Brokered CDs: What they are and how to buy them

Written by

Karen Bennett,

Edited by

Marc Wojno, MBA

Published on April 23, 2025 | 6 min read

Bankrate is always editorially independent.

Key takeaways

Brokered CDs are certificates of deposit bought through brokerage firms rather than directly from banks, offering potential advantages in rates, terms and liquidity.
Unlike traditional bank CDs with early withdrawal penalties, brokered CDs can be sold on the secondary market if you need your money before maturity (though you might face a loss).
FDIC insurance still covers brokered CDs up to $250,000 per bank, and using multiple banks can expand your coverage.
Current competitive brokered CD rates range from 4.25% to 4.65% APY, with higher rates typically offered on longer-term CDs.

Brokered CDs are certificates of deposit you purchase through a brokerage firm, rather than directly from a bank. While they function similarly to traditional bank CDs — offering a fixed interest rate for a set term — brokered CDs provide some unique advantages, including potentially higher yields, longer term options and the ability to sell on the secondary market before maturity.

For investors who want to diversify their fixed-income portfolio or maximize FDIC insurance coverage across multiple banks, brokered CDs are a good option to consider. However, they also come with distinct risks that differ from standard bank CDs.

Brokered CDs at a glance

Feature	Brokered CDs	Traditional bank CDs
Purchased through	Brokerage firms	Banks and credit unions
Early access to funds	Can sell on secondary market (may lose value)	Early withdrawal penalty
FDIC insurance	Up to $250,000 per bank	Up to $250,000 per bank
Minimum investment	Typically $1,000	Can be as low as $500 or less
Term lengths	1 month to 20 years	Typically 3 months to 5 years
Interest payment	Often paid periodically to brokerage account	Usually compounds within the CD
Callable options	Some are callable by the issuing bank	Rarely callable
Current APY range (April 2025)	4.25% to 4.65%	4.00% to 4.50%

Brokered CDs are time-deposit investments that pay a fixed interest rate over a specific period. Unlike traditional CDs, which are purchased directly from financial institutions, brokered CDs are bought and sold through intermediaries — typically brokerage firms — that offer CDs from multiple banks on a single platform.

Compare current options in Bankrate’s guide to the best CD rates.

How brokered CDs work

Brokerage firms purchase large quantities of CDs directly from banks, then divide them into smaller amounts for their customers. The broker acts as an intermediary between the investor and the issuing bank, facilitating the purchase and providing a platform for managing the investment.

When you purchase a brokered CD, your money is still deposited at the issuing bank, but your account relationship is with the brokerage firm. Interest payments typically go to your brokerage account rather than compounding within the CD itself.

One of the most significant advantages of brokered CDs is the secondary market. If you need access to your funds before the CD matures, you can sell it on the secondary market rather than paying an early withdrawal penalty. However, the market value of your CD may be lower than your original investment, especially if interest rates have risen since your purchase.

Think of brokered CDs as having the features of both a traditional CD and a bond. Like a CD, they offer a fixed interest rate and FDIC insurance. But like a bond, their market value fluctuates with interest rates, and they can be sold before maturity — though potentially at a loss.
— Hanna Horvath, CFP & Managing Editor at Bankrate

Pros and cons of brokered CDs

Advantages of brokered CDs

Higher potential rates: Brokered CDs sometimes offer more competitive interest rates than those available directly from banks, particularly for longer-term CDs (3-5 years). As of May 2025, the highest brokered CD rates range from 4.25% to 4.65% APY, with longer terms typically earning higher yields.
Access to multiple banks: Through a single brokerage account, you can purchase CDs from dozens or even hundreds of different banks. This saves you the hassle of opening accounts at multiple financial institutions to compare and access the best rates.
Expanded FDIC insurance: The FDIC provides insurance up to $250,000 per depositor, per bank. By using brokered CDs from multiple banks, you can effectively expand your coverage well beyond this limit. For example, $1 million spread across CDs from five different banks would be fully FDIC-insured through a single brokerage account.
Secondary market liquidity: Unlike traditional CDs that lock your money away until maturity, brokered CDs can be sold on the secondary market if you need access to your funds. While you might face a loss depending on current interest rates, you avoid the fixed early withdrawal penalties typical of bank CDs.
Extended term options: Brokered CDs often offer more varied term lengths than bank CDs, ranging from as short as one month to as long as 20 years. This provides greater flexibility for creating CD ladders and matching investments to specific financial goals.

Disadvantages of brokered CDs

Broker fees: While purchasing new-issue brokered CDs is often commission-free, selling CDs on the secondary market typically incurs transaction fees. For example, Charles Schwab charges $1 per $1,000 in CD value (with a $10 minimum and $250 maximum) for secondary market transactions.
Market value risk: If you need to sell a brokered CD before maturity, you may receive less than your principal investment, especially if interest rates have risen since you bought it. Unlike bank CDs with fixed early withdrawal penalties, your loss potential with brokered CDs can vary based on market conditions.
Callable features: Some brokered CDs come with “call” provisions that allow the issuing bank to redeem them before maturity, typically when interest rates fall. If your CD is called, you’ll receive your principal plus accrued interest, but you’ll lose the higher interest rate for the remaining term.
Complexity: Brokered CDs require more knowledge to navigate than traditional bank CDs. You’ll need to understand concepts like secondary market pricing, call provisions and how interest rate changes affect the CD’s value.

Learn more about how CD rates are expected to change in 2025.

Who should consider brokered CDs?

Brokered CDs typically appeal to:

Investors with large cash positions who need to spread money across multiple banks to get full FDIC insurance.
More experienced investors who understand the risks of the secondary market and interest rate impacts.
Those looking for longer-term CDs beyond what traditional banks offer.
Investors who already have brokerage accounts and want to consolidate their investments.
CD ladder savers who are looking for a wide range of maturity dates.

Brokered CDs generally require minimum investments of $1,000, making them less accessible to beginning savers or those with limited funds. They’re best for individuals who have at least several thousand dollars to invest and a good understanding of fixed-income rules.

How to buy brokered CDs

Purchasing brokered CDs involves a few key steps:

Open a brokerage account with a firm that offers brokered CDs, such as Charles Schwab, Vanguard, or Fidelity.
Fund your account with at least the minimum required investment (typically $1,000).
Research available CDs through the brokerage’s platform, comparing rates, terms, and issuers.
Select your preferred CDs based on your financial goals and desired maturity dates.
Place your order through the brokerage’s trading platform.
Monitor your investments through your brokerage account statements.

Here are some of the largest financial brokerages that offer brokered CDs:

Charles Schwab

Charles Schwab is a financial-services company that provides brokerage accounts and offers a wide range of CD options.

New-issue CDs from Schwab can be purchased commission-free with as little as $1,000. For online trades on the secondary market, Schwab charges a $1 transaction fee for each $1,000 CD, with a $10 minimum and $250 maximum. A $25 per-trade service charge applies to broker-assisted transactions.

Vanguard

Vanguard, one of the largest investment companies in the world, also offers a range of CD options through its dealer network for brokered CDs. There’s a $1,000 minimum for its CD purchases with terms ranging from one month to 20 years. Vanguard doesn’t charge a commission for new-issue CDs, but it does charge a fee of $1 per $1,000 (with a $250 maximum) for CDs sold on the secondary market.

Fidelity

Fidelity offers brokered CDs with competitive rates and a user-friendly platform. New-issue CDs can be purchased with a minimum of $1,000, and some fractional CDs are available with minimums as low as $100. For secondary market transactions, Fidelity charges a trading fee similar to other major brokerages.

Brokered CD rates

As of May 2025, brokered CD rates at the three major brokerages listed above typically fall in these ranges:

Short-term (3-6 months): 4.25%-4.40% APY
Mid-term (1-2 years): 4.40%-4.60% APY
Long-term (3-5 years): 4.50%-4.65% APY

When you may want to consider other options

Here are some situations when a bank CD might be better:

You want to take on less risk. Because brokered CDs can be bought and sold on the secondary market or called back before their maturity date, they’re riskier investments than bank CDs.
You want less complexity. Purchasing a brokered CD takes a little more research and work than investing in a CD from a well-known bank. Plus, closing a brokered CD early is more complicated than with a traditional bank.
Selling on the secondary market is too risky for your current financial situation. The only way to get money out of a brokered CD is to sell it. If you think you’ll need access to funds without the risk of selling a CD for less, you may want to consider a no-penalty, or liquid, CD or high-interest savings account.

Explore options beyond CDs in Bankrate’s guide to high-yield savings accounts.

Bottom line

Brokered CDs function similarly to other types of CDs, but they are kept in a brokerage account and can be traded like bonds. Consider a brokered CD if you’re looking for more liquidity, want more term options or higher rates, or need to expand FDIC insurance.

If you’re looking for a CD that comes with minimal risk, compare traditional CD options to find the best rate and a term that fits your needs.