Vanguard is one of the most recognized names in investing. It’s one of the Big Three investment firms in the US, sitting next to BlackRock and State Street. The company helps more than 30 million clients invest for a range of financial goals, and a lot of people are happy with what they can do here: Vanguard finished fourth in the most recent J.D. Power customer satisfaction rankings for self-directed investing, scoring five points above the industry average.
Vanguard offers a range of mutual funds, exchange-traded funds, or ETFs, stock, bond and money market funds, and certificates of deposit, or CDs. Vanguard CDs, however, are a bit different than the CDs you’re used to comparing. They are brokered CDs, which means they leverage Vanguard’s massive buying power to offer clients some of the best rates on the market.
Vanguard CDs: At a glance
| CD types offered | Brokered CDs |
| Minimum deposit | $1,000 |
| Term lengths | 1 month to 120 months (10 years) |
| Compounding schedule | None -- Vanguard CDs pay simple interest. |
| Early withdrawal penalties | None, but they will be sold on a secondary market, which may create a gain or loss depending on market conditions. |
| Grace period | None -- once the CD matures, the funds move into a linked money market fund and it’s up to you to reinvest. |
Vanguard CD rates
Vanguard CDs are FDIC-insured CDs that you buy through your Vanguard brokerage account. You can get new issue CDs -- those come directly from a bank -- or secondary trades, which you buy from another account holder who’s selling their CD. New issues don’t have any fees, but secondary trades are charged $1 for every $1,000 of value up to a maximum of $250.
Vanguard CD terms and payout
Vanguard CDs have a minimum investment amount of $1,000. Then, if you want to invest more, it all must come in $1,000 increments.
While you’ll buy the CD through a Vanguard account, it’s the bank that issues the CD that ultimately decides when you can get your interest earnings. If you’re aiming to use the interest earnings to cover living expenses, you should review the information about the payment schedule in the CD description to make sure you’ll be able to receive regular payments throughout the term. It’s important to understand how Vanguard’s secondary market for CDs works, by allowing you to purchase a CD from another individual. The CD is still an FDIC-insured account -- it’s just available from a different source. Think of it almost like eBay for CDs.
What happens after your Vanguard CD matures?
Unlike CDs you can buy directly from banks and credit unions, Vanguard CDs don’t have any kind of grace period once they mature. Instead, the principal amount and the earned interest are automatically transferred to your linked money market fund. If you want to invest in more CDs, you’ll have to request to purchase more of them in your account.
Early withdrawal penalties
If you need to access your cash prior to the maturity date, you’ll receive all the interest you’ve earned -- a key point of distinction versus traditional CDs that will often require you to forfeit a certain amount of interest for your early withdrawal. It’s not all roses, though. Selling a CD on the secondary market involves paying commission fees, and you aren’t guaranteed to actually get your principal back. Vanguard warns that selling a CD before it matures can come with a substantial gain or loss.
Example: How much can you earn with a Vanguard CD?
Your Vanguard CD earnings ultimately depend on how much you’re willing to commit for an extended period of time. Here’s a rundown of the potential payout if you invest $10,000 in a Vanguard CD. Because Vanguard pays simple interest, there’s no extra math to determine compounding.
Additionally, there are alternative terms available. Vanguard advertises rates for groupings of terms: One to three months, four to six months, seven to nine months, 10 to 12 months and 13 to 18 months.
| CD term | APY | Total interest |
| 3 months | 4.95% | $123.75 |
| 6 months | 5.00% | $250 |
| 9 months | 5.05% | $378.75 |
| 12 months | 5.15% | $515 |
| 18 months | 5.10% | $765 |
| 2 years | 5.00% | $1,000 |
| 3 years | 4.90% | $1,470 |
| 4 years | 4.80% | $1,920 |
| 5 years | 4.90% | $2,450 |
| 10 years | 4.80% | $4,800 |
How do Vanguard CD rates compare?
The CD rates at Vanguard can go toe-to-toe with the best CD rates you’ll find anywhere. Most importantly, all of Vanguard’s CD rates across all terms are quite high. At many banks, you might find competitive CD rates for certain promotional term lengths alongside some very low rates for other terms.
How to open a Vanguard CD
To open a CD with Vanguard, you’ll need to open an account with the company first. It’s a fairly simple process that involves sharing your Social Security number, your employer’s information and your bank account and routing numbers. You’ll need to be prepared to transfer at least $1,000 from your bank account to meet the minimum CD investment.
What other savings options does Vanguard offer?
Vanguard is an investment firm, so it doesn’t offer many of the traditional savings products you’re accustomed to finding at banks and credit unions. There are money market funds, which are very safe investments that aim to maintain a share price of $1.00 -- but there’s still a certain degree of risk involved.
Vanguard, however, is making an inroad to standard savings offerings with the new Vanguard Cash Plus Account. It’s currently offering an impressive 4.25% APY, and the FDIC insurance coverage is huge: Up to $1.25 million for individuals. Don’t get too excited just yet, though: It’s an invitation-only pilot program for select existing customers right now. Keep your eye on CNET to know if, and when, Vanguard makes this product more widely available.