What are the best TD Ameritrade and TD Bank CD rates in 2024, and are they better than other brokered CDs? In the table below, you can compare the best TD Ameritrade CD rates for each maturity, across both callable and non-callable options.
TD Ameritrade CD Rates
TD Ameritrade provides access to brokered certificates of deposit (brokered CDs), which are exclusively available to TD Ameritrade and TD Bank clients. It’s important to note that TD Ameritrade itself does not issue these CDs. Instead, it offers CDs newly issued by various banks and secondary CDs, which are sold by other investors on the secondary market.
The following table displays the top TD Ameritrade CD rates per maturity term for new issue CDs in TD Ameritrade’s marketplace*:
APYs shown are as of May 3, 2024. Click to expand on mobile.
*Note: TD Ameritrade CD rates can change. YieldAlley suggests checking TD Ameritrade’s website for the latest information.
In 2020, Charles Schwab closed its acquisition of TD Ameritrade. While the two brokerage firms are still working to integrate their platforms, their offerings remain somewhat disparate. For example, Schwab offers a different set of brokered CDs and rates. However, you can buy the same Schwab money market funds on TD Ameritrade. In general, we feel that Schwab has a greater variety of cash options than TD Ameritrade.
Fees and Buying CDs on TD Ameritrade
- TD Ameritrade Account Required: To buy brokered CDs on TD Ameritrade, you must have a brokerage account with TD Ameritrade to buy and hold your brokered CDs.
- Fee for buying new-issue CDs: None.
- Fee for secondary CDs: When acting as principal, TD Ameritrade adds a markup of $1 per bond or CD to any purchase or subtracts a markdown of $1 per bond or CD from every sale. When acting as an agent, TD Ameritrade charges $1 per bond or CD on secondary transactions. Both principal and agent trades are subject to a $10 minimum fee and a maximum of $500.
- Minimum investment per New-Issue CD: $1,000. You can buy more new-issue CDs in increments of $1,000.
- FDIC Insurance: Yes. TD Ameritrade’s brokered CDs offer FDIC insurance of $250,000 per bank per depositor. For example, you have expanded FDIC coverage if you buy two CDs on TD Ameritrade from two banks up to $500,000.
Key Information about TD Ameritrade CDs
Frequency of Interest Payments: It depends. The frequency of interest payments on TD Ameritrade varies depending on the CD. CDs with a maturity period of less than one year typically pay interest only when they mature. For 1-year CDs, interest is usually paid only when they mature, although some may pay interest every six months. However, for CDs with longer maturity periods of 18 months or more, interest may be paid every six months, every three months, or every month.
Monthly Fees: None. This is common for CDs.
Compounding: None. Brokered certificates of deposit (CDs) do not accrue compound interest, unlike bank CDs. Instead, brokered CDs accumulate simple interest.
Early Withdrawal Penalty: None. With TD Ameritrade brokered CDs, there are no early redemption fees like there are for bank-issued CDs, but trading a brokered CD on the secondary market means you may receive less than the original purchase price.
Auto-Roll: No. TD Ameritrade does not offer Auto-Roll, which means you cannot automatically reinvest your CD on TD Ameritrade when your CD matures.
TD Ameritrade IRA CD: Yes. If you have an IRA account with TD Ameritrade, you can use that IRA to buy brokered CDs.
Types of CDs Offered By TD Ameritrade
New Issue CDs: When a bank or financial institution introduces a new investment opportunity to the public, they issue a new issue CD. A certificate of deposit is a financial product with a predetermined length and interest rate, allowing investors to secure a certain return on their investment over a specified period.
Secondary CDs: These are certificates of deposit that are bought and sold on the secondary market, not directly from the issuing bank. This gives investors the flexibility to trade a CD before it reaches its maturity date.
Callable CDs: These are a type of CD where the issuing bank has the right to terminate or “call” the CD before its maturity date. This is typically done when the bank wants to benefit from lower interest rates. It’s important to note that the bank can only call the CD after a certain period or on specific dates.
Non-Callable CDs: These are CDs that the issuer cannot terminate before the maturity date. Once you invest in a non-callable CD, the issuer is obligated to keep it until the maturity date. This makes non-callable CDs a more stable and predictable investment choice.
Step-up CDs: A step-up CD is a type of certificate of deposit that provides an escalating interest rate throughout its duration. It’s important to note that step-up CDs typically have a callable feature, meaning that the issuing entity retains the option to redeem the CD before its maturity date.
Why is My TD Ameritrade CD Losing Money?
If it seems like your CD is losing value, it might be because interest rates are increasing, making the rates on your TD Ameritrade CD less competitive compared to the current rates. However, if you keep your CD until it matures, you’re guaranteed to receive your initial investment back, along with the interest earned as stated by your TD Ameritrade CD rate.
If your intention is to hold your CD until it matures, it’s advisable to disregard any changes in its value. For more information, you can refer to our Brokered CDs FAQ.
TD Ameritrade Cash Equivalents and Other Offerings
Cash equivalents are investments that can be quickly converted into a known cash amount and carry a minimal risk of value fluctuation. Certificates of Deposit (CDs) are typically classified as cash equivalents.
Here are some examples of cash equivalents you can buy on TD Ameritrade:
- Money Market Funds: These are mutual funds that invest in short-term, high-grade investments from U.S. corporations, and federal, state, and local governments. After Schwab acquired TD Ameritrade, the money market fund selection on TD Ameritrade reflects what you’d get on Charles Schwab.
- Treasury Bills: These are short-term securities issued by the U.S. government that mature in less than a year. They’re considered one of the safest investments and often serve as a reference point for other interest rates. You can buy new-issue Treasury bills on TD Ameritrade and Charles Schwab.
- Certificates of Deposit (CDs): These are insured time deposits with banks or credit unions, backed by the Federal Deposit Insurance Corporation (FDIC). They have a predetermined term and usually offer a fixed interest rate.
I’ve Evaluated TD Ameritrade’s CD Rates. Are These CDs a Good Fit for Me?
When examining TD Ameritrade CD rates, assessing whether these CDs align with your financial objectives and situation is crucial.
What factors should you take into account?
- Risk Tolerance: Assess your willingness to take on financial risks. CDs are essentially risk-free investments insured by the FDIC, offering a guaranteed return rate. However, they typically provide lower returns than riskier assets like stocks or mutual funds and don’t have the flexibility of Treasuries.
- Financial Goals: Identify your short-term and long-term financial aspirations. CDs can be a great choice for short-term goals or as a stable component in a diversified investment portfolio.
- Interest Rates: Look at the prevailing interest rates. CDs can be a good choice if the rates are appealing, as they provide fixed, guaranteed returns.
- Capital Preservation: If your primary focus is safeguarding your capital rather than earning high returns, CDs, due to their low-risk nature, can be a suitable option.
- Income Source: For those seeking a consistent income source, such as retirees, CDs can be beneficial as they yield regular interest payments.
- Liquidity Needs: Reflect on your need for immediate access to your funds. CDs necessitate that you lock in your money for a certain period, so they may not be the best choice if you need frequent access to your cash.
- CD Laddering: Consider implementing a CD ladder strategy, which involves buying a series of CDs with different maturity dates.
CDs offer a way to secure a guaranteed return during periods of fluctuating interest rates. It’s also worth considering other cash equivalents like money market funds and Treasury bills. While these don’t provide guaranteed rates like TD Ameritrade CD rates, these products typically offer more flexibility and sometimes higher yields.
