What is a jumbo CD? (Spoiler: Bigger isn't always better)

Are you looking to invest a large sum of money and earn a guaranteed return? A jumbo CD might be the answer, but don't be fooled by the name — bigger doesn't always mean better. 

While jumbo CDs typically require a minimum deposit of $100,000 or more, they don't always have the highest interest rates. In fact, some regular CDs with lower minimum deposits may have better rates due to increased competition among banks. 

So, before you lock your money away, take some time to understand what a jumbo CDs is, how it works and if it's the right choice for your financial goals.

What is a jumbo CD?

A jumbo CD is a certificate of deposit that requires a higher minimum deposit — typically $100,000. Like regular CDs, jumbo CDs come with a fixed interest rate and term. 

They're attractive to businesses, which may use them as a way to earn extra money on idle funds. But if you have more than $100,000 to comfortably invest and are retiring soon, a jumbo CD could be a low-risk way to earn a guaranteed return on a portion of your savings. 

How does a jumbo CD work?

A jumbo CD works just like a regular CD, but with a higher minimum deposit requirement. You select a term, deposit your money and receive your principal plus interest when the CD matures. 

Jumbo CDs differ from traditional CDs in that the length of the term is customizable — it can be as short as seven days or as long as 10 years, throughout which you agree to leave the money untouched.

If you need to make a withdrawal before the term ends, you’ll risk paying a penalty. Penalties vary by bank and account, though here’s an idea of what Chase Bank charges for early withdrawal penalties: 

Do jumbo CDs have higher interest rates? 

It’s not always true that jumbo CDs have a higher interest rate than traditional CDs, however much it’s a common belief. There’s more competition for regular CDs, so banks have to fight harder for new customers. And they “fight” by offering stronger APYs. 

If you’re comparing CD rates at only one bank, you’ll almost always find that the bank’s jumbo rates are better than its standard rates. (This is the bank’s way of rewarding you for giving it more money.)

But once you start comparing multiple banks to one another, you may find some have standard rates much higher than jumbo rates elsewhere. This is why it pays to shop around. 

If you have a jumbo-size deposit, don’t feel like you have to stick with jumbo CDs only. You may find higher rates for traditional CDs.

???? Expert tip: Just because a CD is labeled jumbo doesn't always mean it offers the best rates. Don’t overlook competitive rates for regular CDs with lower minimum deposits.

Benefits of jumbo CDs

Drawbacks of jumbo CDs

Dig deeper: When is it worth it to break a CD? A finance expert's take on early withdrawals and breaking even

How to compare jumbo CDs

If you’re considering a jumbo CD, use these tips to find the best rates and most valuable perks to fit your financial goals and budget: 

???? Expert tip: Jumbo CDs can be a lucrative way to diversify your investments and protect a portion of your savings, especially if you're nearing retirement age. But they shouldn't be your only investment. Your goal should be a mix of low-risk and higher-risk investments to balance out your portfolio and build enough wealth for retirement.

Alternatives to a jumbo CD

If a jumbo CD doesn't quite fit your financial needs, you have plenty of other options to consider — both alternative CDs and other high-yield options.

Dig deeper: High-yield savings account vs. CD: What to know when rates are high

Learn more about jumbo CDs, high-interest rates and more when comparing your options.

What’s the difference between a jumbo CD and a traditional CD? 

The main difference is the minimum amount of money you’re required to deposit. A jumbo CD typically requires a minimum opening amount of $75,000 to $100,000, compared with traditional CDs, which require minimums of $500 or more. You might earn a slightly higher interest rate on a jumbo CD for agreeing to deposit more money, but rates vary by bank.

Aside from this requirement, jumbo CDs function exactly like regular CDs: You have a fixed term length and interest rate, and you pay a penalty if you need to access your money before the CD matures.

What are jumbo CD rates today? 

The FDIC doesn’t track average jumbo CD rates. But it’s common to see rates as low as 0.05% to as high as 5.20% or more, depending on the bank and term. Currently, some of the highest 12-month jumbo CD rates are around 5.20% from Alliant Credit Union, and the best 10-year jumbo CD rates are around 2.50% from Chase. 

Are jumbo CDs negotiable?

Not usually. The advertised rates you see for jumbo CDs is what you get. There’s little (if any) room for negotiation. However, some banks support relationship rates for existing customers, which are higher than advertised rates for non-customers. 

How risky is a jumbo CD?

Jumbo CDs are very safe because they’re federally insured by the NCUA or FDIC. So even if your bank failed, you would get all your money back, up to the federal limits. The main risk you have to worry about with a jumbo CD is the potential early withdrawal penalties you’ll face if you need your money early. 

Is it better to have one large CD or several smaller ones?

It depends on your budget and financial goals. If you’re not ready to commit to one large CD, you might want to consider a CD ladder, which is where you take out several smaller CDs with different maturity dates, so you have rolling access to your money as each one matures. But if you’re absolutely sure you won’t need your money during the term length you’re considering, a single jumbo CD can help keep things simple.

About the writer

Cassidy Horton is a finance writer who specializes in banking, insurance, lending and paying down debt. Her expertise has been featured in NerdWallet, Forbes Advisor, MarketWatch, CNN Underscored, USA Today, Money, The Balance and Consumer Affairs, among other top financial publications. Cassidy first became interested in personal finance after paying off $18,000 in debt in 10 months of graduation with an MBA. Today, she's committed to empowering people to stand up and take charge of their financial futures.