When I'm not hosting this podcast, I am writing books, but it is really hard for me to write when I'm at home, so I like to find remote cabins in the middle of nowhere to just hang out and write. But I hate the idea of my house just sitting empty, doing nothing but collecting dust and definitely not collecting checks. And that's why I'm an Airbnb host. It's one of my all-time favorite side hustles. Other popular side hustles are awesome, too, don't get me wrong, but they often involve big startup costs. By hosting your space, you're monetizing what you already have access to. It It doesn't get easier than that. And if you're new to the side hustle game and you're anxious about getting started, don't worry, because you're not in this alone. Airbnb makes it super easy to host. I mean, if I could do it, you could do it. And your home might be worth a lot more than you think. Find out how much at airbnb. Com/host. I'm Nicole Lappin, the only financial expert you don't need a dictionary to understand. It's time for some money rehab. You know, when it comes to slow and steady investment offerings, I am a big fan of CDs.

But just like the music kind, there isn't one CD, and that's great. Financial solutions shouldn't be one size fits all because we all have different financial needs. So to help you pick which CD is best for you, I'm going to give you the low down on seven types of CDs. Yes, seven. And the more you know. Number one, brokered CDs. Brokered CDs, as you can probably tell by the name, are typically purchased through a brokerage firm, not not directly from a bank, which is how you'd buy a traditional CD. Brokered CDs are bought and sold much like stocks and bonds through a brokerage account. Most major brokerages have a range of brokered CDs from different banks, offering you a smorgas board of different rates and terms to choose from. The variety is a key difference from traditional CDs, because while your local bank only offers their CDs, a brokerage can provide access to a diverse array of different CDs from different banks all across the country, sometimes even globally. And even though you're buying these CDs from a brokerage and not a bank, these CDs are still bank products, so most brokered CDs are FDIC-insured up to the legal limit, so your principle is generally safe.

Because they come from a reseller, a la your brokerage, leverage. These types of CDs have slightly different perks and risks compared to traditional bank CDs. For example, brokered CDs may offer flexibility to sell on the secondary market before maturity. Don't get me wrong, being able to sell early is a huge perk with this type of CD, but it's not all rainbows and butterflies. The secondary market for brokered CDs can be fickle. There's no guarantee that you're going to find a buyer if you need to sell the CD before it matures, meaning it could get tricky to get your cash out early. Or you might be able to sell it, but for a less than your original investment, which is not the outcome anyone wants. For these guys in particular, be sure to really read the fine print. Some brokered CDs may be callable. We'll talk about these in more detail in a sec. But net net, brokered CDs are for the investor who wants the pick of the litter might need to pull their money out early and knows the risks. Number two, jumbo CDs. These are similar to traditional CDs, but require a big minimum deposit, often 100 grand or more.

Jumbo CDs typically offer higher interest rates than standard CDs due to the, well, jumbo investment. You can't necessarily cold call your bank for these. As you can imagine, CDs with this high of a minimum deposit are more of a boutique offering. While While they're usually offered by large and online banks, some small or regional banks specifically cater to the type of client that is looking to sock away 100K in a nice safe CD. At the moment, the difference in the rate of jumbo CDs versus regular CDs is fairly small, so in some cases, you would be better off with a traditional CD. However, even in less favorable markets, these can have a role in financial planning if you have a very large sum of money and you want to protect it while earning a modest rate of return. Remember, FDIC insurance covers you for only up to 250K, so if you have 100K that you're planning to use for a down payment on a house in five years, a jumbo CD at a bank different from the one where you have your checking and your savings account could be a great way to keep your money safe, insured, and invested without having to think too hard about it.

The difference in rates can be more pronounced when interest rates are high and banks are actively seeking to increase their deposits. Banks make a lot of money from interest on loans and mortgages. When interest rates are high, banks want to loan out as much money as possible. So to do that, they need more money in the bank, literally. By attracting larger deposits through jumbo CDs, banks can increase their capital reserves and have more funds to lend out. Number three, Bump Up CDs. Bump Up CDs offer a unique blend of security and flexibility in this not-so-crazy world of fixed income investing. Unlike traditional CDs where the interest rate is locked in for the entire term, Bump Up CDs allow you the option to increase your rate of return if the bank's rate for new CDs up. This comes in handy when interest rates are on the rise and makes for the perfect CD for any investor with FOMO. It's like a price guarantee. Bump Up CDs give you that have your cake and eat it to feeling. They're a hedge against rising rates while maintaining the core benefits of a CD. Sounds too good to be true?

It's not, but there is a catch. These CDs start with lower interest rates compared to their traditional counterparts, which is basically the trade-off for the flexibility they provide. Generally, the opportunity to bump up the rate isn't unlimited, though. Most only allow you to trade up once or twice during the CD's term. Number 4, Step Up CD. Here's another CD for Commitment, folks. With Step Up CDs, the interest rate increases at predetermined intervals throughout the term of the CD. This makes it the perfect option if you want to invest in CDs, but you're sure that interest rates will change and you don't want to lose out on gains. If you lock in a step up CD, over its term, the interest rate automatically climbs at specific points like climbing a staircase. Each step represents a higher interest rate, giving you the potential for greater returns as time goes on. It's a bit like a long-term bet on rising rates. Like bump-up CDs, the initial interest rate on step-up CDs might be lower than traditional CDs, but as the step-up kicks in, you could end up with a better overall return. Number 5, Liquid CDs. What if your fear of commitment isn't about rising interest rates?

What if it's the idea of locking up all of your money that gives you cold feet? Then allow me to introduce you to a super flexible CD called the Liquid CD. The Liquid CD sets itself apart from standard CDs by allowing you to withdraw some or all of your money before the mature date without facing any penalties. Obviously, this isn't a free for all, and there will be rules about how much and how often you can withdraw your money. So not to sound like a broken record here, but please do read the fine print. If you are squirreling away money for your future baby fund or cash that you might need sooner than expected, this can be a great choice to give yourself a little more flexibility. However, the trade-off for this convenience is, you guessed it, typically a lower interest rate compared to traditional CDs. With liquid CDs, you're essentially paying for easier access to your money with what would be the maximum returns. Some of the other alternative CDs we've already talked about, these can require a little bit of shopping around. And just a heads up, depending on the bank, the money might not be immediately available for withdrawals.

So liquid CDs are for the money that you may need earlier than expected, but with some notice, in other words, not your emergency fund. Number 6, callable CDs. We've talked a lot about our commitment phobes. Let's give our adrenaline junkies a little something to work with. If you're looking to maximize your return and you don't mind more risk, then a callable CD might be your perfect match. This is a CD that offers a top-tier interest rate, but that comes with a price. The bank can say, mind now, give it back at any point and call the CD back from you before it fully matures. You get all of your money back, plus whatever interest you've made so far, but you do miss out on any potential future returns. The bank might do this if interest rates fall significantly after the CD is issued. Lower interest rates mean that the bank can and probably will refinance its debt at a better rate, which means take back their CD. Banks love these CDs, especially when they think interest rates are going to fall, and this gives them an escape hatch to a lower rate. It's important to note that not all banks offer callable CDs, and the terms can vary significantly between those that do.

If you're considering one, take a close look at the rules around how soon a CD can be called after it's issued. Number seven, add-on CDs. An add-on CD can come in really handy if you're a CD stand and you just can't get enough of them, but now is not a really good time to tie up a big chunk of your money. There are some limits here, and it varies from institution to institution and even CD to CD. But generally with add-on CDs, the interest rate is fixed and you can add on certain amounts of money up to a certain limit or a set number of times over the lifetime of the CD. So let's say you have $100 right now to invest, and you know you're going to get $1,200 back from Uncle Sam when your tax refund comes in in a few weeks. But you really want to lock in an awesome rate on a CD. In that scenario, you could try to snag a CD with the $100 that you have right now and then add on the $1,200 later. What are the drawbacks you might ask? Great question, and I'm so glad that you've picked up on the basic fact that all investments have downsides.

Sides. The drawback is that add-on CDs offer interest rates that are often lower than those of traditional CDs. Give, take, rinse, repeat. For today's tip, you can take straight to the bank. If you want to jump on a CD, don't assume that your bank is going to give you the best rate out there. Definitely shop around. And when you do, look at digital banks that don't have brick and mortar locations like Allied Bank. Those banks save a lot on overhead by being completely URL instead of IRL, and they can pass those savings on to you.

Money Rehab is a production of Money News Network. I'm your host, Nicole Lappin. Money Rehab's executive producer is Morgan LaVoy. Our researcher is Emily Holmes. Do you need some money rehab? And let's be honest, we all do. So email us your moneyquestions, moneyrehab@moneynewsnetwork. Com, to potentially have your questions answered on the show or even have a one-on-one intervention with me. And follow us on Instagram at Money News and TikTok at Money News Network for exclusive video content.

And lastly, thank you. No, seriously, thank you.

Thank you for listening and for investing in yourself, which is the most important investment you can make.