CD Investing: Revisiting Brokered CDs

The following is a guest post contributed by Charles Rechlin, a long-time reader and friend of the site. His last guest post covered Relationship Rate CDs. I would like to thank Charles for sharing more of his valuable experience on personal CD investing.

Notes on Personal CD Investing: Revisiting Brokered CDs

by Charles Rechlin

Ever since US Treasury yields began improving in November, I’ve been accumulating a modest portfolio of 3-, 4-, and 5-year Wells Fargo Bank CDs.

Because Wells Fargo’s highest posted rate for direct CDs in California is a whopping 55 basis points (its 58-month special, with relationship bonus), I’ve been building this portfolio by purchasing the bank’s highly-competitive, non-callable brokered CDs. Late last month, for example, I bought, through Scottrade, a 3-year new issue CD yielding 1.80% and a 5-year new issue CD yielding 2.30%, using funds from a maturing 2.00% APY San Diego County Credit Union CD.

The purchase of even a small position in brokered CDs outside of my IRA accounts represents a significant departure for me from past investing practices.

Taking Advantage of Recent Higher Rates for Brokered CDs

In a two-part Blog post last summer, I compared my experience investing IRA assets in both direct CDs and brokered CDs. That piece covered the key features of, and some pros and cons of investing my IRA portfolio in, brokered CDs. I indicated that, based principally on the administrative convenience afforded by brokered CDs, I’d moved a large portion of my IRA portfolio from direct IRA CDs into brokered CDs over the last few years.

For my larger non-IRA portfolio, I’ve always gone the other way—establishing CDs directly with banks and credit unions, and eschewing brokered CDs. The principal drawback of brokered CDs, from my perspective, is their limited liquidity—they don’t provide for early withdrawals at the option of the owner, and have a relatively thin market. Also, brokered CD yields are usually lower than the APYs on direct CDs of the same bank with identical maturities.

The principal drawback of brokered CDs, from my perspective, is their limited liquidity—they don’t provide for early withdrawals at the option of the owner, and have a relatively thin market.

This disparity in yields, however, sometimes flips. Because there’s a market for brokered CDs, their rates are often more sensitive to moves in Treasury yields than are those of direct CDs. Occasionally, when Treasury yields are rising, the rates offered on brokered CDs of a bank exceed those posted for the bank’s direct CDs of like maturity.

This has frequently been the case since Treasury rates first began moving up after the November election.

Consider the yields for prominent bank new issue brokered CDs offered through Fidelity, Vanguard and Scottrade during the last week of February, compared with posted rates for direct CDs of those banks:

Capital One—the yields for 3-, 4- and 5-year brokered CDs of Capital One Bank (USA), N.A. were 1.80%, 2.10% and 2.30%, respectively, compared with APYs of 1.60%, 1.80% and 2.00%, respectively, for direct CDs of the same maturities posted online by its affiliated bank, Capital One, N.A.

Discover—the yields for 2-, 5-, 7- and 10-year brokered CDs were 1.55%, 2.30%, 2.45% and 2.70%, respectively, in contrast to 1.30%, 1.76%, 1.95% and 2.20% APYs posted for the respective maturities offered on Discover’s website.

Ally—the yield for Ally’s 3-year brokered CD was 1.80%, while the posted rate for Ally’s online “high yield” 3-year CD was 1.60% APY (for the $25,000+ balance tier).

GS Bank—the bank was offering a highly-competitive 2.30% 5-year brokered CD, while posting a less competitive 1.85% APY for its online 5-year CD.

Sallie Mae—the yield for the bank’s 3-year brokered CD was 1.75%, compared with a posted APY for its 3-year direct CD of 1.60%.

(You can find brokered CD rates by visiting the websites of these broker-dealers and other broker-dealers having online trading platforms, although sometimes you must have an account to access rates. Also, the regular “CD Rates Summary” on DepositAccounts.com provides current top brokered CD rates by maturity, broker and bank.)

Occasionally, when Treasury yields are rising, the rates offered on brokered CDs of a bank exceed those posted for the bank’s direct CDs of like maturity.

Although the recent disparity between brokered and direct CD rates illustrated by these offerings can be explained by the greater market sensitivity of the former, it’s not easy to explain the emergence of Wells Fargo as a leading player in the new issue brokered CD market.

Wells Fargo, which has not posted competitive direct CD rates for several years, seems to have begun offering competitive, standard maturity, non-callable CDs immediately following the Federal Reserve’s initial target Fed Funds rate hike in December 2015. Prior to that time, the bank’s brokered CDs were limited to longer-term instruments subject to early calls and often with step rates.

Today, Wells Fargo regularly offers through online brokers 13-month, 2-year, 3-year, 4-year and 5-year non-callable brokered CDs at yields that beat those of the most competitive Internet bank direct CDs.

It’s not clear to me why Wells Fargo, with its vast nationwide branch network, has chosen to offer these CD yields in the brokered CD marketplace, while denying them to its brick-and-mortar customers. Perhaps it believes that the new issue brokered CD market allows it greater control over funding its requirements for term deposits.

Whatever the reasoning, I’ve been taking advantage of what Wells Fargo has been doing to obtain what I consider favorable yields.

Limiting My Exposure to Brokered CDs

On the other hand, I’m not exactly plunging head-long into brokered CDs for my non-IRA portfolio. Right now, my Wells Fargo CDs (the only brokered CDs I own outside of my IRA) account for less than 2% of my taxable investment assets.

Despite their poor liquidity, brokered CDs actually have a “market value” (displayed on your online account pages) that fluctuates from time to time depending in large part on prevailing interest rates. As a result, you really must be prepared to hold these investments to maturity. There’s no early withdrawal value you can fall back on if you have to exit before maturity.

From a valuation standpoint, I do take some comfort, however, in what is variously called the “conditional put,” the “death put” or the “survivor option,” a feature normally found in direct CDs as well. The “Certificate of Deposit Disclosure Statement” Scottrade provides to investors describes this as follows:

“In the event of death or the adjudication of incompetence of the owner of a CD, early withdrawal of the entire CD will generally be permitted without penalty.”

The use of the loaded word “generally” makes the comfort I get from this language somewhat colder than it otherwise might be. I suppose to fully understand this weasel wording would require drilling down on paperwork and market practices, broker-by-broker, bank-by-bank, to an extent I haven’t the energy to do.

(Then again, many early withdrawal disclosures for direct bank CDs, requiring prior bank consent and/or allowing the bank to amend terms of CDs, including EWPs, also leave me feeling a bit chilly.)

Anyway, because I believe interest rates will continue to rise (which will inevitably lower the “market value” of—but not the balance due on—my brokered CDs), and because I’m relatively certain that the current disparity between brokered and direct CD yields will flip again, I’m taking it slow and easy. With this cautious approach, I expect that brokered CDs, while a viable investment option for me from time to time, will never constitute a large part of my non-IRA CD portfolio.

FJL49855 | Mar 13, 2017 | Comment #42

The way I understand it, one also has to watch the FDIC limit of 250k per bank when buying brokered CD's. This could be a problem when investing larger amounts forcing one to buy CD's from other banks or credit unions. For example, once a total of 250k is invested in Wells Fargo CD's from any combination of Wells Fargo CD offerings, brokered or not, the FDIC insurance is maxed. BTW I still think there is a place for "taxable" muni bonds in tax deferred accounts for a little better yield. Schwab has a good selection of taxable muni bonds.

DOA | Mar 13, 2017 | Comment #43

#42, can you inform me on where you got your information on the FDIC limit rule that you are explaining?

DOA | Mar 13, 2017 | Comment #44

#42, Maybe you are talking about single ownership (without POD) on the FDIC coverage or are you saying that you cannot assign POD beneficiaries to the brokerage and direct "same bank" accounts to achieve greater than the $250K FDIC insured amount?

Simion | Mar 13, 2017 | Comment #45

Yes, I think that is what #42 means.

FJL49855 | Mar 15, 2017 | Comment #58

https://www.fdic.gov/consumers/consumer/news/cnspr13/cdsfrombrokers.html

Also with pass-through insurance, a consumer’s brokered deposits are added to any traditional deposits he or she has at the same bank for purposes of calculating coverage. So, if your combined brokered and traditional deposits at a single bank exceed $250,000, you should call the FDIC to discuss your coverage.

LuvCD | Mar 15, 2017 | Comment #59

To supplement #58....if an ira brokered cd that matures much later than 701\2 , talk to tax person for rmd advice

ChasR | Mar 13, 2017 | Comment #46

There's no way around the $250k per bank limit for IRA accounts.

As for non-IRA accounts, I believe most brokers allow an individual to set up a TOD (transfer on death) account. My standard Scottrade disclosure says these are recognized as "informal revocable trust" accounts by the FDIC for insurance purposes so long as the beneficiaries are identified on the broker's records. I've never gotten to the point of needing to use one, but may need to in the future.

LuvCD | Mar 13, 2017 | Comment #48

And, when coupled with the desire I have found when making time/irregular QCDs during the year AND taking regular taxable distributions toward the end of year (on the latter, when? After looking at other taxable income and determining THEN what amount to take to stay in the lowest tax bracket) brokered IRA CDs is a non-starter (generally) for anyone over 70 1/2 who wants flexibility.

However, I'm still looking for a listing of banks that have non-IRA brokered CDs. Why? I have several institutional CD accounts and I want to see if those institutions (or others) are from time to time are offering higher rates on a brokered CD. I would not be a happy if that is the case

DOA | Mar 13, 2017 | Comment #49

I think to see a listing, you have to have an online account with the brokerage firm. Another possible alternative would be to visit a Schwab or other brokerage firm location and they could probably show you a current listing of bank cd's that they offer.

Maecl | Mar 13, 2017 | Comment #50

You can see a list of named bank CD's offered at Vanguard. You need a brokerage account to buy them. There are no fees unless you buy on the secondary market.

LuvCD | Mar 14, 2017 | Comment #51

DOA..." current listing of bank cd's that they offer." I'll try that but. And Maecl, that is the same going from a broker toward the CD rather than the other way, i.e. Bank to broker

Maecl | Mar 14, 2017 | Comment #52

I don't know what you mean by "bank to broker". The following link will explain the difference in brokered and band cd's.
https://personal.vanguard.com/us/content/Funds/FundsCertOfDepositOVContent.jsp
Until you understand a brokerage account stay with banks. When you're ready go to a low cost company like Vanguard.

LuvCD | Mar 14, 2017 | Comment #53

Have a bank CDs and then find a broker or the reverse, i.e. have a broker and find a bank with the CDs

Maecl | Mar 15, 2017 | Comment #54

You don't do both. If you get a CD at a bank you keep it at the bank. If you open a brokerage account you can buy a CD through them and it stays in your account at the brokerage. You don't move between bank and brokerage. Not Ever.

The financial institution, product, and APY (Annual Percentage Yield) data displayed on this website is gathered from various sources and may not reflect all of the offers available in your region. Although we strive to provide the most accurate data possible, we cannot guarantee its accuracy. The content displayed is for general information purposes only; always verify account details and availability with the financial institution before opening an account. Contact [email protected] to report inaccurate info or to request offers be included in this website. We are not affiliated with the financial institutions included in this website.

Comments

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71 Comments.

ChrisCD | Mar 10, 2017 | Comment #1

As to potential reasons why banks use brokered CDs: 1) Others are doing the marketing for them 2) They don't have to worry about the CIP 3) They are probably booking a single $5MM to $10MM CD so much less paperwork, less checks/wires in, less interest payments out, and at maturity less wires and checks out.

cd :O)

ChasR | Mar 11, 2017 | Comment #10

Thanks. It just strikes me as odd that a too-big-to-fail bank relies on little brokerages like Scottrade to sell its CDs. But then, I never worked in the banking business and don't pretend to understand its economics. The only economics I care about are my own.

Bozo | Mar 10, 2017 | Comment #2

Charles, my main complaint with brokered CDs (IRA, or otherwise) is the lack of compounding. By definition, all the interest gets "swept", and then, you have to figure out what to do with the sweep account. But then, we've had this discussion before.

Folks with brokered CDs at Vanguard, Fidelity, Schwab (pick 'em) soon find out what the lack of compounding costs. Your interest payments get dumped into an account yielding something just north of zero. Then, periodically, you need to re-invest that account into something else. It's a paperwork nightmare.

I'll pass.

DOA | Mar 11, 2017 | Comment #8

I like the interest to compound also, but if the rate is hgh enough, the higher rate offsets this disadvantage. And if rates are on the rise, then you will be glad that the interest did not compound and then you can reinvest the interest in a higher rate cd. As far as a paperwork nightmare, I think in an overall comparison, the paperwork nightmare might be even worse with direct cd accounts.

ChasR | Mar 11, 2017 | Comment #9

One way I think about it that the absence of reinvestment for brokered CDs is really no different than what you face if your buy a Government Note or corporate bond. You only get a compounding with deep discount or zero coupon obligations, which provide you little or no cash flow. Anyway,we have had this discussion before,and we all have to pick our own poison.

Catdog | Mar 11, 2017 | Comment #21

Another advantage of buying brokered cd's on the secondary market thru a broker is buying them at a discount to par. & they usually mature before 5 years. Example: as of this writing I can buy a 2.3% Capital One 5 year CD (maturing a few weeks before 5 years) for 98.9 plus $2/1000 commissions (Fidelity is $1/1000) & accrued interest which is still cheaper than buying a new issue at par. If you want monthly pay instead of semi-annual, Wells Fargo 2.3 secondary is 99.450 + commissions & accrued interest. If you use CDs for income as I do, & intend to hold until maturity, buying a 4 yr 11 month CD at a discount to par saves money, even adding commissions & accrued interest (which is deductible from actual interest received).

DOA | Mar 10, 2017 | Comment #3

Thanks for the article. I hope you might sometime include buying secondary issues and the tax consequences that may exists since the brokerage firm now reports yearly amortization on 1099-int forms.

Bozo | Mar 10, 2017 | Comment #4

DOA, buy on the secondary market at your peril. In a rising-rate environment (which we are now in), brokered CDs act like bonds. As rates go up, the value of brokered CDs goes down. To make matters worse, there's the brokerage fee.

I am not a huge fan of brokered CDs, as you might guess.

CDman | Mar 10, 2017 | Comment #5

The value of any CD goes down as rates go up , brokered or not, just in case you didn't know. If you hold to maturity its not an issue

Bozo | Mar 11, 2017 | Comment #12

CDman, while technically correct, you must understand the market for brokered CDs is somewhat inefficient. Unlike equities or bonds, the market for brokered CDs is quite illiquid. First, you pay a penalty for the spread. Then, you pay another penalty for the broker fee. After you get done paying the hit for rising interest rates, you get a check. Not my cup of tea.

Att | Mar 10, 2017 | Comment #6

Vanguard does not charge brokerage fees on CDs. The minimum is 10k

DOA | Mar 10, 2017 | Comment #7

The brokerage fee is built into the cd. So if you buy a new issue that gets 2.3% rate YTM, then that is what you get. You pay no additional fees to the broker. Sometimes, you can get even a higher rate when buying a secondary issuue. I am a huge fan for the highest rate that I can get. Whether it be brokerage or direct.

Att | Mar 11, 2017 | Comment #19

Fees are built into any product or there are spreads for profits. My statement was that there are no "brokerage fees" which is fact. You pay "brokerage fees" when you buy most bonds and of course stocks. Brokerage fees are not that high. Munis are $1.00 per bond minimum of $10. A stock trade for me is $3.

It is also easy to open a brokered CD. No credit check or sending in documentation. No CU account with $5 to open. Of course you don't compound interest or can close early like some non brokered CDS. I have 2 brokered CD'S paying 3.25% and very satisfied with that.

Bob McKenna | Mar 11, 2017 | Comment #11

As usual, Charles is brilliant in his observations.

Bozo | Mar 11, 2017 | Comment #13

Bob McKenna, some might agree that brokered CDs are good. Others might not. Charles and I have argued this issue many times. He likes brokered CDs, I don't.

We respectfully agree to disagree. Should you like a brokered CD, then by all means, buy one.

LuvCD | Mar 11, 2017 | Comment #15

Bozo, on your recent penfed Forum post...if you check your credit reports you may find they requested an earlier report! A hit! Even if a freeze in place!

LuvCD | Mar 11, 2017 | Comment #14

I'm confused.
If one is over 701/2 why would any individual want a brokered ira cd since QCDs, among other things, could not be managed?
Who is the issuer of brokered CDs...if underlying bank (for fdic purposes) then ...why is the bank, the issuer, paying more than its non-brokered CDs? If a bank is paying more, why does anyone do business with any bank that is the issuer of brokered CDs, I.e.pay non customer a higher rate?
HELP! Thanks to all!

ChasR | Mar 11, 2017 | Comment #22

LUV CD:
I think your questions are addressed, mostly, in the two-part article I did that Ken linked in this piece.
RMDs and QCDs can be managed in a portfolio brokered CDs by scheduling maturities carefully and/or selling CDs the portfolio.
The FDIC-insured bank is the "issuer" of the CD, although there are complicated depository arrangements so that only the broker (and the FDIC) knows who the owner of the CD is.
As for banks paying a higher rate on brokered CDs, this is not typical and, as I said in the piece, it flips back and forth. I don't want to have too many brokered CDs, however, because of the various negatives about them which Bozo and other readers are not shy about pointing out.

ChasR | Mar 11, 2017 | Comment #23

I've got sticky computer keys this morning. In my second sentence, the word "of" should appear before "brokered" and the word "in" before "the portfolio."

LuvCD | Mar 11, 2017 | Comment #24

Thanks for feedback!

LuvCD | Mar 31, 2017 | Comment #70

ChasR, thanks. Not practical to have brokered ira cd over 701/2...b/c giving through QCD is throughout the year, rates best for longer terms, and finally to target my year end tax bracket I would have to see "where I'm at with all income in December " in order to see what tax bracket I want to be in and thus take an appropriate distribution...like I said not too practical.

Seeker | Mar 11, 2017 | Comment #16

Brokered CD’s are twice blessed: FDIC insurance and have been adjudged securities. As to the latter they are subject to the anti-fraud provisions (and remedies) of state and federal securities laws.

Bozo | Mar 11, 2017 | Comment #17

Seeker, if you like brokered CDs, then, by all means, go for them. The nice thing about this blog is that everyone can have an opinion. I might like "X", you might like "Y", but you are free to choose your dancing partner. And so am I.

Bogey | Mar 11, 2017 | Comment #18

Exactly. That applies to choices of banks, CUs, investments, etc.
And as we have seen, individual experiences with the same financial institutions vary as well.

LuvCD | Mar 11, 2017 | Comment #20

Bozo, did you see note by #15?

Bozo | Mar 11, 2017 | Comment #25

I saw your post (#15), but was totally flummoxed by it. Perhaps you could clarify. Feel free to PM me.

LuvCD | Mar 11, 2017 | Comment #27

PM? The question you posed on the Forum (I don't belong) is why is PenFed sending you marketing/promotional material/items? I'm suggesting that they are looking at various account holders with them, pulling a credit report, and then sending out a solicitation. All without the account holders knowledge until one pulls the "right" credit report/agency to see if PenFed is listed as making an inquiry. Then...if one has opted out of all promotional material, has no credit cards, etc. (i.e. a creditor to PenFed) AND perhaps a freeze in place at that agency...how did PenFed "break the system?" Again, that may be what you're looking at. The worst option is not to having seen the solicitation and know that a hit was made on your report, credit score, w/o your consent.

Bozo | Mar 12, 2017 | Comment #29

LuvCD, OK, now I understand. What disturbed me about the e-mail solicitation was an apparent discrepancy in phone numbers. The number listed to call was different from the number for PenFed, so I got suspicious. Ken clarified by noting that PenFed (as many financial institutions) refer business to outside consultants. I neither called the number, nor clicked on any link.

Bozo | Mar 11, 2017 | Comment #26

Bogey, the debate over brokered versus retail will rage on long after we are all dead. The best argument (for brokered) I have ever seen is convenience. Custodian-to-custodian IRA CD transfers are truly a pain. The paperwork is a fiasco. Chasing a few basis points here or there is problematic. Charles makes excellent points, and I'm just about at the tipping point (of going with brokered). But, not quite.

The issue, as always, is compound interest. When brokered CDs finally get their act together and compound interest, it will be an easier decision.

Just my $.02.

ChasR | Mar 11, 2017 | Comment #28

One good thing is that the brokered CD topic is always bound to stir controversy among DA.com readers. There are other topics I could mention, but I'm afraid that if I do, Ken will delete this comment for being "off topic."
Just kidding, of course.

Bozo | Mar 12, 2017 | Comment #30

Charles, the irony is that the conversation over "brokered versus retail" is somewhat arcane. Esoteric would be an understatement. The topic stirs controversy among, what, three or four on the planet? But I do enjoy your posts.

Bogey | Mar 12, 2017 | Comment #31

Comment #17 covers it rather well. To carry it any further than that is ridiculous. Sort of like: "it is to, it is not" childish argument. And of course one or the other kid has to have the last word.

ChasR | Mar 12, 2017 | Comment #33

You're probably correct. However, credit default swaps, CMOs and CDOs were extremely esoteric as well--so much so that almost no one understood how they worked, and they almost destroyed our financial system and economy.

Anony | Mar 12, 2017 | Comment #32

We have a Schwab non-IRA account with over 1/2 million in brokered CD's. I never have a problem finding a home for the interest (every six months). I've bought and sold certain stocks during slumps, while picking up dividends along the way. I've also reinvested interest in additional brokered CD's. It's all a matter of risk/reward. By all measures we should have stayed in the market because we can afford losses. However, my wife wanted to preserve capital with the least risk and that made CD's a logical choice.

deplorable 1 | Mar 12, 2017 | Comment #34

Excuse me but isn't there fees associated with brokered CD's? Not only that but you can build a ladder using credit union and bank CD specials with better yields for free using this site. My current set of CD's and rates:
1. Vibe credit union 2.5% APY 5 yr. CD special with 3.5 years to go.
2. Nationwide bank 2.32% APY 5 yr. CD special with 2 years left.
3. Navy Federal CU 2% 17 month CD special just opened.
I'm waiting for a 3% 5 year special which will be coming after the March FED hike most likely to ladder up.

Anony | Mar 12, 2017 | Comment #35

No fees on my brokered CD's. The rate is fixed over the life of the CD. A 100K CD at 3% pays $1,500 every six months. We've been buying 10-year CD's for awhile so a ladder has developed on its own. One thing I like is I don't have to worry about automatic rollovers by the institution. Some ask at issue time what you want to do with the money when it matures. Others do not give you a choice...you must come in at maturity and decide then. I asked what if I was in a foreign country at maturity and was told if I could prove it was me maybe I could do it over the phone. This practice (of trying to keep your money locked up in their bank/CU) should be ILLEGAL. All CD owners should be given options! Brokered CD's provide convenience, simplicity and safety.

Att | Mar 12, 2017 | Comment #36

Keep your options open. Brokered CDS are an option. Sometimes you kind find some good rates.

LuvCD | Mar 12, 2017 | Comment #37

As a newbie to brokered CDs, I'm interested in seeing what new or secondary issues for a particular bank. Is there an easy one place to go and find out who is offering brokered CDs for particular bank?

Att | Mar 13, 2017 | Comment #38

Do you have a brokerage account with anyone? They should have a listing of brokered CDs they offer. Vanguard has good information on brokered CDs and also has a large selection of new and secondary market CDs

LuvCD | Mar 13, 2017 | Comment #39

No current accounts. To clarify I'm looking for particular banks, not what a specific broker may be offering/have. Vanguard does not have/list for the banks I'm interested in

??? | Mar 13, 2017 | Comment #40

You keep saying particular banks.
Throw us a bone were not mind readers.
The old sugar vs vinegar thing

ChasR | Mar 13, 2017 | Comment #41

I've never found a source of available new issue or secondary market CDs outside the trading platforms of online brokers. Incapital LLC, a financial intermediary which puts together bond and CD deals for some issuers, has a weekly online listing of new issue bonds and CDs in its wholesale program, but this is slim pickings. Far more deals appear on Fidelity and Vanguard.

Att | Mar 13, 2017 | Comment #47

I believe with Vanguard you have to have an account to look at brokered CD'so. The institutions they list change constantly. The past couple of weeks they have had Chase and Wells Fargo as well as others. I have 2, one with BOFI and the other GE Capital bank now GS bank. #42's comment about FFIC coverage should be noted. Why are you interested in a particular bank?

ChasR | Mar 15, 2017 | Comment #55

For anyone still reading the comments to this piece, I just saw that, on Vanguard, the latest Wells Fargo non-callable, new issue CD yields are 1.85% for three years and 2.40% for five years. Hopefully, tomorrow's Fed rate hike will bump up Treasury yields a bit more and brokered CD yields will follow suit.

DOA | Mar 15, 2017 | Comment #56

Hopefully, rates will go up. For any of those that got the early issues of the Treasury Ibonds, they sould be a happy camper. Those good fixed rates that they once had probably are gone forever.

LuvCD | Mar 15, 2017 | Comment #57

Chas... still reading. Your post highlights the "need" for us to do due diligence before buying brokered CDs AND most importantly ANY bank CD. Putting aside the ethics (or absence thereof) of Wells over the last couple of years..why would anyone use Wells for direct purchase CDs? Their rates are not even near what Charles posted in #55. Why does Wells treat its "direct" customers with such disdain!

Ken,et al...could there be a one stop place to see which banks have sold/issued brokered CDs? Otherwise how are "we" to know IF the DA rates are the best for CDs by/through a particular bank?

Bogey | Mar 16, 2017 | Comment #60

Some people make investing in CDs way more complicated than it actually is whether they are directly through a bank or Cu or brokered CDs. It's really very simple decision process. Though, reaching for the highest interest rates is always a moving target.

LuvCD | Mar 16, 2017 | Comment #61

#60...that's what the issuers want you to think. For example, on brokered IRA CDs how many fully disclose the pitfalls if an individual purchases a long term brokered CD and is required out of that CD to make QMDs...annually OR wants to take advantage of QCDs? One can't do it unless they sell the CD on the market at the then current price (loss or gain) and then, takes the QMDs, and then does it again the next year...that's not one is usually looking for in the post-701/2 age environment.
Have fun... thinking it is all very simple! Finally, ask your issuer of regular CDs and/or Brokered CDs...all in IRAs...how many customers approach them about making QCDs? I have been the only one for several issuers! And, your survey is...

Anony | Mar 17, 2017 | Comment #62

#61... Most brokered CD's are relatively simple. Biannual interest for your cash. No EWP. Secondary market sale possible. Nothing more, nothing less. It's up to you to manage the consequences of your decision. It's not rocket science.

LuvCD | Mar 17, 2017 | Comment #63

#62 Not IRA brokered CDs

Anon-LA | Mar 27, 2017 | Comment #65

Today, 3/27/17 I noticed that the Wells Fargo 13 mo & 18 mo brokered CDs are no longer available, perhaps entirely subscribed, a settlement date of 3/29 (Thursday). I'm new at this, so perhaps the WF rates were clearly above the competition. I'll watch for good rates again, any suggestions?

LuvCD | Mar 27, 2017 | Comment #66

What were the brokered CD rates and the corresponding term rates for direct CDs with the bank?

Anon-LA | Mar 28, 2017 | Comment #67

Today, 3/28/17 Wells Fargo has new CDs dated 4/12/17. The 13 mo is 1.25%, and the 18 mo is 1.5%, above what the competition is offering. Thanks, LuvCD

LuvCD | Mar 28, 2017 | Comment #68

anon-LA...And the brokered cd rate (and direct cd rate) from WF for same term was/is??

LuvCD | Mar 28, 2017 | Comment #69

Got it (somewhat) from Charles' post above...brokered "new issue CD yields are 1.85% for three years and 2.40% for five years." Thus over .5 percent haircut if buying directly from Wells Fargo! WF must not like customers! Or is there an apple to apple comparison?

Joe4CDs | Nov 7, 2017 | Comment #72

I've been using FDIC insured brokered CD's for a few years now, for IRA, Roth, and non retirement funds. Mostly through Schwab, but also TD Ameritrade. Rates are very competitive, and often even better rates by buying secondary CDs. Sometimes paying a premium in the secondary for a higher rate seems to be a good way to put "spare change" to work. By monitoring how much is invested with each issuer, you can avoid exceeding FDIC insurance. Best 5 yr coupon when checked 10/30/2017 was 2.4%, which means if you can aggregate your coupon payments and reinvest, the APY is even higher. Yes, you may be able to beat this on the margins going direct through banks, but with a large retirement fund to manage, the broker approach seems much more manageable.

CDinterest | Nov 7, 2017 | Comment #73

Having everything at one brokerage is a real time saver. I often take the interest, find a good dividend payer and diversify. I'm sitting on $50K (CD interest and additional personal savings) and have yet to decide on a new CD or dividend paying stock.

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