Dedicated to Deposits: Deals, Data, and Discussion

5.30% 3-Month Brokered CD at TD Ameritrade


Update 1/26/08: The latest funding deadline for this CD is 2/1/08.

TD Ameritrade is offering a special 5.30% APY 3-month brokered certificate of deposit. The minimum deposit is $10,000 and the maximum is $100K. The interest rate is 5.20%.

According to the promotion instructions you open your TD Ameritrade account online, fund the account with at least $10,000 by 1/11/08, they'll email you an access code, and then you'll need to log in and open the CD by 1/14/08.

This is very similar to a CD promotion they had earlier in the year that I reported on last March. A reader asked about the small print which states "Brokered CDs have an extended settlement period of up to two weeks." Another reader provideed this information: "Being one of those deposit brokers, many CDs have a future settle date. Your funds wouldn't set idle with them, but you wouldn't wire them in until the settle date. This is because they end up being part of a much larger Master CD. The receiving bank only has to put one large CD on their books instead of numerous smaller ones."

Here's another important piece of the small print:
Brokered CDs available at TD AMERITRADE are deposit obligations of the issuing bank. As a bank obligation, the CDs, along with other deposits you may hold at the issuing bank, will be eligible for insurance by the FDIC. ... TD AMERITRADE will not be responsible for any insured or uninsured portion of the CD.

A general overview of brokered CDs is provided by Justin at the About's Banking/Loans blog. Here's a description of brokered CDs from the SEC site:
Although most investors have traditionally purchased CDs through local banks, many brokerage firms and independent salespeople now offer CDs. These individuals and entities, known as "deposit brokers", can sometimes negotiate a higher rate of interest for a CD by promising to bring a certain amount of deposits to the institution. The deposit broker can then offer these "brokered CDs" to their customers.

The main risk seems to be the potential loss if you need to sell before maturity. Instead of an early withdrawal penalty, you would sell the CD in the secondary market. The value that you can sell it for may be much less than you would expect. For short term CDs, this doesn't seem to be much risk.

Other TD Ameritrade Promotions

Promotions at TD Ameritrade seem to be very common. You may be able to take advantage of new brokerage account bonuses before opening this CD.

One promotion allows you to earn up to $300. Open the account by 1/31/08 and fund it with at least $25,000, you'll get $100. You'll also get 30 days of commission-free internet equity trades. An additional $100 can be earned by transferring $50K from another brokerage, and an additional $200 can be earned by transferring $100K from another brokerage.

There's also another $100 bonus for opening an account before 3/31/08 and funding by 12 monthly consecutive automatic electronic deposits of $50 or more. First $50 must be deposited within 30 days of opening account.

Thanks to the reader who emailed me info on this CD promotion.

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Comment #1 by Anonymous posted on
Does anyone know which bank is this CD offered by?

Last time I did their promotion, and it was through Morgan Stanley Bank Utah.

Also, to get the bonus using an existing acct, you might only have to transfer 10K of new funds. The code they sent you is not customer-specific. I.e., once you have the code, you can share with family, etc, IMHO.

Comment #2 by Anonymous posted on
Has anyone done this promotion in the past few days? I was wondering if it was still 5.30% APY, even though it says the number is only accurate as of 12/13/07. Also, does anyone have any experience with how long it takes to get funds transfered, if I was trying to get fund there before 2/1/08?