Financial professionals may obtain more information on weekly issuance by calling (800) 327-1546 or go to New Issue CD Offerings.
Wide Selection of Issues
Through Incapital's CD program, broker-dealers have access to CDs offered by dozens of banks across the country. This availability of choice allows investors to select among a larger variety of maturities and payment frequencies, while simultaneously shopping for attractive yields.
Access to multiple issuers can be useful in the management of FDIC coverage for large deposits.
Deposit Insurance Limits
The standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category. FDIC's Summary of Deposit Insurance Coverage
Diversity of Structures
Traditional CDs typically pay fixed rate interest payments that do not vary during the life of the CD. The frequency of payments is on either a monthly or semiannual basis. While simple fixed rate CDs satisfy the needs of many investors, others prefer custom-tailored structures with potential for higher yield. One variation of a fixed rate CD is a callable CD, which may provide opportunities for higher yields in exchange for accepting 'call risk'.
Zero Coupon CDs are structured to provide no interest payments, but rather are offered at a deep discount and then accrete to par (the principal amount at maturity). Zero Coupon CDs are usually offered at higher yields than fixed rate CDs and feature automatic compounding of interest.
Structured CDs provide investors with an interest payment at maturity that is directly tied to the performance of an asset or basket of assets. Structured CDs combine the opportunity to participate in the positive performance of an asset or basket of assets with the security of principal protection when held to maturity.
Higher Yield
Purchasing CDs through a financial advisor provides the potential for higher yield in two important ways. First, with the ability to survey a wide range of issues, investors can choose the highest rate available. Second, through access to a variety of payment structures, income needs may be matched to the optimal type of CD for individual investors.
Special CD Feature
A very noteworthy feature available for CDs purchased through financial advisors is the estate benefit, commonly referred to as a "death put", which allows an estate to redeem the CD prior to maturity at par (or accreted value for a ZCD) in the event of death or legal incompetence of the owner. This can be very useful to an estate.
Other Considerations
As with other fixed income instruments, secondary market prices for CDs are subject to market conditions. CDs redeemed prior to maturity are subject to credit market fluctuations, and may return less than the initial investment. Only CDs held to maturity or call are assured the full return of principal. Callable CD holders receive the return of original principal along with earned interest when the CDs are called. In the case of Structured CDs, interest paid in the event of call follows a predetermined schedule which is disclosed at the time of issuance.