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With a brokered CD, the only way to get money out is by selling. And brokered CDs are like bonds in that when theyre being traded, their value can change based on the interest-rate environment so you could lose money. Plus, some brokerages tack on a trading fee when you sell CDs.
Potential risks with brokered CDs Market risk: The most common risk is that youll need your funds before the CD matures. Although there are no early redemption fees (like there are for bank-issued CDs), you may receive less than your original purchase price.
If a CD is sold on the secondary market at a lower value than its face value, it will have lost money. But there are no losses if the CD is kept until maturity.
If your CD gets called when interest rates drop, you may end up having to reinvest your money in an investment with a lower yield. Potential losses (when sold early). Since callable CDs are usually brokered CDs, youll have to sell it on a secondary market if you want to get out of it early.
Keeping the CD until its maturity date, however, can reduce the risk of losing money on it. Fees: Though there are no early withdrawal or monthly fees on brokered CDs, there may be a fee for selling them, which can eat into your earnings. Callable: Some brokered CDs can be called back before their maturity date.
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Once the CD matures, you can withdraw your deposit and the interest earned. Brokered CDs are a special type of CD option that can potentially offer much higher rates than traditional bank CDs.
Key Takeaways Banks issue callable CDs so they arent stuck paying higher interest rates should the prevailing interest rates drop. Yields on callable CDs are somewhat higher than traditional CDs, compensating for the risk to investors of the CD being called away.

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