How to find the best jumbo certificate rates (aka jumbo CD rates)

If you're searching for a low-risk investment and have a large lump sum of funds to invest, a jumbo certificate may suit you. Jumbo certificate rates (aka jumbo CD rates) vary depending on many factors, so it's essential to do your research to qualify for the highest returns. Learn what a jumbo certificate is, how it compares to a traditional certificate, and how to find the best jumbo certificate rates.

What is a jumbo certificate?

A jumbo certificate is a savings product that earns interest on a set sum for a fixed period of time. Jumbo certificates are similar to traditional certificates except jumbo certificates usually require a minimum deposit of $75,000, $100,000 or more. Investing in a jumbo certificate works by opening a certificate at a credit union or bank with a specific maturity date. Once the certificate matures, you'll receive the initial premium back plus interest. The length and payout rate of a jumbo certificate depends on the terms of your agreement. The payout options are also usually more favorable with a jumbo certificate than when compared to a regular certificate.

Who sets jumbo certificate rates?

Individual credit unions or banks set jumbo certificate rates. Financial institutions determine these rates based on current interest rates and other factors, like overhead costs. The credit union or bank may also factor in how much you plan on investing and for how long. Typically, the more you're willing to invest, the higher the interest rate the financial institution will pay.

Most certificates are fixed. Regardless of how much interest rates fluctuate, you'll receive a fixed amount once your investment matures. This characteristic makes jumbo certificates a safe investment. The attractive part about credit unions and banks setting their jumbo certificate rates is they often compete among themselves to sell more certificates. As a result, you can shop around to find the best rates.

Jumbo certificates are a low-risk investment because they are insured up to $250,000. The National Credit Union Association (NCUA) covers deposits and certificates at credit unions and the Federal Deposit Insurance Corporation (FDIC) covers certificates issued by banks.^*

How to find the best jumbo certificate rates

If you plan on tying up your money for a set time with a certificate, you should also get the best rate for your certificate. The following steps can help you find the best jumbo certificate rates:

1. Decide how much you're willing to invest

While the minimum investment for a jumbo certificate is usually approximately $100,000, you may find lower investment requirements with online credit unions or banks. Decide how much you can comfortably invest. In other words, make sure you have enough funds to cover your expenses while these funds are tied up. Once your certificate matures, you will be able to access these funds.

2. Determine how long you're willing to invest

The longer you're willing to invest, the higher the return you'll receive. Even though certificates with longer agreements pay more, investing in one may not be worth it if you'll have to withdraw your funds early. Penalties on jumbo certificates can be expensive, so select a term that matches the timetable of when you’ll need access to your money.

3. Research current rates

Choosing a competitive annual percentage yield (APY) allows you to earn the highest rate for your investment. Shopping around can help you find the best jumbo certificate rate. Consider the economic environment and market conditions. If you expect interest rates to increase soon, you could end up locked into a jumbo certificate, unable to take advantage of the higher return.

4. Review your investment portfolio

Once you know the current certificate rates, you can determine whether a jumbo certificate fits your investment goals. Jumbo certificates are low-risk, which can be a great way to diversify your portfolio. However, the risk makeup of your portfolio depends on your age, income and investment goals. Determine where a jumbo certificate fits in with your financial plans.

5. Learn more about the financial institution

Always choose a federally insured bank or credit union so your funds are protected.

6. Compare certificates

Comparing certificates is easier than ever, as many online sites list the best ones with their current rates. This listing lets you quickly review the credit union or bank, term lengths, APY and minimum deposit. 

Considerations when choosing the best certificate rates

Consider the following additional points when choosing certificates:

• Review payout schedules: Typically, longer terms pay higher rates.
• Compare jumbo certificates against regular certificates: In most cases, jumbo certificates offer better rates. However, comparing the current rates of jumbo certificates versus regular ones may still be worthwhile.
• Consider tax liabilities: Jumbo certificates are taxable like any other investment. Determining how much you'll owe and when is essential when investing in a jumbo certificate.
• Avoid choosing based solely on APY: While APY can be a good indicator of your returns, it shouldn't be the only criterion. Sometimes, choosing a more reputable financial institution with a slightly lower APY may be better than choosing the highest APY.

Shopping financial institutions and comparing rates is the best way to maximize your returns. If you’re ready to save with a certificate, Alliant offers several convenient ways for you to open a regular or jumbo certificate. If you're already an Alliant member, just log in to online banking, select Open a New Account in the left sidebar and follow the prompts. If you're not yet a member, review our Certificates page for steps on how to apply.

Want to learn more saving and investing tips? Check out these other articles:

• Share certificate vs. CD (certificate of deposit)
• A basic guide to certificates (aka CDs) 
• What is a certificate (CD) account? Discover all you need to know 

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^* Your deposits are federally insured up to $250,000 and backed by the full faith and credit of the United States Government.