In 2020, Charles Schwab acquired TD Ameritrade, marking a significant change in the brokerage landscape. As of July 2024, TD Ameritrade no longer offers CD purchases directly. Instead, clients are now directed to Charles Schwab for their CD needs. For a detailed comparison of current rates and offerings, you can explore our analysis of Charles Schwab’s competitive CD rates.
TD Ameritrade’s Legacy in Brokered CDs
Before the transition, TD Ameritrade offered multiple brokered CDs. These CDs were unique in that they were:
- Exclusively available to TD Ameritrade and TD Bank clients
- Sourced from various banks, not issued by TD Ameritrade itself
- Available as both new issues and secondary market offerings
Key Features of TD Ameritrade’s Former CD Program
- Minimum Investment: $1,000 for new-issue CDs, with the ability to purchase additional increments of $1,000
- FDIC Insurance: Offered up to $250,000 per bank per depositor, allowing for expanded coverage through multiple bank CDs
- Interest Payment Frequency: Varied based on CD term, ranging from maturity-only payments for short-term CDs to monthly, quarterly, or semi-annual payments for longer-term CDs
- Compounding: TD Ameritrade’s brokered CDs accumulated simple interest, unlike bank CDs which often offer compound interest
- Early Withdrawal: No specific penalties, but selling on the secondary market could result in receiving less than the original purchase price
- Auto-Roll: Not offered, requiring manual reinvestment at maturity
Types of CDs Previously Offered by TD Ameritrade
- New Issue CDs
- Secondary CDs
- Callable CDs
- Non-Callable CDs
- Step-up CDs
For a detailed explanation of these CD types and how they function in the brokered CD market, you can refer to our brokered CD FAQ.
TD Ameritrade’s Approach to Cash Equivalents
In addition to CDs, TD Ameritrade offered other cash equivalent options, including:
- Money Market Funds
- Treasury Bills
These products provided alternatives for investors seeking liquidity and low-risk options. For a step-by-step guide on how to purchase Treasury bills through Schwab, you can review our Treasury bill buying guide for Schwab.
The Transition to Schwab: What It Means for Investors
With the transition to Charles Schwab, former TD Ameritrade clients may notice some changes in CD offerings and related services. While the core concept of brokered CDs remains, specific features, fees, and available products may differ.
For those considering CDs as part of their investment strategy, it’s important to reassess based on current offerings and personal financial goals. Factors to consider include:
- Current interest rate environment
- Personal risk tolerance
- Short-term vs long-term financial objectives
- Need for liquidity
- Overall portfolio diversification
Remember, while CDs offer stability and guaranteed returns, they may not always provide the highest yield compared to other cash equivalents or investment options.