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A jumbo CD, or certificate of deposit, is a CD having a minimum denomination of $100,000. Individuals and institutions alike can use the CD as a low-risk way to earn interest income. The depository institution may offer a better rate for the jumbo CD than it does for a standard CD for the same term, but the jumbo CD rate is still determined competitively by market forces. In every other respect the jumbo CD is like a standard CD. Typical maturities for a jumbo CD are 1 to 6, 9, 12, 18, 24, 30, 36, 48, or 60 months. Early withdrawal of a jumbo CD can incur a significant penalty. Note that a jumbo CD deposited by one individual can be fully insured by the FDIC, but only for $100,000. |
