A reader emailed us earlier this week asking about CDs (certificates of deposit) through their brokerage – Scottrade. She currently has a brokerage account set up with them and wants to place a sizable chunk into a deposit since it is simply sitting idle in her account not accruing any sort of interest. Although I have never personally opened a bank CD through Scottrade, I did do a bit of research on their deposit offerings and below is what I’ve found. If you have personal experience in opening a CD with Scottrade, please share in the comment section below.
First and foremost. While Scottrade does have a banking division and may have underwritten CDs in the past they don’t currently do this now. Today if you were to open a CD with Scottrade it would actually be held with another bank (always an FDIC insured one) but not with Scottrade itself.
Perhaps the main reason they don’t currently offer any of their own deposits is because the interest rate environment is so terrible making it not economically viable for them to do so. (Check out this google trend chart to see the current level of consumer interest in bank CD’s.)
That being said, you can still open CD with your Scottrade account without any fees or hidden costs. Scottrade gets paid from the banks for promoting their deposits, so no charges will be encountered by the consumer. They offer the traditional CDs you would see at any bank with 3 month to 20 year maturities.
The interest rates you can expect to receive however are abysmal when compared to some of the leading online banks. With the deposit rate climate being what it is today we wouldn’t suggest opting for anything other than a short term maturity (3 months, 6 months, 12 months at the most) so that you have the cash freed up for a better deposit rate when rates as a whole begin to rise.
Scottrade does not publish the CD rates offered through their partnered banks on their website but we’ve confirmed a few rates with their St. Louis banking branch to shed a little more light on these products.
3 month CD – 0.06% APY to 0.09% APY depending on deposit amount.
6 month CD – 0.11% APY to 0.14% APY depending on deposit amount.
12 month CD – 0.15% APY to 0.20% APY depending on deposit amount.
18 month CD – 0.20% APY to 0.27% APY depending on deposit amount.
24 month CD – 0.25% APY to 0.32% APY depending on deposit amount.
36 month CD – 0.30% APY to 0.37% APY depending on deposit amount.
48 month CD – 0.40% APY to 0.50% APY depending on deposit amount.
60 month CD – 0.45% APY to 0.50% APY depending on deposit amount.
To put the offers above in perspective the current national average for 12 month CDs is 0.65% APY and the current national average for money market accounts with balances under $25k is 0.45% APY.
Below is a table of the top CD rates available through online banks (or locally). As you can see Scottrade has a difficult time stacking up.