Originally Posted by Al18
I prefer bank or credit union CD over brokered CD's from Fidelity/Vanguard because:
1. Interest does NOT compound with brokered CD's
2. Bank/Credit Union CD's are typically easier to redeem early
3. If you have to redeem early, it will typically cost you more with brokered CD's and there's no fixed price.
I prefer brokered CD's
1. Interest is not locked up in CD, you get money out each quarter
2. Brokered CD's are easier to buy and sell. No need to go through
hoops at maturity to get your money. (most banks will auto renew your CD at maturity, even if their interest rates are very low)
3. brokered CD's can rise in value and can be sold at any point.
4. Brokered CD's (usually) have higher interest rates
5. Brokered CD's are easier to spread among multiple banks with out opening and managing a new account each time.
6. Easier to find long term 5+ year CDs, in secondary market, you can find
part year terms to spread out your ladder better.
About the only place brokered cd lag is with short term (2yrs or less)
One other caveat I'll note on the secondary market. The face value in insured by FDIC.
Depending on rates, you pay a few cents per dollar more or less that face value.