Rachel Louise Ensign

speaker

574 appearances 12 recordings 1 series first heard Jan 2018 last heard Jan 2024

Rachel Louise Ensign’s voice in public audio — every appearance, attributed to the second.

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WSJ Your Money Briefing · ‘Brokered CDs’ Offer Interest Rates Well Above Regular CDs · 26 Oct 2022 podcast

So they are increasing rates on what we think of as the traditional CDs, like you go to the bank website and look for a CD.

But where they are giving the best rates are on these products called brokered CDs where you don't buy them directly through the bank.

The bank sells them through brokerage firms like Fidelity or Schwab or TD Ameritrade.

I did speak to a consultant who works with the banks on setting their deposit pricing.

And he basically said, hey, these banks are seeing money from their wealthiest customers be more rate sensitive, meaning these folks have already started to move their money for a higher rate.

And they're trying to hang on to the deposits of wealthier people, which they can get through these brokerage firms.

Broadly, banks have been very reluctant to increase interest rates on deposits of all kinds.

And on one end of the spectrum, you kind of have the traditional savings account, which at many banks is still really yielding almost nothing.

But on the other end of the spectrum...

you have these brokered CDs where the banks are finally starting to pay up in pretty significant amounts.

So if you're looking for yield, you're probably not going to get it at a traditional bank on your savings account.

In most cases, where you are going to get it is if you go into your brokerage account and look and see if that same bank is offering a brokered CD.

The difference can really add up.

So one example that we have in the story is JP Morgan was offering a rate of about 2% on a one-year CD to most of their regular customers through their website.

But on Fidelity, they were offering a really similar product at about 4.5%.

So over the course of a year, if you have $100,000 you want to put somewhere safe, that's a difference of about $2,500.

No, you do not actually.

So CDs of all kinds typically do have minimum deposit amounts.

A lot of the brokered CDs, it's about $1,000, though Fidelity does actually have a product now where you can buy like a part of a CD with a lower minimum.

And there are minimum deposit rates on the CDs from the banks, too.

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