OVERVIEW    
Jumbo CDs are FDIC insured and placed directly at banks nationwide. FISN searches nationwide for the best CD rates and offers these certificates of deposit for investment. Depositors select the Jumbo CDs that meet their needs for safety, yield and return of principal. The CD is held by the depositor.

PROCESS       
The depositor selects suitable Jumbo CDs and FISN opens the new CD accounts in the depositor’s name directly at each bank and establishes the deposit terms. The depositor then wires the funds to each bank to credit each new account set up in their ownership name. Interest and ownership paperwork are mailed directly to the depositor. The depositor completes these bank deposit forms and verifies the ownership information, amount, rate and maturity date. Paperwork is returned to each bank along with the required identification.

FDIC COVERAGE        
Jumbo CDs are opened in amounts no greater than the $250,000 insurance limit. No more than the $250,000 insurance limit per ownership category should be invested in any one bank at the same time. The FDIC insurance limit has been temporarily raised to $250,000 until Dec. 31, 20013. The insurance limit applies to each ownership category. Multiple ownership categories such as joint and trust accounts may afford additional FDIC insurance per bank. FISN understands the FDIC insurance system and helps depositors gain the best return by maximizing coverage. Many banks are available to stretch FDIC insurance. Usually Jumbo CDs are opened for slightly less than the FDIC insurance limit, so that both principal and interest is FDIC covered.

JUMBO CD FEATURES
Jumbo CDs pay interest at a fixed rate over the life of the CD.  Interest is paid monthly at the end of each month or on the anniversary date. Each bank has it own style of paying interest and for reporting to account holders. Key information is the name of the bank and the location of the home office, the issue date and the maturity date.

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ID REQUIREMENTS
Some banks have extra identification requirements or impose special conditions such as deposits limited to personal, business or institutional accounts. Many banks restrict their best Jumbo CD rates to institutional accounts only. Rates for other amounts, banks without restrictions and/or other ownership categories are available upon request. Every account will require copies of government issued, picture identifications at a minimum. Business and trust accounts will require business organizational documents.

FEES
FISN earns a placement charge on every deposit, paid either by the bank or the depositor, for the service. The depositor receives the full stated interest rate in either case. If the bank pays FISN, the CD earns the stated interest rate without reduction. Or, if the depositor pays FISN, the charge effectively reduces the stated rate and is invoiced to the customer after placement, for the full term. It reduces the effective rate for the CD by 0.25%. For example, if the CD pays 5.00%, you would earn 5.00% less 0.25% for a net of 4.75%.

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Your Insured Deposit

UNIQUE RISKS FOR JUMBO CDs
Jumbo CDs present few unique risks. Jumbo CDs are traditional CDs established at a fixed rate for a fixed term. Depositors should be aware of the rate, the frequency of interest payments and the maturity date. Banks usually require Jumbo CDs to be in amounts of $95,000 to $100,000. The FDIC insurance limit per bank is $100,000. The typical risk is that the total exposure per bank may exceed the $100,000 limit when accrued and unpaid interest is included. This risk can be avoided by placing CDs in amounts less than the FDIC insurance limit including the possibility of several months of outstanding interest. This risk avoidance policy usually precludes doing Jumbo CDs that compound and pay interest at maturity. Interest must be disbursed monthly to avoid exceeding the FDIC limit. And, follow the FDIC rules and never exceed the per bank limit even in separate CDs. Strategies are available for families to extend FDIC insurance per bank.

INTEREST RATE RISK      
All investments that pay interest or dividends are subject to interest rate risk. Certificates of deposit (CDs) are included since their primary purpose is to produce income in the form of interest. Interest rate risk is present if interest rates are moving up from the original level but has no effect if CDs are held to maturity. Most Jumbo CD investors intend to hold their CDs to maturity. The risk is that the CD rate may dip below the prevailing market rates. If the CD rate is below the market, the investor has lost the opportunity to earn a higher return. Since Early Withdrawals are usually available, the investors can calculate the penalty and compare it to the higher rate opportunity. If the penalty is less than the increased interest, especially after taxes, than the risk can be overcome by taking a penalty and earning a higher rate on a new CD.

RE-INVESTMENT RISK       
All fixed income investments are subject to re-investment risk. This risk is related to what you do when an investment ends, regardless of the reason. If you plan to continue investing, you have to re-enter the marketplace to find a new, replacement investment. One side of this “risk” is that rates may be lower and/or fewer products may be available. The other side of this “risk” is that rates may be higher and/or more products are available. Strategies to lessen this risk is to time investment maturities close to when you might need the money or to go long when rates appear high and to go short term when rates appear low. Some investors do both by laddering the maturities between long and short terms. Longer term CDs capture higher returns from longer investments. Shorter maturities keep the remainder of your funds regularly available so rate swings are not missed.

PRINCIPAL RISK
All investments are subject to principal risk. This risk is connected to the issuer. If the financial outlook of issuer declines, the issuer’s credit rating could be downgraded or the issuer could actually default on its debt. With most debt, if the issuer is less credit worthy, the debt value will fall in value. And, if the issuer cannot repay the debt at all, the investment may be near worthless. The principal value will diminish in either case. With FDIC insured CD investments these two risks are nearly non-existent. Most banks, particularly regional banks, are not rated but even if they were, it typically does not matter much because the FDIC stands behind the bank. In a default, the FDIC is still there, protecting depositors. The FDIC usually transfers deposits to a viable bank or simply returns the deposit when a bank fails. Both actions occur promptly as is required in the FDIC rules. This risk is avoided by following the FDIC rules and staying insured.

OVERVIEW
Certificates of deposit (CDs) are less liquid than trading investments such as stocks. CDs are designed to be held to maturity, rather than be bought and sold, over and over again. A CD investor can reclaim their funds by exiting a certificate of deposit through a variety of methods. Some CDs have early withdrawal rights, nearly every CD can be sold and most CDs have a payment at death feature.

EARLY WITHDRAWAL
Fixed Rate Jumbo CDs almost always have early withdrawal rights although some banks limit it. There is a penalty for exercising the early withdrawal which could be substantial. Each bank has its own program for calculating the penalty since there are no government rules or standards. The penalty formula is stated in the bank’s standard disclosure available prior to deposit. Upon request the bank will compute the penalty and disclose the amount. The depositor has a choice to accept the penalty to trigger the withdrawal or reject the opportunity to withdraw the funds. The transaction can usually be done quickly, making the net proceeds available the same day.

CD SALE
Fixed Rate Jumbo CDs are not sell able nor transferable on the books of the bank where it is issued and held. A private sale is not recommended since the ownership and taxability of the interest cannot be reassigned. Jumbo CDs are unlike CDs held in a brokerage account which can be readily sold and re-registered in the name of a new owner.

TRANSFERABILITY
Fixed Rate Jumbo CDs are not transferable to another ownership capacity on the books of the bank where it is issued and held. These CDs issued directly by a bank cannot be  transferred to another bank. CDs and securities held in a brokerage account can be sold and transferred.

PAYABLE ON DEATH
Certificates of deposit generally have a feature that permits CDs to be paid off following the death of an owner. The standard privileges for refunding the CD apply if the CD is owned by a single person or by a joint account of individuals. Other ownership forms used by individuals may require investigation to determine whether they fit the circumstances necessary for payment on death. Each bank has its own program since there are no government rules or standards. If applicable, the bank usually requires a death certificate and a standard form indicating the authority of a living individual to request the payment following death for the deceased person. FISN can assist survivors or estate officials in this process. The return of funds is not immediate and can take several weeks once all the paper work is submitted. If the CD is held directly at the bank which issued it the funds are simply returned to the owner(s) by mail. The full amount is returned with interest up to the date of withdrawal.