Credit union 1 yr cd 1.75 percent ?

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goldfinger22
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Joined: Sun Sep 26, 2010 12:16 pm

Credit union 1 yr cd 1.75 percent ?

Post by goldfinger22 »

I have a MM account with 500k in it
They have a 1 yr cd offer of 1.75 percent
Should I wait to see if they go higher ?
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David Jay
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Location: Michigan

Re: Credit union 1 yr cd 1.75 percent ?

Post by David Jay »

I think I would wait until last week's fed rate increase percolates through the system. Check rates again in, say, 2 weeks.
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anon_investor
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Re: Credit union 1 yr cd 1.75 percent ?

Post by anon_investor »

goldfinger22 wrote: Wed Jun 22, 2022 8:32 am I have a MM account with 500k in it
They have a 1 yr cd offer of 1.75 percent
Should I wait to see if they go higher ?
1 year Treasury Bills are paying 2.92% and are exempt from state/local income tax.
Topic Author
goldfinger22
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Joined: Sun Sep 26, 2010 12:16 pm

Re: Credit union 1 yr cd 1.75 percent ?

Post by goldfinger22 »

anon_investor wrote: Wed Jun 22, 2022 8:50 am
goldfinger22 wrote: Wed Jun 22, 2022 8:32 am I have a MM account with 500k in it
They have a 1 yr cd offer of 1.75 percent
Should I wait to see if they go higher ?
1 year Treasury Bills are paying 2.92% and are exempt from state/local income tax.
Don’t those rates fluctuate ?
Bear906
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Re: Credit union 1 yr cd 1.75 percent ?

Post by Bear906 »

goldfinger22 wrote: Wed Jun 22, 2022 9:04 am
anon_investor wrote: Wed Jun 22, 2022 8:50 am
goldfinger22 wrote: Wed Jun 22, 2022 8:32 am I have a MM account with 500k in it
They have a 1 yr cd offer of 1.75 percent
Should I wait to see if they go higher ?
1 year Treasury Bills are paying 2.92% and are exempt from state/local income tax.
Don’t those rates fluctuate ?
If you buy a 1-year T-BIll at 2.92%, you're locked in at 2.92%.
Eschew obfuscation.
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Tubes
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Re: Credit union 1 yr cd 1.75 percent ?

Post by Tubes »

And the latest 13 week (3 month) T-Bill paid 1.7%.

I'd definitely wait to pull a trigger on penalty based CD with this rate and term.
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goldfinger22
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Re: Credit union 1 yr cd 1.75 percent ?

Post by goldfinger22 »

Tubes wrote: Wed Jun 22, 2022 11:09 am And the latest 13 week (3 month) T-Bill paid 1.7%.

I'd definitely wait to pull a trigger on penalty based CD with this rate and term.
So wait a couple weeks ?
Any risk on Tbills ?
Can you cash them early ?
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Tubes
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Re: Credit union 1 yr cd 1.75 percent ?

Post by Tubes »

If you only feel comfortable with FDIC CDs, at least give it 4 weeks or so to see if your CU offers a better rate.

T-Bills are not FDIC insured, but they are a product of the US government. FDIC insurance is a product of the US government. T-Bill are as secure as the US government.

T-Bills held at a brokerage like Fidelity or Vanguard can be sold early on the market at market prices. They behave like zero coupon bonds, meaning when you buy the T-Bill, you buy it at a discount and when held to term, you get the full value. The market can then dicker on the actual value of your T-Bill based on how much term is left in the bill, and what the current market is for new bills being offered. But if you stick with short term T-Bills, there likely is no reason to sell them.
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goldfinger22
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Joined: Sun Sep 26, 2010 12:16 pm

Re: Credit union 1 yr cd 1.75 percent ?

Post by goldfinger22 »

So
Is there a max limit on the dollar amount you can buy at a time ?
Also is there a charge to buy them ?
Thank you !
MikeG62
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Re: Credit union 1 yr cd 1.75 percent ?

Post by MikeG62 »

goldfinger22 wrote: Wed Jun 22, 2022 8:32 am I have a MM account with 500k in it
They have a 1 yr cd offer of 1.75 percent
Should I wait to see if they go higher ?
I would pass on this. It’s not compelling when compared to, for example, Treasuries of similar duration.

Yes treasury prices fluctuate, and if you needed to sell before maturity and yields have risen materially since you purchased you might take a bit of a hit. Of course the closer you are to maturity the less the impact of the rate rise would be.

Could also do a treasury ladder (3, 6, 9 and 12 months). This would cover off that risk and provide a higher yield than the CD you reference.
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ebeb
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Re: Credit union 1 yr cd 1.75 percent ?

Post by ebeb »

1year CDs at Schwab are giving 2.95% APY but of course interest is taxable but better than 1.75% :D

Schwab's Highest-Yielding CDs by Maturity
Maturity 1 Mo 3 Mo 6 Mo 9 Mo 1 Yr 18 Mo 2 Yr 3 Yr 4 Yr 5 Yr 10 Yr 20 Yr 30 Yr +
APY(%) 1 1.308 1.914 2.263 2.608 2.950 2.900 3.300 3.350 3.400 3.450 -- -- --
55% VOO | 40% BND | 5% CASH | | "Be curious, and however difficult life may seem there is always something you can do and succeed at; it matters that you don't just give up." -Stephen Hawking
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EngCapt1
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Re: Credit union 1 yr cd 1.75 percent ?

Post by EngCapt1 »

goldfinger22 wrote: Wed Jun 22, 2022 8:32 am They have a 1 yr cd offer of 1.75 percent
If you feel that you must have FDIC protection, you can find a 1yr brokered CD with significantly better rates than that at Fidelity (2.95%) or Vanguard (2.9%). Even the 3 month CD's have higher rates than the 1.75% you quoted.

:beer
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