the knowledge you need on investing in Bank CDs. Contact us today for all your investment needs.
Tom serves as the Financial Consultant for Heritage Bank. In partnership with LPL Financial Services, he assists individuals, families and business owners with all aspects of financial planning including retirement.
LPL Financial Consultant • 678-284-3302 • [email protected]