Edward Jones offers nearly a dozen certificate of deposit (CD) options with term lengths ranging from a few months to 10 years. All accounts have high interest rates that stack up favorably against the best CD rates on the market. The reason for the high rates is that Edward Jones is a broker that buys CDs in bulk from other banks and resells them at competitive rates.
Because Edward Jones offers brokered CDs, there are a few elements that work differently than CDs from traditional banks. Some features, like the ability to get CDs from multiple banks, provide freedom and flexibility to customers.
Because Edward Jones is a brokerage, investors can more holistically integrate their CD accounts into their larger investing strategy. Of course, it's not all positive. Some limitations, like the inability to withdraw early from a CD, may make things more challenging.
If you envision CDs occupying a significant part of your savings portfolio, you may want to consult a financial advisor to ensure you invest in them properly. Locating a financial advisor that fits your needs is not as hard as you might think.
SmartAsset’s free tool does the searching for you, as it matches you with top financial advisors in your area based on your answers to a short questionnaire about your finances. If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.
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Overview of Edward Jones CDs
Edward Jones is a brokerage service. When it comes to CDs, that means Edward Jones is not creating its own CDs the way traditional banks do. Instead, it buys CDs from other banks in large volumes and then resells them to customers at competitive rates. The CDs that Edward Jones sells are known as brokered CDs.
One advantage of brokered CDs is that it’s possible to buy CDs from multiple banks through Edward Jones. The FDIC will insure your CDs up to $250,000 at every institution you bank with. So getting CDs from multiple banks (through Edward Jones) will allow you to insure potentially more than $1 million. This isn’t relevant to everyone, but it provides some more security if you are putting a lot of money into CDs.
Edward Jones has 10 CD term options available. Term lengths range from three months to 10 years. As with most brokered CDs, the interest rates are competitive. However, it’s important to note that Edward Jones does not compound your interest. You will receive interest payments based on how many days you hold a CD and the annual percentage yield (APY).
If your CD term is one year or less, you will receive an interest payment when your CD reaches maturity. If your CD term is more than one year, Edward Jones will send you an interest payment monthly, quarterly, semiannually or annually (as well as when your CD reaches full maturity). The exact schedule for your interest payments will depend on your CD. Make sure to check the schedule before you open an account.
When your CD earns interest, payments will go straight into your money market account (MMA) or another bank account that you have with Edward Jones. The interest payment will send on the same day that it is paid. Similarly, Edward Jones will transfer your principal to another account when your CD reaches maturity. This differs from traditional banks, which renew your CD for another one of the same term length after your maturity date.
There are also some potential fees you should consider. Unlike with traditional bank CDs, brokers sometimes charge a commission for buying and selling CDs. These fees often come out of your interest payments and can cut into your earnings.
If you open a new CD account directly through Edward Jones, you will not pay any commission fees. Edward Jones will receive a concession from the CD’s original bank, but this concession is already factored into the price of the CD. (You can see the amount of the concession fee in the confirmation paperwork for opening your account.)
If you buy a CD on the secondary market, then you will pay Edward Jones a commission. This is the same as paying a commission to a broker for trading stocks or bonds. (You can see the amount of the commission fee in the trade confirmation.) The exception is that if you buy a CD on the secondary market as part of a fee-based financial advisor account, you will not pay commissions.
Buying and selling CDs on the secondary market (i.e. the stock market) is something Edward Jones does because it is a broker. These CDs, known as secondary CDs, have already been issued. So if you make a transaction with a secondary CD, you are not the first person (or firm) to buy or sell it. Secondary CDs are useful because you have the ability to get your principal investment back. For example, if you invest $2,000 in a two-year CD but something happens after one year and you need to use that $2,000, you can sell your CD to someone else and attempt to recoup your money.
Secondary CDs are similar to other fixed-income investments like bonds. Because a CD has a fixed interest rate, the current interest rates on the market will determine the value of your CD. If you buy a CD and then interest rates rise, you could have a difficult time selling your CD for the full amount of your principal. However, you could end up earning money if you buy a CD and then sell after interest rates decrease.
It is worth noting that you cannot withdraw your principal from a CD until the maturity date. Many banks allow you to withdraw funds before the end of your term, but you have to pay a large fee. Edward Jones does not allow you to withdraw any, except in special circumstances.
How Much You Earn With Edward Jones CDs Over Time
The high interest rates from Edward Jones mean you will earn more money than you would with CDs from most other banks. As you compare CD rates from other banks, you’ll notice that many compound interest daily or monthly. This helps maximize your interest earnings, but you’ll still earn more with Edward Jones unless the other banks offer very similar, or higher, interest rates.
For example, let’s say you contribute the minimum amount ($1,000) to the shortest available CD term (three months) with Edward Jones. You will have earned $0.12 in interest at the maturity date. If you went to another bank and opened a three-month CD at a rate of 0.01%, you would only have earned $0.03 at the time of maturity.
All CDs from Edward Jones offer competitive rates, so you can expect relatively high earnings no matter what term length you choose. The table below shows what your approximate total balance will be depending on your initial deposit and your term length.
|Initial Deposit||3-Month CD||6-Month CD||12-Month CD||36-Month CD||60-Month CD|
How Edward Jones’ CD Rates Compare to Other Banks’
The CD rates from Edward Jones compare well to traditional banks. For the most part, you will only find higher rates with other brokers. CDs from Vanguard generally have higher rates, but they have a significantly higher minimum deposit at $10,000.
If you cannot afford the $1,000 minimum deposit at Edward Jones, you should consider an online bank. Ally, one of the most well-known online banks, offers high interest rates with no minimum deposit. You could receive higher rates if you contribute more to your CD, but you can get started no matter how much you have. Because it is a more traditional bank, Ally also allows you to withdraw funds early from a CD, unlike Edward Jones. You will have to pay a high penalty for withdrawing early, but it is possible. It’s worth noting that Ally also offers some of the best high-interest savings accounts.
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Compare Edward Jones to Other Competitive Offers
Should You Get an Edward Jones CD Account?
If you are strictly looking for the highest interest rates, you will have a tough time beating Edward Jones. Its CD terms range from three months up to 10 years, so you can invest for your short-term and long-term goals. This range is also great if you want to set up a CD ladder that regularly pays you interest.
However, there are some factors to keep in mind because Edward Jones is a broker and not a traditional bank. For example, you can’t withdraw your principal from a CD before the maturity date. The only way to recoup your money is to sell the CD on the secondary market. This could result in you losing money though and using the secondary market opens you up to commission fees.
There are also some definite advantages to working with a broker. Because you are actually getting CDs from other banks, through Edward Jones, you can spread out your savings and gain more FDIC insurance. If you have multiple CDs, it’s also useful that statements from Edward Jones will list all your CDs and their maturity dates. No more calling the bank to ask when your CD term is ending.
Another big advantage is that Edward Jones offers financial advisory services. So if you are unsure how to invest or if you just want help staying on track with your savings goals, you can work with a financial advisor. A financial advisor can help you to create a holistic financial plan in addition to finding the best CDs for you. (That includes help with buying and selling CDs on the secondary market.) Investors with many savings goals or complex financial situations could particularly benefit from this service.