A large-denomination certificate of deposit is a kind of large-amount certificate of deposit issued by a bank, and its interest rate is generally higher than that of a fixed deposit of the same maturity, so it is favored by many depositors. But are large certificates of deposit really as safe as regular bank deposits?Before depositing a large certificate of deposit, you need to understand these risks.
1.High threshold. The minimum deposit amount of a large certificate of deposit is generally 200,000 yuan or more, which is a large amount of money for most people, and may occupy all or most of their deposits. If you deposit all your money in a large certificate of deposit in one bank, then it is equivalent to putting all your eggs in one basket, and in the event of an accident, the loss can be significant.
2.Security. Although large-denomination certificates of deposit are financial products of bank deposits, they are not completely equivalent to bank deposits. According to the "Regulations on Deposit Insurance", the bank deposit insurance institution only guarantees the principal and interest of each depositor's deposit in the same bank within 500,000 yuan, and the part exceeding 500,000 yuan must be repaid in proportion to the bank's liquidation. In other words, if you have a large certificate of deposit with a bank of more than $500,000, then in the event of a bank failure, you may lose your principal.
3.Liquidity. The deposit period of large-amount certificates of deposit is generally 3 months, 6 months or 1 year, and cannot be withdrawn at any time during the period, otherwise the interest will be calculated according to the current deposit interest rate, and the interest income will be lost. Some large certificates of deposit support partial early withdrawal, but require the remaining amount to be not less than the minimum deposit amount, which may not be flexible for some depositors who need money urgently. In addition, some large-denomination certificates of deposit support transfer, but the transfer takes a certain amount of time, and there may be a discount, and it may not be able to be realized in time.
4.Yield. Although the interest rate of large certificates of deposit is higher than that of fixed deposits, it is not fixed, but fluctuates according to market conditions. With the reduction of deposit rates, the interest rate on large certificates of deposit has also been declining, and there are no more than 4% of large certificates of deposit. In general, the interest rate of large certificates of deposit will vary from bank to bank, generally speaking, the interest rate of state-owned banks is lower, and the interest rate of small and medium-sized banks is higher, but the risk of the latter is also relatively large.
To sum up, large-denomination certificates of deposit are not a risk-free wealth management product, but have certain thresholds, security, liquidity and yield risks. Before depositing a large amount of CDs, depositors should make a reasonable choice based on their own capital situation, risk appetite and return expectations, taking into account various factors. At the same time, it is also important to pay attention to diversification and do not put all your money in one bank or one product to avoid surprises.
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