Rachel Louise Ensign

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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 a standard certificate of deposit has long been a popular place to stash money that's seen as pretty low risk because as long as you're under the FDIC deposit insurance limits, your money is considered safe and you are set to earn a certain amount of interest over time.

So you put $1,000 in and the bank says, hey, we will give you 2% for your $1,000 for a year.

So basically, the big picture is that CDs have really fallen out of favor because interest rates have been so low.

So, you know, back many decades ago, they were an extremely popular product.

A huge share of bank deposits were tied up in CDs of all kinds.

And just with the over a decade of very low rates,

Basically, these have fallen out of favor and are now starting to become a little bit more popular as the Federal Reserve starts to raise rates.

So basically, what we're seeing is banks are increasing rates selectively.

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.

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