Yankee CDs are a short-term savings vehicle commonly issued by foreign banks to raise capital from American investors. As a financial product, Yankee CDs are very similar to the original Certificates of Deposit (CDs) offered in the U.S., but with the one main difference of having maturity periods shorter than one year.

There is a downside to investing in a Yankee CD- the customer cannot withdraw their funds without incurring hefty penalties. Banks generally offer Yankee CDs in multiples of $50,000 or more, making them not only unsuitable for small investors but also quite accessible to high net worth individuals or institutional investors. Furthermore, these CDs are offered at slightly higher interest rates than those available in the U.S., making them attractive to foreign banks that can attract large investors looking for higher yield.

Although Yankee CDs are safe and secure investment options, they are only suitable for those who are comfortable with terms of shorter investment periods and loss of liquidity. Much like most traditional investments, Yankee CDs come with specific terms and conditions, varying from bank to bank, which must be carefully considered. Furthermore, as Yankee CDs have higher interest rates than other U.S. CDs, if not carefully monitored and managed, the returns on these investments can be wiped out due to penalties from early withdrawal.

In sum, Yankee CDs are worthwhile if you are a larger investor looking for greater returns on investment than those available in the U.S. market, and if you understand and agree to the risks. Whether Yankee CDs are a suitable means of long-term saving or a high-risk option to add to a portfolio of secure investments is a decision that has to be weighed up weighing profits against loss of access to funds.