But others don't mature for 15 to 20 years. These CDs frequently come with a one-year call provision, which means the broker can cash out your CD after a year, returning your initial investment plus any interest. But the street doesn't run both ways. If you redeem the CD before the maturity date, you could face a big penalty. Early redemption costs.
Some brokers claim their CDs carry no early withdrawal penalties.
But that doesn't mean you can redeem a brokered CD for free. If your broker bought a giant CD and split it up , he'll try to sell your share to another customer. If interest rates have risen, he'll probably have to sell it at a discount, reducing the amount of money you'll get back. Because brokered CDs are purchased from banks, they're usually federally insured against a bank failure. There are no certification requirements for deposit brokers.