Investor Alley Brain Trust,
I need your help clearing up some confusion. Wife and I have a joint brokerage account. If I buy brokered CDs, what's the FDIC insurance on the CDs? Is it $250k per person, so we can have upto $500k in CDs insured, OR is it total $250k FDIC insured since this is through a brokerage? FWIW, the brokered CD is from a FDIC member bank (e.g. JPMC).
I've always had CDs held directly with a bank/credit union, so this is a first for me doing it via a brokerage. I've read the FDIC site and a couple of other sources; which has lead to more confusion. Here's one
example:
Sold by brokerage companies and independent brokers rather than banks, brokered CDs are not always FDIC insured. Brokered CDs can carry higher interest rates than CDs you would buy directly from a bank, but are more complex. The broker effectively acts as a wholesaler, bundling together individuals’ investments to get a better rate of return on the deposited funds.
While brokered CDs can come from FDIC member banks, not all do, says the Financial Industry Regulatory Authority. “Although most brokered CDs are bank products, some may be securities, which won’t be federally insured,” the organization notes. In addition, because they are structured with the broker as a middleman between the bank and individual investors, you might not be entitled to the full $250,000 of deposit insurance protection, the Securities and Exchange Commission warns.
Thanks in advance.
