1 Unlike a bank CD, a new issue CD can be traded on the secondary market, 2 meaning it doesn’t necessarily have to be held to maturity. More important, both are FDIC-insured up to $250,000 (per account owner, per issuer), a coverage limit that was made permanent in 2010.īrokered CDs can also be purchased from different issuing banks allowing you to effectively expand your FDIC protection beyond the $250,000 limit in a single account registration type, such as an Individual account or an IRA. Both are debt obligations of an issuing bank and both repay your principal with interest if they’re held to maturity. Both pay a set interest rate that is generally higher than a regular savings account. Because the deposits are obligations of the issuing bank, and not the brokerage firm, FDIC insurance applies.Ī brokered CD is similar to a bank CD in many ways. The CDs are usually issued in large denominations and the brokerage firm divides them into smaller denominations for resale to its customers. Fidelity offers investors brokered CDs, which are CDs issued by banks for the customers of brokerage firms.
