Jumbo CDs are one of the most versatile tools for savers. If you're sitting on $100,000 and want to diversify some of your holdings into a savings account, this is arguably the best savings solution for you.
Why? Because it achieves several objectives: One, the top-earning accounts offer rates above 4%, helping you earn thousands fast.
Two, jumbo CDs don't require you to tie up money for long periods, as they have terms ranging from six months to one year on average. If you want to make some money, avoid the short-term capital gains tax and have quick access to your cash for other investments, a jumbo CD is a suitable, in-between option while you investigate future moves.
How much can you earn with a $100,000 jumbo CD? I'll break this down, show you the best accounts and key considerations before signing up for one.
A quick way to make thousands effortlessly
Even with the Federal Reserve cutting rates three times, jumbo CD rates haven't dropped yet. Here are some of the best options to consider:
Account |
APY |
Min. Deposit |
Term |
|---|---|---|---|
4.35% |
$100,000 |
12 months |
|
4.25% |
$50,000 |
9 months |
|
4.05% |
$75,000 |
12 months |
|
4.00% |
$100,000 |
15 months |
|
3.96% |
$25,000 |
12 months |
|
3.90% |
$100,000 |
12 months |
|
3.75% |
$50,000 |
6 months |
How much can you earn? Let's use our top example, ECFU Financial Credit Union. They have six-month and one-year jumbo CDs offering 4.35% annual percentage yield (APY), which is among some of the best rates I've found with CDs and savings accounts.
Deposit |
Term |
Earned interest |
$100,000 |
6 months |
$2,151.85 |
$100,000 |
12 months |
$4,350 |
This shows you can earn thousands of dollars effortlessly in a quick window. Before you sign up for an account, make sure you understand how jumbo CDs work.
What are the downsides of a jumbo CD?
The first is that you're going to limit your earnings compared with riskier investment strategies. If you were to take that $100,000 and place it in an index fund tied to the S&P 500, returns average around 10% annually. However, with the higher returns come elevated risk, and historic averages are not necessarily indicative of what you could earn.
The other thing to consider is that jumbo CDs work the same as regular CDs in that once you sign up, you're locked in for that term. That's why they work great for diversification because it's a great place to park your money and forget about it. But, if you do need it for any reason before the maturity date, early termination fees apply, amounting to months of earned interest.
This could equate to hundreds of dollars, so this approach makes the most sense when you treat jumbo CDs as a part of your bigger investment strategy.
As a final point, it's important to remember that the interest will count as taxable income, so you should consider if the yield would impact your tax strategy.
Is now a good time to lock in a jumbo CD?
Now is an excellent time to sign up for a jumbo CD. The Federal Reserve has been on a rate-cutting spree due to ample signs of weakness in the job market.
That's what makes CDs such worthwhile investments: They offer fixed interest rates. If you sign up for one today and the Fed cuts rates a few times while you have your CD, it doesn't impact your earnings, since CDs have fixed interest rates.
Given that rates can drop at any moment following a Fed decision, you'll want to strike now while rates far outpace inflation. Whether you want a jumbo CD or another CD term, this Bankrate tool can match you with one fast:
