Avoid the 3.10% 3-Year CD that TD Ameritrade is Hawking

Avoid the 3.10% 3-Year CD that TD Ameritrade is Hawking

Rate information contained on this page may have changed. Please find latest cd rates.

TD Ameritrade sent out an email today to their clients trying to sell a callable CD with an October 2021 maturity that is yielding 3.10% APY. The term of the CD is actually three years and three months.

Some BestCashCow users contacted me about it today; one even said it looks like a “no brainer”. While the product may seem attractive at first glance, it should be avoided.

Here is why:

  1. You Lose If Interest Rates Go Down. The CD is callable by the issuer one-year after its issuance and then every three months. While I think it unlikely that interest rates will go down over the next three years, there are people who do, and if they do, this thing will be called away from you. That doesn't happen with a regular CD (non-brokered CD).
  2. You Lose If Interest Rates Go Up (or if you need liquidity). If interest rates continue on their trajectory, and as guided by the Fed, they are going to be much higher in one year. And, while there is a “market” for brokered CDs, you’ll be selling this at a huge loss if you want to take advantage of higher interest rates (or if you need liquidity).

A rising interest rate environment is not the time to be chasing yield, especially by locking up your money for long periods. If you want to chase yield here, consider online one-year CDs or online two-year CDs. You may find better local rates on one-year or two-year CDs.

The only brokered CDs that we have seen recently that are at interesting are Morgan Stanley’s 6 month 2.20% CDs and, for the reasons discussed here, we’d also avoid those.

Ari Socolow
Ari Socolow: Ari Socolow is the Chief Economist and Editor-in-Chief at BestCashCow. He is particularly interested in issues relating to bank transparency and the climate crisis. Since co-founding BestCashCow in 2005, Ari has been frequently cited in the media as an expert on local and national savings accounts, CD products, mortgage and loan products and credit card rewards products.

Your code to embed this article on your website* :

*You are allowed to change only styles on the code of this iframe.

Today's Highest Online CD Rates

Bank Product Term Interest Rate (APY)
CFG Bank 1-Year 5.40% APY with $500 minimum
TotalDirect, a division of City National Bank of Florida 1-Year 5.35% APY with $25,000 minimum
Navy Federal Credit Union 1-Year 5.30% APY with $50 minimum
Dollar Savings Direct, a division of Emigrant Bank 3-Year 5.00% APY with $1,000 minimum
First Internet Bank of Indiana 3-Year 4.66% APY with $1,000 minimum
IncredibleBank 3-Year 4.58% APY with $1,000 minimum
First Internet Bank of Indiana 5-Year 4.55% APY with $1,000 minimum
BMO Alto, a division of Bank of Montreal Harris 5-Year 4.50% APY with no minimum
Popular Direct 5-Year 4.35% APY with $10,000 minimum

See More Online CD Rates →

Add your Comment

or use your BestCashCow account

or