Can CDs Purchased Elsewhere Be Transferred To Vanguard Brokerage?

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Topic Author
Van
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Joined: Wed Oct 27, 2010 9:24 am

Can CDs Purchased Elsewhere Be Transferred To Vanguard Brokerage?

Post by Van »

I like having everything in one place. All of my investments, including a number of CDs, are in my Vanguard Account. These CDs are all brokered CDs and were all purchased through my Vanguard Brokerage account. However, there are better CDs in terms of rates to be had other than those listed on the Vanguard Brokerage site. My question is: Is there a way to buy a CD from a bank, credit union or ? and have it transferred to my Vanguard Brokerage account?

I'm guessing the answer is no, but I'm hoping that some clever Boglehead has figured out a way to do this.
alex_686
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Re: Can CDs Purchased Elsewhere Be Transferred To Vanguard Brokerage?

Post by alex_686 »

To transfer a CD from one spot to another the CD had to be DTC eligible.

There are no reason why a cd you bought at a bank couldn’t be DTC eligible. However the CDs tend to be issued under different programs. The Federal Reserve - the banking regulator- treats these slightly differently for reserve requirements. So I can’t see the bank doing this. Never hurts to ask.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
Topic Author
Van
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Re: Can CDs Purchased Elsewhere Be Transferred To Vanguard Brokerage?

Post by Van »

Thanks Alex_686. What does DTC eligible mean?
alex_686
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Re: Can CDs Purchased Elsewhere Be Transferred To Vanguard Brokerage?

Post by alex_686 »

The Depository Trust & Clearing Corporation

In the good old days buying and selling stocks involved handling physical stock certificates, which as you can imagine had issues.

Now all of the backend stuff like who owns what is handled by DTC. Vanguard doesn’t have to network with every bank and every bank with every broker. They all just network with DTC.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
aristotelian
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Re: Can CDs Purchased Elsewhere Be Transferred To Vanguard Brokerage?

Post by aristotelian »

Are the CDs in question brokered CD's bought through another investment platform? Do they have a CUSPID? I have had no problem going from TD to Fidelity but you should call Vanguard to confirm.
Topic Author
Van
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Re: Can CDs Purchased Elsewhere Be Transferred To Vanguard Brokerage?

Post by Van »

aristotelian wrote: Sat Sep 26, 2020 2:53 pm Are the CDs in question brokered CD's bought through another investment platform? Do they have a CUSPID? I have had no problem going from TD to Fidelity but you should call Vanguard to confirm.
I don't actually have any CDs now that I want to transfer. All of CDs that I currently own were purchased through Vanguard and are in my Vanguard Brokerage account. What I would like to know is if it is possible to buy a CD from XYZ bank or credit union and then transfer it to my Vanguard Brokerage account. If so, what are the mechanics involved?
aristotelian
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Re: Can CDs Purchased Elsewhere Be Transferred To Vanguard Brokerage?

Post by aristotelian »

Van wrote: Sat Sep 26, 2020 3:08 pm
aristotelian wrote: Sat Sep 26, 2020 2:53 pm Are the CDs in question brokered CD's bought through another investment platform? Do they have a CUSPID? I have had no problem going from TD to Fidelity but you should call Vanguard to confirm.
I don't actually have any CDs now that I want to transfer. All of CDs that I currently own were purchased through Vanguard and are in my Vanguard Brokerage account. What I would like to know is if it is possible to buy a CD from XYZ bank or credit union and then transfer it to my Vanguard Brokerage account. If so, what are the mechanics involved?
Pretty sure the answer is no but you can always call Vanguard to confirm.
alex_686
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Re: Can CDs Purchased Elsewhere Be Transferred To Vanguard Brokerage?

Post by alex_686 »

Van wrote: Sat Sep 26, 2020 3:08 pm
aristotelian wrote: Sat Sep 26, 2020 2:53 pm Are the CDs in question brokered CD's bought through another investment platform? Do they have a CUSPID? I have had no problem going from TD to Fidelity but you should call Vanguard to confirm.
I don't actually have any CDs now that I want to transfer. All of CDs that I currently own were purchased through Vanguard and are in my Vanguard Brokerage account. What I would like to know is if it is possible to buy a CD from XYZ bank or credit union and then transfer it to my Vanguard Brokerage account. If so, what are the mechanics involved?
You would need to ask the bank if the CD is transferable and their polices. There is not a cookie cutter solution here.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
123
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Re: Can CDs Purchased Elsewhere Be Transferred To Vanguard Brokerage?

Post by 123 »

I think it's unlikely that a CD purchased at a brick and mortar bank can be transfered like a brokered CD. The reason is that the retail arm of the bank that sold the CD at the bank likely wants to keep those assets on its books. With retail CDs they place a certain reliance that many of them will just automatically rollover at maturity. If the CD could be handled like a brokered CD they are usually guaranteed to be kissing the money goodbye at maturity since it would cash out into your brokerage settlement account and there is no particular incentive to go back to them.

There are a lot of things about banking and investment products that are inconvenient for a reason.
The closest helping hand is at the end of your own arm.
Topic Author
Van
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Re: Can CDs Purchased Elsewhere Be Transferred To Vanguard Brokerage?

Post by Van »

123 wrote: Sat Sep 26, 2020 4:07 pm I think it's unlikely that a CD purchased at a brick and mortar bank can be transfered like a brokered CD. The reason is that the retail arm of the bank that sold the CD at the bank likely wants to keep those assets on its books. With retail CDs they place a certain reliance that many of them will just automatically rollover at maturity. If the CD could be handled like a brokered CD they are usually guaranteed to be kissing the money goodbye at maturity since it would cash out into your brokerage settlement account and there is no particular incentive to go back to them.

There are a lot of things about banking and investment products that are inconvenient for a reason.
This makes a lot of sense to me. I had not thought about it in this way.
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