What are CDs?
CDs are federally insured certificates of deposit issued by banks and savings-and-loan institutions. They can be purchased for as little as $1,000 with a term that ranges from 1 month to 20 years.
Why would Schwab recommend them?
CDs can be an appropriate investment for investors looking to earn a better interest rate of return than a savings account offers and who value FDIC insurance, principal protection, and a fixed rate of return, and who don’t mind setting aside cash for a specific term.
What does Schwab charge for CDs?
A selling concession is included in the offering price for online and broker-assisted trades.
$1 per $1,000 CDs ($10 minimum, $250 maximum)
Online price + $25 per trade service charge*
*Schwab uses the same pricing schedule for sell orders, which must be placed through a broker and are subject to a $25 broker-assisted fee.
|Sample of CD rates available at Schwab through CD OneSource Marketplace.|
|Maturity Ranges (9/25/2016)||Rates up to|
|1-3 Month CDs||0.601%APY|
|4-6 Month CDs||0.701%APY|
|7-9 Month CDs||0.751%APY|
|10-18 Month CDs||0.85%APY|
|1.5-2.5 year CDs||1.2%APY|
Take a closer look at the benefits.
Competitive rates and no fee
Schwab CD OneSource® offers you a virtual one-stop marketplace for CDs, with competitive rates, all in one convenient location. Use Schwab CD OneSource® to easily compare CDs by yield, maturity, and institution. Also, there are no hidden fees, and there is no additional charge when you buy through Schwab CD OneSource. This is because the deposit institution itself pays Charles Schwab & Co., Inc. a fee for distributing its CDs.
Insure more money using FDIC coverage
Current FDIC coverage insures each individual bank up to $250,0001 per depositor. One strategy to keep more money insured by the FDIC is to buy CDs from multiple banks using Schwab CD OneSource.
Choice and control
Schwab CD OneSource offers you a wide selection of CDs, making it easy to search for the rate and maturity that meet your needs. Additionally, your CDs are held in your Schwab brokerage account, not at the issuing institution, allowing you to see your whole financial picture and manage your investments in one place.
Notification of maturity
Schwab will send you a notification when your CD reaches maturity, reminding you that it’s coming due and to take action if you wish to make another investment. If you want to reinvest the CD, perhaps choosing a different issuer with a different term or interest rate, simply call us or go online at Schwab.com to see what's currently available.
Review the risks.
The most common risk is that you will need your funds before the CD matures. In that case, we'll help you sell your CD at the current market price. If you decide to sell, you'll receive the bid price plus any accrued interest. Although there are no early redemption fees, you may receive less than your original purchase price.
A callable CD is a certificate of deposit that pays a fixed interest rate over its lifetime. What differentiates a callable CD from a traditional CD is that the issuer can redeem, or "call," your CD from you for the full amount before it matures. The risk is that the issuer will exercise a call option at an unfavorable time for the holder, such as when interest rates decline.
You’ll find a large selection of competitive CD rates and maturities from a wide range of banks across the country.
Schwab CD OneSource®
Choose from a wide selection of CDs with the safety of FDIC insurance.
Take advantage of resources to help you make decisions.
Talk to a specialist
Get assistance from over 100 Schwab Fixed Income Specialists, who draw on an average of over 21 years of experience.2
Do the research
Access commentary that provides you with greater insight.
Attend a workshop
Learn more through educational workshops at your local Schwab branch.
We're here to help
Clients of independent investment advisors: You may also contact your advisor or call Schwab Alliance at 800-515-2157.
1. Funds deposited at an FDIC-insured institution are insured, in aggregate, up to $250,000 per depositor, per insured institution based upon account type by the FDIC. The FDIC considers any other deposits you may have with an issuing bank. CDs you purchase from a particular bank are aggregated with any other deposits you may have with the issuing bank for determining FDIC insurance coverage (i.e., if you already have deposits of $250,000 with a bank, don't purchase CDs from the same bank in the same ownership category). Because the deposit insurance rules are complex, you may want to use FDIC’s online tool, Electronic Deposit Insurance Estimator (EDIE), to estimate your total coverage at any particular bank.
2. As of January 2016.
Certificates of deposit available through Schwab CD OneSource typically offer a fixed rate of return, although some offer variable rates. They are FDIC-insured and offered through Charles Schwab & Co., Inc.
Charles Schwab Bank and Charles Schwab & Co., Inc. are separate but affiliated companies and subsidiaries of The Charles Schwab Corporation.
Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks, including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors.