should the holder need these funds before the jumbo cd matures withdrawing them would result in a financial penalty which could be a fee assessed by the bank for the loss of interest earned to date each bank will have specific rules and guidelines for early withdrawals if the funds likely might be needed before the cd s maturity then investors might be better off investing the funds in an account that doesn t have withdrawal restrictions such as a high interest savings account 
another worry for jumbo cd investors is interest rate risk this comes when current market interest rates rise above the rate offered by the jumbo cd if interest rates rise while investors are holding a jumbo cd they miss out on the higher rates they could have had if these funds had been available to invest elsewhere conversely if interest rates fall during the holding period the investor may not be able to reinvest the funds at maturity at a rate comparable to the cd this hazard is known as reinvestment risk although jumbo cds pay a higher rate at the onset than other products investors must weigh the pros and cons to ensure they don t have a lower return in the long term jumbo cds offer a steady rate of interest for the length of the holding term jumbo cds typically pay a higher interest rate than traditional cds or savings accounts do the steady interest paid on jumbo cds can partly offset the portfolio s market risk of negative returns from holding stocks jumbo cds carry a guarantee of up to 250 000 per account by the fdic or the ncua jumbo cds pay a lower return than many other fixed rate investments such as bonds in a rising interest rate environment jumbo cds face interest rate risk as investors might hold a cd paying a lower rate jumbo cds don t typically keep up with inflation meaning prices could rise faster than the cd s rate of return investors cannot access their funds in jumbo cds before maturity without incurring an early withdrawal penalty jumbo cds can have high minimum balance requirements examples of jumbo cdsveridian credit union founded in waterloo iowa in 1934 offers many types of cds including jumbo cds examples of the jumbo rate as of june 21 2024 include the interest rates being offered can change anytime for new cds and might be different depending on the state where the depositor is located frequently asked questions faqs 