Ready to put your money to work and earn some predictable income? Buying a Certificate of Deposit (CD) on Merrill Edge can be a smart move for a portion of your portfolio, offering FDIC insurance and a fixed interest rate for a set period. Unlike volatile stocks, CDs provide a sense of stability, making them ideal for saving for a specific goal or diversifying your investments.
This lengthy guide will walk you through every single step of purchasing a CD on Merrill Edge, from understanding what they are to placing your order. Let's get started!
How to Purchase a CD on Merrill Edge: A Step-by-Step Guide
Step 1: Understand What a Brokered CD Is and Why Merrill Edge?
Before diving into the "how-to," let's clarify what you're actually buying. When you purchase a CD through Merrill Edge, you're buying a brokered CD. This is slightly different from a traditional bank CD.
What's a Brokered CD? Brokered CDs are issued by various banks and savings associations but are bought and held through a brokerage firm like Merrill Edge. This gives you access to a wider range of CD issuers and terms than you might find at a single bank. While they are held in your brokerage account, they are still FDIC-insured up to applicable limits, just like traditional bank CDs.
Why Merrill Edge? Merrill Edge offers a robust platform for self-directed investors. They provide access to a wide selection of brokered CDs, often with competitive rates. Their integrated platform with Bank of America also offers convenience if you already have banking relationships there. Plus, Merrill Edge typically doesn't charge commissions on new issue CDs, though some fees might apply to secondary market transactions.
Engage User: Are you ready to explore the world of fixed income and potentially lock in some attractive rates? Let's begin by ensuring you have the right foundation in place!
Step 2: Ensure You Have a Merrill Edge Brokerage Account
To purchase a brokered CD, you must have an active Merrill Edge brokerage account. If you don't already have one, this is your first crucial step.
Sub-heading: Opening a New Merrill Edge Account
Visit the Merrill Edge Website: Navigate to the official Merrill Edge website.
Choose "Open an Account": Look for a prominent button or link to open a new account.
Select Account Type: For CD purchases, a standard Self-Directed Brokerage Account is usually what you'll need. You might also consider an IRA (Traditional or Roth) if you're looking to invest for retirement, as CDs can be held within these accounts.
Provide Personal Information: You'll need to provide details such as your Social Security Number, date of birth, mailing address, email, and employment information.
Fund Your Account: Once your account is open, you'll need to fund it. You can do this through various methods:
Electronic Funds Transfer (ACH): Link your bank account for easy transfers.
Wire Transfer: For larger amounts, this can be a quicker option.
Check Deposit: Mail a check or deposit via the mobile app.
Account Transfer: Transfer an existing account from another financial institution.
Sub-heading: Already a Merrill Edge Client?
Great! Simply log in to your account to proceed to the next steps. Ensure you have sufficient cash available in your account to make the CD purchase. If not, you'll need to transfer funds first.
Step 3: Navigate to the Fixed Income Screener
Once you're logged into your Merrill Edge account, it's time to start looking for CDs.
Locate the "Research" Tab: On the Merrill Edge platform, look for a tab or menu option typically labeled "Research" or "Investments."
Find "Fixed Income": Within the "Research" section, you should find a sub-category for "Fixed Income" or "Bonds & CDs." Click on this.
Access the CD Screener: Merrill Edge provides a dedicated Fixed Income Screener that allows you to search for available CDs. This is your primary tool for finding suitable options.
Step 4: Utilize the CD Screener to Find Your Ideal CD
This is where you'll define your preferences and narrow down the vast selection of available CDs. The screener is a powerful tool, so take your time and explore its features.
Sub-heading: Key Search Parameters to Consider
Term Length (Maturity Date): This is critical. How long do you want your money locked away? Options typically range from a few months to several years (e.g., 3 months, 6 months, 1 year, 2 years, 5 years, etc.). Longer terms generally offer higher interest rates, but your money is less accessible.
Yield (Interest Rate): This is the return you'll earn. Look for the Annual Percentage Yield (APY). Merrill Edge's screener will show current rates. Compare rates from different issuers and for different terms.
Minimum Investment: Brokered CDs typically have a minimum investment of $1,000, and often come in multiples of $1,000.
Issuer: While FDIC insured, you might have preferences for certain banks or financial institutions. The screener allows you to filter by issuer.
Callable vs. Non-Callable:
Non-callable CDs cannot be redeemed by the issuer before their maturity date. This means your interest rate is guaranteed for the entire term.
Callable CDs generally offer a slightly higher yield, but the issuer has the option to "call" or redeem the CD before its maturity date, typically if interest rates fall. If a CD is called, you'll receive your principal back, and you'll then need to find a new investment. Be aware of this feature.
Interest Payment Frequency: How often will you receive interest payments? Common frequencies include monthly, quarterly, semi-annually, or at maturity.
FDIC Insurance: While brokered CDs are generally FDIC insured, always confirm the issuer's FDIC status and understand the coverage limits ($250,000 per depositor, per insured bank, for each account ownership category).
Sub-heading: Refining Your Search
Use Pre-defined Search Parameters: Merrill Edge often provides pre-set filters for common searches, which can be a good starting point.
Select Your Own Criteria: For a more tailored search, use the custom filter options to input your desired term, yield range, minimum investment, and other preferences.
Sort Results: Once you have your search results, sort them by yield, maturity date, or other relevant criteria to easily compare options.
Step 5: Review CD Details and Select Your Choice
After using the screener, you'll have a list of CDs that meet your criteria. Now it's time to drill down into the specifics of each one.
Click on a CD to View Details: Select a CD from your search results to open its detailed information page.
Examine Key Information:
CUSIP Number: This is a unique identifier for the security.
Yield to Maturity (YTM): The total return anticipated on a bond if the bond is held until it matures.
Coupon Rate: The stated interest rate the CD will pay.
Issue Date and Maturity Date: Confirm the exact start and end dates of the CD.
Accrued Interest: If you are buying a CD in the secondary market (not a new issue), there might be accrued interest you need to pay the seller.
Call Provisions (if applicable): Understand the terms under which the CD could be called.
FDIC Coverage Details: Double-check the FDIC insurance status.
Compare and Contrast: Don't just pick the first one that looks good. Compare several options to find the one that best aligns with your financial goals and risk tolerance. Consider factors like:
Rate vs. Term: Is a slightly lower rate for a shorter term better for your liquidity needs, or do you want to maximize yield with a longer commitment?
Callable vs. Non-Callable: Are you comfortable with the possibility of a callable CD for a higher yield, or do you prefer the certainty of a non-callable one?
Issuer Strength: While FDIC insured, you might prefer larger, more established banks.
Step 6: Place Your CD Order
Once you've made your selection, it's time to execute the purchase.
Initiate Trade: From the CD's detail page or by using the "Trade" tab, select "Fixed Income."
Enter CD Details: If you already know the CUSIP number or issuer, you can directly input this information. Otherwise, select the specific CD you've chosen from your research.
Specify Quantity: Enter the number of CDs you wish to purchase. Remember, brokered CDs typically have a minimum of $1,000, so you'll enter the number of $1,000 increments (e.g., if you want to invest $5,000, you'll enter "5").
Review Order: Carefully review all the details of your order: the CD's term, interest rate, maturity date, total principal amount, and any applicable fees.
Confirm and Place Order: If everything looks correct, confirm the order. Merrill Edge will then process your request. You'll typically receive an order confirmation shortly after.
Step 7: Monitor Your CD and Plan for Maturity
After purchasing, your work isn't entirely done.
View Your Holdings: Your newly purchased CD will appear in your Merrill Edge account holdings. You can monitor its value (though brokered CDs held to maturity will return principal plus interest) and track interest payments.
Interest Payments: Interest payments will typically be credited directly to your Merrill Edge account. You can then choose to reinvest these payments or withdraw them.
Plan for Maturity: Brokered CDs do not auto-renew. As your CD approaches its maturity date, Merrill Edge will send you a maturity notice. At this point, you have a few options:
Reinvest: Purchase a new CD with the principal and accrued interest.
Withdraw: Have the principal and interest credited to your cash management account or linked bank account.
Explore Other Investments: Use the funds for other investment opportunities.
Frequently Asked Questions (FAQs) about Purchasing CDs on Merrill Edge
Here are 10 common questions with quick answers to help you further:
How to check Merrill Edge CD rates?
You can check Merrill Edge CD rates by logging into your account, navigating to the "Research" tab, and then selecting "Fixed Income" to access the CD Screener, which displays current offerings and their yields.
How to know the minimum investment for a Merrill Edge CD?
The minimum investment for most brokered CDs on Merrill Edge is typically $1,000, and they are usually purchased in increments of $1,000. This will be clearly stated in the CD's details on the screener.
How to sell a CD before maturity on Merrill Edge?
While brokered CDs are designed to be held to maturity, Merrill Edge may maintain a secondary market where you might be able to sell your CD before it matures. However, the price you receive could be less than your original investment, especially if interest rates have risen since you purchased it. Early withdrawals are generally not permitted directly from the issuer.
How to ensure my Merrill Edge CD is FDIC-insured?
All brokered CDs offered through Merrill Edge are issued by FDIC-insured banks and savings associations. You can confirm the FDIC insurance details for each specific CD within its detailed information on the Merrill Edge platform.
How to understand the difference between callable and non-callable CDs on Merrill Edge?
A non-callable CD guarantees your interest rate for the entire term, as the issuer cannot redeem it early. A callable CD typically offers a higher yield but allows the issuer to redeem it before maturity, usually if interest rates fall, requiring you to reinvest.
How to choose the right CD term on Merrill Edge?
The right CD term depends on your financial goals and liquidity needs. Shorter terms offer more flexibility but often lower rates, while longer terms lock in higher rates but tie up your money for a longer period.
How to use CD laddering on Merrill Edge?
CD laddering involves dividing your investment into multiple CDs with staggered maturity dates (e.g., 1-year, 2-year, 3-year CDs). As each CD matures, you can reinvest it into a new, longer-term CD, providing both regular access to funds and the opportunity to capture potentially higher rates over time.
How to receive interest payments from my Merrill Edge CD?
Interest payments from your Merrill Edge CD are typically credited directly to the cash balance in your Merrill Edge brokerage account. You can then choose to withdraw or reinvest these funds.
How to contact Merrill Edge customer service for CD-related questions?
You can contact Merrill Edge customer service for CD-related questions by calling their dedicated lines, typically found on their "Contact Us" page. For Self-Directed Investing, the number is often 1.877.653.4732.
How to manage my CD after it matures on Merrill Edge?
When your CD matures, Merrill Edge will notify you. You will have options to either reinvest the principal and accrued interest into a new CD, transfer the funds to your Merrill Edge cash management account, or withdraw them to a linked bank account. Remember, brokered CDs do not auto-renew.
