What Does A CD Broker Do?

Bill has a good offer on his matured certificate of deposit from a CD broker. Is there any risk involved with dealing with a broker?

QUESTION: Bill has a $140,000 certificate of deposit that has matured at his credit union. The rates have dropped and he needs to move the money. He ran across a CD broker who is offering a better rate, and he wants to know if there is any risk in dealing with a CD broker.

ANSWER: It depends on who they are. You’re only talking about tenths of a point. Whatever rate he offers you, go to your bank and tell them you’re being offered a better rate and see if they won’t kick their rate up. If they do, I’d probably stay with the bank.

There are legitimate CD brokers, but we’re only talking about $500 a year here. I’d just keep it handy for the handiness of it. Even with that, I generally stay away from certificates of deposit. I usually go for money market accounts that pay about CD rates and are totally liquid, so I can get the money when I want.

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