When most people hear 'CD rates,' they picture walking into a bank or visiting an online bank's website, choosing a term, and opening an account directly. That's a traditional bank CD — and it's by far the most common way savers access certificates of deposit. But there's a second, less widely understood category: the brokered CD, purchased through a brokerage firm rather than directly from a bank. Both offer fixed yields and can be FDIC-insured, but they behave very differently in practice.
Understanding the distinction matters more than ever right now, because brokered CDs have become more visible as brokerage platforms compete for cash sitting on the sidelines. If you've noticed CDs offered inside your investment account, this guide explains what you're actually looking at.
How a traditional bank or credit union CD works
A bank CD (or credit union share certificate, as they're formally called at credit unions) is a direct deposit account. You open it with the institution, agree to a term, and the institution pays you a fixed APY. At maturity, you get your principal back plus the interest earned. FDIC insurance (for banks) or NCUA insurance (for credit unions) covers your deposit up to $250,000 per depositor, per institution, per ownership category — protection provided by those federal agencies, not by any comparison tool or third-party platform.
The catch: if you need your money before the term ends, you pay an early-withdrawal penalty — typically a set number of days of interest, which the institution defines in its terms. You cannot sell a bank CD to someone else. Your only exit is to break the CD and pay the penalty, or to wait for maturity.
Current examples from our live feed (as of Jul 01, 2026 — confirm before acting): Bask Bank is offering a 12-month CD at 4.40% APY with a $1,000 minimum. Suncoast Credit Union and Genisys Credit Union are each showing 4.50% and 4.40% APY respectively, with no minimum deposit. These are straightforward bank and credit union CDs you'd open directly with each institution.
How a brokered CD works differently
A brokered CD is still issued by a bank — meaning it can still be FDIC-insured at the issuing bank level, up to the same $250,000 limits. But you purchase it through a brokerage firm (such as a major online brokerage), which acts as an intermediary. The brokerage aggregates CDs from multiple issuing banks and offers them on a single platform.
The critical mechanical difference: brokered CDs trade on a secondary market. If you need your money before maturity, you don't break the CD and pay a penalty — you sell it to another buyer at the prevailing market price. That price can be higher or lower than your original purchase price, depending on how interest rates have moved since you bought it. If rates have risen since you bought your brokered CD, its market value will typically be lower than par (what you paid), and you could receive less than your original principal. If rates have fallen, it may trade above par.
Comparing the two side by side
FDIC insurance: a crucial detail for brokered CD buyers
Because a brokerage can offer CDs from dozens of issuing banks on one platform, it's easy to accidentally exceed the $250,000 FDIC limit at a single issuing institution. If your brokerage puts $300,000 of your money into CDs all issued by the same bank, $50,000 of that is uninsured. Reputable brokerages provide tools to track which banks are issuing your CDs and flag concentration risk, but the responsibility ultimately rests with you.
One advantage of the brokered-CD structure is that it makes it easier to spread large sums across many issuing banks — each covered separately under FDIC limits — through a single account. For savers with more than $250,000 to deposit, this can be a meaningful practical benefit compared to opening accounts at multiple banks individually.
Watch out for callable brokered CDs
A callable CD gives the issuing bank the right to redeem (call) the CD before its stated maturity date, typically after a specified call-protection period. Banks tend to exercise this option when interest rates drop — which is exactly when you'd most want to keep a high-rate CD. If your CD is called, you'll receive your principal and accrued interest, but you'll need to reinvest at whatever rates exist at that moment, which may be lower. Always check whether a brokered CD is callable before you buy.
Which type of CD is right for you?
Bank and credit union CDs are simpler and better suited to most everyday savers. You know exactly what you'll earn, exactly what an early exit will cost, and exactly which institution is holding your money. Tracking FDIC coverage is straightforward.
Brokered CDs can be useful for savers who: (a) want to compare many issuers without opening multiple accounts, (b) have large sums to spread across multiple institutions for coverage purposes, or (c) want the option of selling before maturity rather than paying a fixed penalty. But that flexibility introduces secondary-market risk and additional complexity that isn't present in a standard bank CD.
Neither type is universally superior. The right choice depends on your deposit size, your need for liquidity, your comfort with complexity, and your tax situation. For personalized guidance, consult a qualified financial professional.
Next steps
If you're leaning toward a traditional bank or credit union CD, the best starting point is comparing current rates across institutions to find the highest CD rates available for your preferred term. Rates change frequently, and the difference between the top offer and the national average can be substantial — often a full percentage point or more.
Compare live bank and credit union CD rates across terms and minimum deposits at /preview/secure-returns/compare/ — and always verify the rate, terms, and FDIC/NCUA status directly with the issuing institution before you open an account.