Anybody using Andrews CU 3% IRA CD?

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Carl53
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Anybody using Andrews CU 3% IRA CD?

Post by Carl53 » Sat Nov 21, 2015 6:33 am

I stumbled across Andrews Federal Credit Union offering a 3% APY 7 year IRA CD on depositaccounts.com.

https://www.depositaccounts.com/banks/a ... union.html

The reviews are not so favorable, but the rate and their listed health rating are. They appear to have an easy access membership via a membership to a consumer organization.

I would be interested in hearing anyone's experience with them and in particular with this CD.

john94549
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Re: Anybody using Andrews CU 3% IRA CD?

Post by john94549 » Sat Nov 21, 2015 6:41 am

The larger issue is whether 3% is all that much of a bargain.

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dm200
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Re: Anybody using Andrews CU 3% IRA CD?

Post by dm200 » Sat Nov 21, 2015 10:10 am

Note that this is a federally chartered, federally insured credit union - so your money is backed by NCUA share insurance to at least $250,000 - and backed by the full faith and credit of the US Government.

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dm200
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Re: Anybody using Andrews CU 3% IRA CD?

Post by dm200 » Sat Nov 21, 2015 10:11 am

Carl53 wrote:I stumbled across Andrews Federal Credit Union offering a 3% APY 7 year IRA CD on depositaccounts.com.
https://www.depositaccounts.com/banks/a ... union.html
The reviews are not so favorable, but the rate and their listed health rating are. They appear to have an easy access membership via a membership to a consumer organization.
I would be interested in hearing anyone's experience with them and in particular with this CD.
Just that seven years, in some ways at least, is a long time for a fixed rate of return.

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Re: Anybody using Andrews CU 3% IRA CD?

Post by ThisTimeItsDifferent » Sat Nov 21, 2015 10:47 am

dm200 wrote:
Carl53 wrote:I stumbled across Andrews Federal Credit Union offering a 3% APY 7 year IRA CD on depositaccounts.com.
https://www.depositaccounts.com/banks/a ... union.html
The reviews are not so favorable, but the rate and their listed health rating are. They appear to have an easy access membership via a membership to a consumer organization.
I would be interested in hearing anyone's experience with them and in particular with this CD.
Just that seven years, in some ways at least, is a long time for a fixed rate of return.
That's just for IRA Share Certificates and the web site says "Penalties apply for early withdrawal." but I don't see the disclosure giving the actual EWP or shall/may language.

Of course an EE bond can be viewed as a 20 year CD with an APY of 3.5% and an EWP of virtually all interest but no loss of principal.
Since it is not marketable, it neither gains nor loses value based on changes in interest rates unlike treasuries or other marketable bonds.

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Re: Anybody using Andrews CU 3% IRA CD?

Post by Johno » Sat Nov 21, 2015 1:22 pm

john94549 wrote:The larger issue is whether 3% is all that much of a bargain.
Relatively speaking it is. The best 5yr IRA rate on that site is 2.42, 73bps >5 yr treasury yield, 3% is 96bps> 7yr treasury yield, yields as of 11/20. It's not as good a deal as PenFed's 3% in 5yrs in early 2014 (when treas ylds were similar to now) let alone NWFCU's recent 3.04% in 3yr (180 bps > 11/20's 3yr treas yield), but those were super deals now expired. So this rate could be beaten by another super deal which might or might not soon pop up, but is perhaps the best in terms of spread to comparable treasury at the moment.

You'd have to do more follow up on the early withdrawal penalty, since that's key to protecting against a big rate rise which is a bigger risk in such a relatively long maturity. Not only the quantitative terms, but whether the withdrawal right is expressly conditional ('we may allow'). But say for argument's sake the EWP was 1 yr's interest (I couldn't find it quickly looking at their site), and CU honored it which it's very likely they would: you'd get ~the same rate as the best current 5yr IRA CD by holding this one for 5yrs and then paying the EWP after 5yrs, meaning you get basically the best 5yr deal plus a free option to continue for 2 more years if best 2 yr CD rate is still less than 3% plus the EWP not paid, ie <~4.5%, 5 yrs from now.

IME sign up hassles tend to be greater for either IRA or CU CD's and this is both, but that's not worth a lot of bps IMO assuming one is investing a significant % of the $250k max. If you believe in the insurance system, the credit quality of the CU is secondary, you risk just getting back your principal but having to re-invest at a lower rate, and/or perhaps lose some accrued interest, but assuming the CU isn't in really bad shape that's probably a few % chance so on expected value basis only a few bps of yield.

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Carl53
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Re: Anybody using Andrews CU 3% IRA CD?

Post by Carl53 » Sun Nov 22, 2015 6:31 am

EWP terms
http://beta.andrewsfcu.org/media/doc/TruthInSavings.pdf

Transaction Limitations: After the share certificate is opened, you may not make deposits to it until the maturity date stated on the account. Dividends credited during the term may be withdrawn at any time during the term; withdrawing dividends can reduce future earnings. Dividends not withdrawn become part of the principal if the account is renewed for an additional term. Withdrawals of principal during the terms are subject to early withdrawal penalties. If you close your share certificate prior to maturity, you will receive the dividends that you earned through the closing date but that have not been previously credited.

Early withdrawal penalties (a penalty may be imposed for principal withdrawals before maturity):
• If your account has an original maturity of less than 24 months, we will charge a penalty equal to 90 days of dividends.
• If your account has an original maturity date of 24 months or greater, we will charge a penalty equal to 180 days of dividends.

If the principal amount being withdrawn together with accrued but unpaid dividends is insufficient to pay the penalty, the Credit Union may deduct the balance of the penalty from any funds remaining in the share certificate, as applicable, or in any other of your accounts at the Credit Union; or, on our request, you will pay us the balance of the penalty.

In certain circumstances, such as the death or incompetence of an owner of this account, the law permits, or in some cases requires, the waiver of the early withdrawal penalty. Different terms and conditions may apply to IRA, Roth IRA, or Coverdell accounts; see your plan documents for more details. Withdrawal of Dividends prior to Maturity: The annual percentage yield is based on an assumption that dividends will remain in the share certificate until maturity. You may alternatively elect to have your dividends transferred to another account with the Credit Union. A withdrawal will reduce earnings. Fees may reduce earnings on the account; if the credit union elects to not renew your share certificate automatically, we will notify you of this prior to your maturity date.


I also noticed that the compounding is at the end of each quarter.

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Re: Anybody using Andrews CU 3% IRA CD?

Post by Kevin M » Fri Feb 19, 2016 5:06 pm

I missed this post, and although it would have been useful to me if I had seen it, I learned about this CD on Jan 16 in this post: Large amount of CDs maturing....what to do? - Page 2 - Bogleheads.org.

Bottom line is that this is a great deal--even better now then when this thread started, and better than when I started my IRA transfer to buy it with proceeds from a PenFed IRA CD that matured late last year. Yield on 7-year Treasury now is 1.53%, so this CD has a yield premium of almost 150 basis points over the Treasury, much higher than my average premium of about 100-110 basis points for CDs purchased over the last 5.3 years (although it may be higher since I last checked, due to the 2-year 2.25% CD and 3-year 3.0% CD purchased last year).

Even the 30-year Treasury has a yield of only 2.61%, so a 7-year CD at 3% is a screaming buy.

EE bonds have been mentioned, but 3% for 7 years is a much better deal than 3.5% for 20 years, especially since you MUST hold the EE bond for 20 years to earn more than 0.1%. And of course with the CD you don't have the low annual purchase limit of EE bonds, but have an effective purchase limit of about $203K to stay under the $250K NCUA insurance limit after earning interest for 7 years: 203,000*(1.03)^7 = 249,664.

Another thing that makes this CD attractive is the low EWP of only 180 days of interest; usually the EWP is at least 360 days of interest for a CD with maturity greater than 5 years, while I consider 180 days of interest as competitive for a good 5-year CD (e.g., Synchrony Bank, Barclays Bank).

Since I've already been posting about it in the other thread, I'll provide an update there on how the IRA transfer has gone for me. I'll just note here that the transfer took a little over 4 weeks from the day I mailed the paperwork to AFCU, which is somewhat longer than the 3 weeks that has been typical for me, but fortunately the rate did not drop. They told me that they will not lock the rate after they have received the transfer form, so it's a bit of a crap shoot as to whether the rate will be good by the time the transfer is done.

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Re: Anybody using Andrews CU 3% IRA CD?

Post by Toons » Sat Feb 20, 2016 5:03 pm

3% for 7 years.?
I would be inclined to accept more risk,and
place monies in a conservative balanced mutual fund. :happy
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Re: Anybody using Andrews CU 3% IRA CD?

Post by Rob5TCP » Sat Feb 20, 2016 5:41 pm

Carl53 wrote:I stumbled across Andrews Federal Credit Union offering a 3% APY 7 year IRA CD on depositaccounts.com.

https://www.depositaccounts.com/banks/a ... union.html

The reviews are not so favorable, but the rate and their listed health rating are. They appear to have an easy access membership via a membership to a consumer organization.

I would be interested in hearing anyone's experience with them and in particular with this CD.
I am more concerned with the rate and less so with the reviews - especially since this will be for my Roth IRA.
Thanks for the heads up.

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Re: Anybody using Andrews CU 3% IRA CD?

Post by Kevin M » Sat Feb 20, 2016 9:53 pm

Toons wrote:3% for 7 years.?
I would be inclined to accept more risk,and
place monies in a conservative balanced mutual fund. :happy
This is not a rational comparison. A balanced fund is composed of stocks and bonds. You would want to compare the CD to just the bond portion of the balanced fund.

I would much rather own this CD for a large portion of my fixed income allocation than any bond fund, and then I would (and do) hold stocks using stock funds. This CD has a yield premium of about 150 basis points over a 7-year Treasury--that's a huge premium. So you're earning about twice as much (3% vs. 1.5%) with this CD as with a marketable bond with essentially the same credit risk (none) and much more term risk.

Balanced funds, such at Vanguard Target Retirement and LifeStrategy funds, are great for investors who want simplicity. They are especially good in tax-advantaged accounts of young accumulators, who are likely to have high stock allocations and relatively small portfolios. CDs are of more interest for those of us with larger portfolios, large allocations to fixed income, and who don't mind some added complexity in our portfolios.

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Re: Anybody using Andrews CU 3% IRA CD?

Post by killjoy2012 » Wed Mar 02, 2016 10:24 am

OK - stupid question....

I signed up with Andrew's yesterday to take advantage of this 3% 7 year CD. During the joining process, I only selected the Savings Acct w/ the $5 deposit since the 7 year IRA certificate was not shown as an extra option to open. And although I can login to the site now, my savings account (?) application is 'Approved Pending'. And I see no way to actually add/apply for the 7 year CD. If I go to the "open a secondary/additional account", it just goes in a loop after re-logging in. Guessing it may be because my acct is not fully situated yet?

Kevin or anyone else - how did you actually initiate the application for the 7 year CD? Even the "Open Now" link is not working (after I login).

Will call them over lunch... just wondering what I'm missing.

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Re: Anybody using Andrews CU 3% IRA CD?

Post by N52570 » Wed Mar 02, 2016 10:35 am

killjoy2012 wrote:OK - stupid question....

I signed up with Andrew's yesterday to take advantage of this 3% 7 year CD. During the joining process, I only selected the Savings Acct w/ the $5 deposit since the 7 year IRA certificate was not shown as an extra option to open. And although I can login to the site now, my savings account (?) application is 'Approved Pending'. And I see no way to actually add/apply for the 7 year CD. If I go to the "open a secondary/additional account", it just goes in a loop after re-logging in. Guessing it may be because my acct is not fully situated yet?

Kevin or anyone else - how did you actually initiate the application for the 7 year CD? Even the "Open Now" link is not working (after I login).

Will call them over lunch... just wondering what I'm missing.
I ended calling them to sort things out, multiple times!
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Re: Anybody using Andrews CU 3% IRA CD?

Post by Kevin M » Wed Mar 02, 2016 2:20 pm

killjoy2012 wrote: Kevin or anyone else - how did you actually initiate the application for the 7 year CD? Even the "Open Now" link is not working (after I login).
Note that this is for IRA accounts only, so you must open an IRA first, which requires filling out the IRA application and mailing it in. If funding the IRA CD with an IRA transfer, you also will fill out the IRA transfer form and mail it in with the application. I selected the 7-year 3% CD as the target account on the IRA transfer form.

Note that they do not guarantee the rate during the IRA transfer, and it took a little over 4 weeks for mine to be completed (from day I mailed the forms to AFCU). The rep I spoke to told me that she thought the rate would hold, but couldn't guarantee it. It worked out for me.

My contingency plan was to do an IRA transfer somewhere else if the rate dropped before my transfer was complete. According to the information provided during filling out the transfer form, they will contact you if the specific product and rate you request is not available upon completion of the transfer. If the rate had dropped, I would have told them to put it in an IRA savings account, and then would have started looking for another good IRA CD deal. At least their IRA savings account pays a little more than the PenFed IRA savings account I transferred from.

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Re: Anybody using Andrews CU 3% IRA CD?

Post by Kevin M » Wed Mar 02, 2016 2:23 pm

Also, although I made a few phone calls, they were for information only (like, "will you lock the rate during the transfer?", "have you received my paperwork yet?", etc.). No calls were required to straighten anything out, but I've done quite a few IRA transfers to credit unions, so I pretty much know the ropes.

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Re: Anybody using Andrews CU 3% IRA CD?

Post by john94549 » Wed Mar 02, 2016 2:44 pm

I get more than a bit "nervous and jerky" when a prospective IRA CD custodian won't rate-lock. And I still feel five years is about as long as I want to go out in my ladder.

FWIW, I have two IRA CDs maturing this year. One is with Alliant, and I'll probably just roll it into their 5-yr at 2.2%. The other is with USAA, where rates are somewhat below competitive, to put it kindly. I'll probably move that IRA CD to Patelco, assuming their 2.5% rate holds.

If all else fails, I'll plop it all with StateFarmBank at 2.2%.

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Re: Anybody using Andrews CU 3% IRA CD?

Post by Kevin M » Wed Mar 02, 2016 4:36 pm

john94549 wrote:I get more than a bit "nervous and jerky" when a prospective IRA CD custodian won't rate-lock.
Yeah, it makes me a bit uncomfortable too, but in this case the rate was high enough and the contingency plan wasn't too onerous, so I went for it.
john94549 wrote:And I still feel five years is about as long as I want to go out in my ladder.
Two considerations here.

First, earning an extra 80 basis points (compared to a 5-year at 2.2%) for extending maturity by two years is a great deal. There are guidelines suggesting that one should extend maturity if one can earn 15-20 basis points per extra year of maturity, and this is double that at 40 bps per extra year of maturity. For example, with 5-year Treasury at 1.34% and 7-year at 1.65%, you only earn about 30 bps or 15 bps/year by extending maturity from 5 years to 7 years.

Also, this guideline does not factor in the early withdrawal option, which leads to the second consideration: the early withdrawal penalty (EWP) of only 180 days of interest is extremely attractive for a 7-year CD, and limits downside risk to about 1.5% (6/12 x 3%) in a rising rate environment. So one is exposed only to the risk of the CU disallowing an early withdrawal or changing the EW terms of the CD, which I consider to be quite low.

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Re: Anybody using Andrews CU 3% IRA CD?

Post by john94549 » Wed Mar 02, 2016 5:58 pm

Kevin, I have two sevens (with PenFed, purchased in 2010) at 3.5%. Was it a fortuitous investment, or just dumb luck?

The interest-rate environment we face today is so much different than it was a decade ago. Will CD rates "normalize" over the next five years or will they stagnate? Seriously, I can remember posts (I believe it was at Bankrate) from mid-Summer of 2006 advising against the 5.9% USAA CD, as 6%+ was on the horizon. Contrarian that I was, I bought the 5.9% 5-yr CD on August 31, 2006. When it rolled, in 2011, the rate was 2.3% The best rate offered by USAA these days is 1.1%. I suspect I will move the CD before it rolls into 1.1%.

Perhaps I am getting more conservative as I approach the RMD phase of life. I think now more "return of capital" than "return on capital".

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Re: Anybody using Andrews CU 3% IRA CD?

Post by Kevin M » Wed Mar 02, 2016 7:50 pm

john94549 wrote: Perhaps I am getting more conservative as I approach the RMD phase of life. I think now more "return of capital" than "return on capital".
Return of capital vs. return on capital is about being concerned more about risk than return. I don't think it applies so much in comparing federally-insured CDs, since the FDIC/NCUA insurance pretty much guarantees the return of your capital. If you don't care about the return on capital, then you might as well just leave your money in a money market earning 0% or a savings account earning 1% as in a CD earning 2% or 3%.

The thing about the AFCU CD is that it offers a significantly higher return for no incremental risk. Whether you hold to maturity or do an early withdrawal to reinvest at a higher rate, you always come out ahead with the AFCU CD at 3% compared to the Alliant CU CD at 2.2% as long as you hold the CD for more than six months: CD Early Withdrawal Penalty Calculator.

For me it's more about getting lazier than getting more conservative as I approach the RMD phase of life. I had a relatively small Ally IRA CD that I let roll over at 2%, even though I could get 2.25% by transferring to Synchrony Bank, since it was small enough that it wasn't worth it to me to do an IRA transfer that requires a signature guarantee (required by Ally). However the amount from the matured PenFed CD was north of $100K, and 3% earns me an extra $800/year on $100K compared to 2.2%, and it didn't even require a signature guarantee (PenFed does not require one). That made it worth it to me to join the CU and submit the paperwork to open the IRA and do the IRA transfer.

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Re: Anybody using Andrews CU 3% IRA CD?

Post by john94549 » Wed Mar 02, 2016 9:55 pm

Kevin M wrote:
For me it's more about getting lazier than getting more conservative as I approach the RMD phase of life.
My wife contends I am getting both lazier and more conservative as I age.

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Re: Anybody using Andrews CU 3% IRA CD?

Post by pbearn » Tue Sep 13, 2016 9:02 pm

Could this Andrews IRA CD be used for a backdoor Roth? Will Andrews do the conversion?

Could I fund this IRA CD now, and Roth convert it in Jan 2017?

Any thoughts/concerns in general about backdoor Roths using CDs, not necessarily specific to this CD? For example, when this matures (or if I decide to break it), how big a pain in the neck it would be to move the money to the new bank with the high-yielding CD rates?

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Re: Anybody using Andrews CU 3% IRA CD?

Post by Rob5TCP » Tue Sep 13, 2016 9:41 pm

Do your conversion first and then transfer a Roth to Andrews. I don't know how much longer the 3% will be available. I have transferred several accounts there and am now approaching my insurance limit (plus a margin for 7 years interest). You may find that it ends before you transfer.
Call them and ask about doing it. I found their customer support to be pretty helpful.

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Re: Anybody using Andrews CU 3% IRA CD?

Post by Gardener246 » Tue Sep 13, 2016 10:25 pm

Just opened and contributed $6,500 into an Andrews 2016 3% IRA CD... wanting to beef up the fixed-income portion of my portfolio... 3% is looking pretty good right now. Their website is abysmal, but their customer service team is most pleasant to work with.

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Re: Anybody using Andrews CU 3% IRA CD?

Post by musbane » Tue Sep 13, 2016 10:54 pm

I bought $250k cd at Andrews for part of my fixed part of our asset allocation. I'm considerating buying another for my wife's IRA.

I'm doing this because I can't find anything else even close to 3% guaranteed by the government.

I'm worried because I can't find anything else even close to 3% guaranteed by the government.

What could go wrong? Seriously.

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Re: Anybody using Andrews CU 3% IRA CD?

Post by bagle » Wed Sep 14, 2016 2:32 am

I agree that the 7-year CD is relative bargain: the 3.0% APR was exactly double the 1.50% 7-year US Treasury yield as of Monday. Not bad for a Federally-insured obligation.

If rates rise considerably, you have the (put) option to withdraw early for a 1.5% (6-month) penalty.

It did take some time and effort to set up both taxable and IRA CDs. Andrews website is not too user-friendly (e.g., Vanguard couldn't transfer IRA due to incomplete Andrews account number). However, Vanguard customer service was excellent in patching in Andrews customer service to resolve problem.

Tip: Andrews did let me scan and email rollover forms, rather than use snail mail, though their web site didn't say so.

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Re: Anybody using Andrews CU 3% IRA CD?

Post by mouses » Wed Sep 14, 2016 3:07 am

musbane wrote:I bought $250k cd at Andrews for part of my fixed part of our asset allocation. I'm considerating buying another for my wife's IRA.
You realize you're going over the insurance limit the first time interest is credited...

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Re: Anybody using Andrews CU 3% IRA CD?

Post by Rob5TCP » Wed Sep 14, 2016 6:39 am

musbane wrote:I bought $250k cd at Andrews for part of my fixed part of our asset allocation. I'm considerating buying another for my wife's IRA.

I'm doing this because I can't find anything else even close to 3% guaranteed by the government.

I'm worried because I can't find anything else even close to 3% guaranteed by the government.

What could go wrong? Seriously.
Their health grade is A+. The bank that I transferred from had a health rating of unknown because of the crash of taxi medallion prices in NY. I go with the strongest rating if it's at all possible. All have NCUA/FDIC insurance. But, if the bank goes under, the rates may suffer even among current CD holders.

https://www.depositaccounts.com/banks/a ... tml#health

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Re: Anybody using Andrews CU 3% IRA CD?

Post by ERISA Stone » Wed Sep 14, 2016 7:57 am

I tried to sign up a few months back. There was so much back and forth between Scottrade, my current provider, and Andrews. Both were pointing fingers at the other for document issues. I got tired of dealing with it and went back to bond funds at Scottrade. I think I tried for about a month before I decided the effort wasn't worth it. I'm sure it would be fine for someone with a little more patience.

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Re: Anybody using Andrews CU 3% IRA CD?

Post by radiowave » Wed Sep 14, 2016 8:30 am

Kevin M wrote: . . .

Since I've already been posting about it in the other thread, I'll provide an update there on how the IRA transfer has gone for me. I'll just note here that the transfer took a little over 4 weeks from the day I mailed the paperwork to AFCU, which is somewhat longer than the 3 weeks that has been typical for me, but fortunately the rate did not drop. They told me that they will not lock the rate after they have received the transfer form, so it's a bit of a crap shoot as to whether the rate will be good by the time the transfer is done.

Kevin
This is one of a number of reasons I don't use CDs. All due respect to Kevin, I enjoy reading his posts on CDs and sharing his expertise. But for the money, it's just too hard to deal with paperwork, EWP, keeping a close eye when the CD matures, etc. We even got hit with a $50 withdrawal fee for a CD my wife had at BoA as an IRA because she moved it to her broker account after it matured.
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Re: Anybody using Andrews CU 3% IRA CD?

Post by dodecahedron » Wed Sep 14, 2016 8:40 am

radiowave wrote:
Kevin M wrote: . . .

Since I've already been posting about it in the other thread, I'll provide an update there on how the IRA transfer has gone for me. I'll just note here that the transfer took a little over 4 weeks from the day I mailed the paperwork to AFCU, which is somewhat longer than the 3 weeks that has been typical for me, but fortunately the rate did not drop. They told me that they will not lock the rate after they have received the transfer form, so it's a bit of a crap shoot as to whether the rate will be good by the time the transfer is done.

Kevin
This is one of a number of reasons I don't use CDs. All due respect to Kevin, I enjoy reading his posts on CDs and sharing his expertise. But for the money, it's just too hard to deal with paperwork, EWP, keeping a close eye when the CD matures, etc. We even got hit with a $50 withdrawal fee for a CD my wife had at BoA as an IRA because she moved it to her broker account after it matured.
I agree that this sounds like way too much trouble in the case of retirement accounts like IRAs (which should ideally be trustee-to-trustee transfers to ensure tax-deferral is preserved), so I haven't bothered. However, for my non-retirement accounts, the hassles are fewer and I have found CDs a good way to go.

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Re: Anybody using Andrews CU 3% IRA CD?

Post by Rob5TCP » Wed Sep 14, 2016 8:41 am

radiowave wrote:
This is one of a number of reasons I don't use CDs. All due respect to Kevin, I enjoy reading his posts on CDs and sharing his expertise. But for the money, it's just too hard to deal with paperwork, EWP, keeping a close eye when the CD matures, etc. We even got hit with a $50 withdrawal fee for a CD my wife had at BoA as an IRA because she moved it to her broker account after it matured.
I've transferred funds between banks, Vanguard, Credit Unions without ever getting a charge (other than a small EWP).
Bank of America is one of the LAST places on Earth I would entrust my money with.

I find that after I set it up; I've made 5 transfers to Andrews without an incident.

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Re: Anybody using Andrews CU 3% IRA CD?

Post by bagle » Wed Sep 14, 2016 10:03 am

ERISA Stone wrote:I tried to sign up a few months back. There was so much back and forth between Scottrade, my current provider, and Andrews. Both were pointing fingers at the other for document issues.
What worked for me was to call Vanguard toll-free, and have them call Andrews while I stayed on the line. We solved my problem on the spot. Vanguard, true to form, was happy to assist, even though this meant a loss of assets for them.
Kevin M wrote: I'll just note here that the transfer took a little over 4 weeks from the day I mailed the paperwork to AFCU
Kevin
My IRA transfer took only a week. Maybe I saved 1 week because I scanned and emailed, rather than physically mail, the documents.

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Julieta
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Re: Anybody using Andrews CU 3% IRA CD?

Post by Julieta » Wed Sep 14, 2016 2:48 pm

My experience was very good. No problems.
Keep It Simple

musbane
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Re: Anybody using Andrews CU 3% IRA CD?

Post by musbane » Wed Sep 14, 2016 4:39 pm

mouses wrote:
musbane wrote:I bought $250k cd at Andrews for part of my fixed part of our asset allocation. I'm considerating buying another for my wife's IRA.
You realize you're going over the insurance limit the first time interest is credited...
Thanks mouses,
I did worry about that, but it turned out that I could have the interest put in a separate savings account at Andrews. From there, I intend to spend it :) I'm retired, and withdraw money to live on regularly any way.

Patdante
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Re: Anybody using Andrews CU 3% IRA CD?

Post by Patdante » Fri Sep 16, 2016 6:20 am

I transferred a six figure IRA during the past two weeks. Their 3% 7 year CD rate is very attractive. I found their IRA department to be very helpful and knowledgable. Due to the uncertainties in the equities market, I moved some funds from my Betterment account. To speed up the transfer, move your funds to your Betterment cash account and then proceed with the direct transfer to Andrews FCU. My recommendation would be to wire your funds to Andrews to speed up the process. I filled out my application forms online and the complete transfer took about 2 weeks, but I had to wait on the US Mail system versus a wire transfer. :happy

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Kevin M
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Re: Anybody using Andrews CU 3% IRA CD?

Post by Kevin M » Fri Sep 16, 2016 3:25 pm

dodecahedron wrote:
radiowave wrote:
Kevin M wrote: . . .
Since I've already been posting about it in the other thread, I'll provide an update there on how the IRA transfer has gone for me. I'll just note here that the transfer took a little over 4 weeks from the day I mailed the paperwork to AFCU, which is somewhat longer than the 3 weeks that has been typical for me, but fortunately the rate did not drop. They told me that they will not lock the rate after they have received the transfer form, so it's a bit of a crap shoot as to whether the rate will be good by the time the transfer is done.

Kevin
This is one of a number of reasons I don't use CDs. All due respect to Kevin, I enjoy reading his posts on CDs and sharing his expertise. But for the money, it's just too hard to deal with paperwork, EWP, keeping a close eye when the CD matures, etc. We even got hit with a $50 withdrawal fee for a CD my wife had at BoA as an IRA because she moved it to her broker account after it matured.
I agree that this sounds like way too much trouble in the case of retirement accounts like IRAs (which should ideally be trustee-to-trustee transfers to ensure tax-deferral is preserved), so I haven't bothered. However, for my non-retirement accounts, the hassles are fewer and I have found CDs a good way to go.
I recently completed my third IRA transfer (one from Vanguard, two from Ally Bank) to buy the Andrews FCU 7-year 3% CD. My yield premium over the 7-year Treasury on date of this last purchase was 1.53 percentage points. I am now close enough to the NCUA insurance limit, factoring in seven years of compound interest, that this will be my last Andrews IRA CD purchase.

Although some obviously find the effort to open credit union accounts, fill out IRA transfer forms (typically one page), and track CDs at multiple financial institutions onerous, I have not found it to be a big deal. I just joined another credit union to get a 5-year IRA CD at 2.55%. Once a CD is purchased and entered into my CD spreadsheet (which feeds my portfolio spreadsheet), there really is nothing to "keep a close eye on" until the CD approaches maturity, and it's easy enough to enter maturity dates into a calendar.

Small opening and withdrawal fees are no big deal relative to the much higher cumulative interest you earn on a good CD compared to a Treasury of comparable maturity. The CU I just joined charges $20 for outbound IRA transfers, but at 2.55% on say $100K, I'll earn about $1,350 more in the first year alone compared to a 5-year Treasury at 1.20% (as of 9/15/2016).

Also, I was able to use a 2% cash-back credit card to deposit $5,000 into savings and checking accounts at the CU, earning $100 in tax-free CC cash rewards. This way more than offsets the $25 to join (membership plus some organization) and possibly $20 to transfer out at the end of seven years (if another good CD is not available then). Once the CD is open I'll transfer most of the $5K back to Ally Bank, since the interest rate on the CU savings account is paltry.

Kevin
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Desert
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Re: Anybody using Andrews CU 3% IRA CD?

Post by Desert » Fri Sep 30, 2016 11:05 am

Just FYI, my transfer from Vanguard to Andrews FCU just completed this week, so the offer is still available. Between this slice and the Pentagon FCU CD's, I have nearly all FI in CD's at 3%. The remaining slice is in LTT.

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Re: Anybody using Andrews CU 3% IRA CD?

Post by ktd » Fri Sep 30, 2016 11:36 am

Desert wrote:Just FYI, my transfer from Vanguard to Andrews FCU just completed this week, so the offer is still available. Between this slice and the Pentagon FCU CD's, I have nearly all FI in CD's at 3%. The remaining slice is in LTT.

Did you transfer from Vanguard to checking account then to Andrews IRA? I want to transfer from Traditional IRA from Vanguard to Andrews Traditional IRA.

Thanks.

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Kevin M
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Re: Anybody using Andrews CU 3% IRA CD?

Post by Kevin M » Fri Sep 30, 2016 12:06 pm

ktd wrote:
Desert wrote:Just FYI, my transfer from Vanguard to Andrews FCU just completed this week, so the offer is still available. Between this slice and the Pentagon FCU CD's, I have nearly all FI in CD's at 3%. The remaining slice is in LTT.
Did you transfer from Vanguard to checking account then to Andrews IRA? I want to transfer from Traditional IRA from Vanguard to Andrews Traditional IRA.

Thanks.
You use the IRA transfer form from Andrews to transfer directly from your Vanguard IRA to the new IRA at Andrews. I would just put the funds in a money market fund in the Vanguard IRA while waiting for the transfer to occur. I've done this several times.

This is a much better way to do the transfer than to do a rollover, in which you withdraw the funds from the IRA and put them into another IRA within 60 days.

Kevin
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Desert
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Re: Anybody using Andrews CU 3% IRA CD?

Post by Desert » Fri Sep 30, 2016 12:50 pm

As Kevin described, I used the forms on Andrews FCU's website to initiate the transfer. Andrews then sent the request to Vanguard, and Vanguard snail mailed the check directly to Andrews. The entire process took about two weeks. I sold the ITT fund I was holding in Vanguard and put the funds in the MM fund in preparation for the transfer. It was all pretty painless.

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