Move to CD now after rate cut?

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jeam3131
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Move to CD now after rate cut?

Post by jeam3131 »

I have some funds tied up in savings accounts that pays out a bonus. I'm assuming with the rate cut, the savings account interest rates are going to essentially zero.

Would it be wise to open a no-penalty CD now and move the funds there?
nalor511
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Re: Move to CD now after rate cut?

Post by nalor511 »

jeam3131 wrote: Sun Mar 15, 2020 5:46 pm I have some funds tied up in savings accounts that pays out a bonus. I'm assuming with the rate cut, the savings account interest rates are going to essentially zero.

Would it be wise to open a no-penalty CD now and move the funds there?
Yes
Alan S.
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Re: Move to CD now after rate cut?

Post by Alan S. »

nalor511 wrote: Sun Mar 15, 2020 6:29 pm
jeam3131 wrote: Sun Mar 15, 2020 5:46 pm I have some funds tied up in savings accounts that pays out a bonus. I'm assuming with the rate cut, the savings account interest rates are going to essentially zero.

Would it be wise to open a no-penalty CD now and move the funds there?
Yes
You will have to move first thing tomorrow. Many CD issuers will probably be reducing rates either tomorrow or in the next couple of days.

"Financial repression" is back yet again. That term basically means that savers will be paying for debtors to borrow more at historically low rates. And of course the largest debtor is the US Govt.
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fredflinstone
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Re: Move to CD now after rate cut?

Post by fredflinstone »

If you can find a no-penalty CD that offers a decent interest rate (say 1% or higher), this seems like a no-brainer.
Stocks 28 / Gold 23 / Long-term US treasuries 19 / Cash (mainly CDs) 22 / TIPS 8
mortfree
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Re: Move to CD now after rate cut?

Post by mortfree »

I just checked out PSECU and CapOne for CDs

1% seems to be the new best. Not sure when that happened or if they will be lower with this latest move.

Good luck.
Topic Author
jeam3131
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Re: Move to CD now after rate cut?

Post by jeam3131 »

Ally no penalty cd. 1.7% and you have 10 days to fund it after opening
cableguy
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Re: Move to CD now after rate cut?

Post by cableguy »

I am so happy I built a 5 year CD ladder last year. I say do it. And do it fast. The government is out of bullets at zero interest rates. You know what’s next......negative.
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willthrill81
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Re: Move to CD now after rate cut?

Post by willthrill81 »

jeam3131 wrote: Sun Mar 15, 2020 7:01 pm Ally no penalty cd. 1.7% and you have 10 days to fund it after opening
I'm seeing it at 1.75% for $25k or larger deposits.

If you can, back up the truck.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
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jeam3131
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Re: Move to CD now after rate cut?

Post by jeam3131 »

willthrill81 wrote: Sun Mar 15, 2020 7:04 pm
jeam3131 wrote: Sun Mar 15, 2020 7:01 pm Ally no penalty cd. 1.7% and you have 10 days to fund it after opening
I'm seeing it at 1.75% for $25k or larger deposits.

If you can, back up the truck.
ya 1.75, my bad.
rossington
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Re: Move to CD now after rate cut?

Post by rossington »

I really don't know if backing up the truck for 1.75% makes any sense. It might be time to learn about high quality dividend paying stocks whose yields are far more than 1.75% and then move the truck in that direction too.
"Success is going from failure to failure without loss of enthusiasm." Winston Churchill.
redfan11
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Re: Move to CD now after rate cut?

Post by redfan11 »

Does this make sense for someone in the 37% tax bracket? Can’t I just invest in VMLTX?
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CalculatedRisk
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Re: Move to CD now after rate cut?

Post by CalculatedRisk »

redfan11 wrote: Mon Mar 16, 2020 2:40 am Does this make sense for someone in the 37% tax bracket? Can’t I just invest in VMLTX?
Or VUSXX? I haven’t don’t the math yet, but I opened a CD (without funding it) and will do the math tomorrow. I’m similarly situated.
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simplesimon
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Re: Move to CD now after rate cut?

Post by simplesimon »

Just moved most of my cash from VMMXX to Ally no-penalty CDs (11 months for 1.75% as of this writing).

People in high tax brackets: 37% of zero is zero. As the underlying older higher interest holdings roll off, the rates will drop.
Prudence
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Re: Move to CD now after rate cut?

Post by Prudence »

Makes sense. Too add: a quick google search indicated that negative interest income cannot reduce federal taxable income.
nesdog
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Re: Move to CD now after rate cut?

Post by nesdog »

I did....grabbed the 1% bonus for new money at Ally plus locked in the No Penalty 11 mo at 1.75% for some additional funds.
Insert clever comment here...
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CalculatedRisk
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Re: Move to CD now after rate cut?

Post by CalculatedRisk »

nesdog wrote: Mon Mar 16, 2020 11:14 am I did....grabbed the 1% bonus for new money at Ally plus locked in the No Penalty 11 mo at 1.75% for some additional funds.
Is the 1% bonus the one that caps out at $250 bonus? If there is another one, can you please link it?
nalor511
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Re: Move to CD now after rate cut?

Post by nalor511 »

CalculatedRisk wrote: Mon Mar 16, 2020 3:25 pm
nesdog wrote: Mon Mar 16, 2020 11:14 am I did....grabbed the 1% bonus for new money at Ally plus locked in the No Penalty 11 mo at 1.75% for some additional funds.
Is the 1% bonus the one that caps out at $250 bonus? If there is another one, can you please link it?
There is no other 1% bonus at ally
z3r0c00l
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Re: Move to CD now after rate cut?

Post by z3r0c00l »

Alan S. wrote: Sun Mar 15, 2020 6:54 pm
"Financial repression" is back yet again. That term basically means that savers will be paying for debtors to borrow more at historically low rates. And of course the largest debtor is the US Govt.
Not sure how low these rates are if inflation is below zero.
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simplesimon
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Re: Move to CD now after rate cut?

Post by simplesimon »

Ally's no penalty CD for balances over $25k had its rate reduced from 1.75% to 1.55%.
Pikel
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Re: Move to CD now after rate cut?

Post by Pikel »

Marcus no penalty is still 1.7%. 1 yr is 1.85%

We have a CD there, it is really easy to set up and transfer money. Also verified it was easy to transfer money back out before opening a large CD about a month ago.
kaneohe
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Re: Move to CD now after rate cut?

Post by kaneohe »

simplesimon wrote: Tue Mar 17, 2020 6:44 am Ally's no penalty CD for balances over $25k had its rate reduced from 1.75% to 1.55%.
what determines which rate you get? date CD opened/funded/or what?
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simplesimon
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Re: Move to CD now after rate cut?

Post by simplesimon »

kaneohe wrote: Tue Mar 17, 2020 8:13 am
simplesimon wrote: Tue Mar 17, 2020 6:44 am Ally's no penalty CD for balances over $25k had its rate reduced from 1.75% to 1.55%.
what determines which rate you get? date CD opened/funded/or what?
I think when it opened.
CenTexan
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Re: Move to CD now after rate cut?

Post by CenTexan »

DId this today at Ally.

You join/open/create your account, then "add" CDs to your account menu (without paying). Click through menus selecting "Add Money Later." Log out, then back in. Select "Accounts" - it will display a list of the CDs you added to your account. They will have a $0 balance, but display the % rate. You have 10 days to get the money to them in order to retain that rate.

You can write a check, then scan front and back, then upload the JPEG image. Ally takes 24 hours to "approve" the check. You can buy up to $50k with one CD. (Ignore the notice saying there is a hold on checks over $25k - that's for checking accounts). Note - even though you initially said you wanted a $xx CD, you can deposit a different amount. Example - when ticking the boxes to add a CD for $25k to your account, then deposit $40k when you fund it. But only 1 check deposit can be made for each CD. So don't think you can do $25k today and $10k tomorrow on two different checks - that first check of $25k defines the CD - no more deposits allowed. (Just open a second one, if you want).
Alan S.
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Re: Move to CD now after rate cut?

Post by Alan S. »

CenTexan wrote: Tue Mar 17, 2020 5:28 pm DId this today at Ally.

You join/open/create your account, then "add" CDs to your account menu (without paying). Click through menus selecting "Add Money Later." Log out, then back in. Select "Accounts" - it will display a list of the CDs you added to your account. They will have a $0 balance, but display the % rate. You have 10 days to get the money to them in order to retain that rate.

You can write a check, then scan front and back, then upload the JPEG image. Ally takes 24 hours to "approve" the check. You can buy up to $50k with one CD. (Ignore the notice saying there is a hold on checks over $25k - that's for checking accounts). Note - even though you initially said you wanted a $xx CD, you can deposit a different amount. Example - when ticking the boxes to add a CD for $25k to your account, then deposit $40k when you fund it. But only 1 check deposit can be made for each CD. So don't think you can do $25k today and $10k tomorrow on two different checks - that first check of $25k defines the CD - no more deposits allowed. (Just open a second one, if you want).
Very similar at Synchrony Bank.
APY 1.80%, have 15 days to fund the account at guaranteed rate. Yesterday I opened one 18 month CD and a 36 month CD for same amounts. I don't think this rate will be around for long.
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