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A jumbo CD refers to a certificate of deposit that has a high minimum deposit requirement, typically $100,000 or more. Given the size of the investment, these CDs typically have greater interest rates than conventional CDs.
Instead of individual investors, institutional entities like banks or businesses frequently buy jumbo CDs. They might be utilized by these organizations to boost the rate of return on their surplus cash holdings.
Jumbo CDs have the benefit of FDIC insurance up to the legal maximum, which is present at $250,000 per depositor per institution. Those looking for a low-risk investment choice may find some security in this.
Jumbo CDs, however, have a few drawbacks as well. Many private investors might not be able to access them because of the high minimum deposit requirements. Furthermore, because the money is committed for a set period of time, investors might not have access to their money when they need it.
