An article in today's St. Louis Post-Dispatch discusses some useful strategies for a CD investor. In addition to CD laddering, it looks at brokerage CDs. One advantage of brokerage CDs is that you can spread your money among many banks as part of one brokerage account and stay within the FDIC limits. This can simplify your record keeping. Also, you can often get better rates than available from local banks.
The main problem with brokerage CDs is if you have to make an early withdrawal. In that case you would have to sell the CD in the secondary market. You could lose some principal as this guy experienced. If you keep the maturities short, this shouldn't be an issue. Charles Schwab is currently offering a 5.35% APY 3-month CD.
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