re: Brokered CD

Bankrate lists some pros and cons. The main pro is diversification among institutions, important if you have over 250K.

The cons include that those institutions are often risky banks in Puerto Rico or such that offer higher rates out of desperation and are prone to fail. They may be FDIC insured, but it can still be a PITA if they go under.

The main con I see:

quote:

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What’s the early withdrawal policy? Banks typically charge an early-withdrawal penalty of 90 days’ worth of interest, but brokered CDs are different, Laura says. If you want to exit your investment, you must sell your CD on the secondary market, where CDs are sold by brokers and prices are driven by investor demand. That means you could lose principal, especially when interest rates rise and CD demand slumps.

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LINK

I have no personal experience with them.