Best CD rates thread

hudson · Post by **hudson** » Wed May 20, 2020 6:49 am

Mike and Evelyn,
I would have to hold my nose on the 5 year 2% CD. I think that it's the best available.
One could wait for those 3% specials that pop up. Who's predicting that? I'm batting zero on predictions.
For emergency fund type money, I can settle for low interest.
For long term...not needed in 5 year money, I just check this discussion, and check https://www.depositaccounts.com/cd/5-year-cd-rates.html
I hold my nose and take the best available. I've learned that you need to move fast. Pull out the stops; all hands on deck.

Also I've learned the hard way to work the phone and call rather than try to sign up online.

MikeG62 · Post by **MikeG62** » Wed May 20, 2020 7:14 am

EvelynTroy wrote: ↑Wed May 20, 2020 6:36 am
MikeG62 wrote: ↑Wed May 20, 2020 6:25 am
EvelynTroy wrote: ↑Tue May 19, 2020 2:33 pm I believe Hudson in an earlier post pointed out The Federal Savings Bank 5 yr. 2.05% CD. They have an A+ financial rating at depositaccounts.com.
I've been procrastinating and not purchasing anything for far too long.
I have a large amount sitting in the Schwab Cash Account earning nothing.
I'm uneasy about going about 5 years, but on the other hand this environment may take a long time until we see CD rates improving.
Any thoughts about going out 5 years - would be appreciative.
While I accept that this is about as good an advertised deal as one can currently locate on Deposit Accounts, I personally don’t find 2.05% for a 5-year lock up particularly compelling. I might do ~2% for up to a 2-year term if I had excess cash I did not need, but don’t think I’d do 5-years. (Note that I did do 2.25% back in March of this year for 17-month term). Of course, it could turn out that this ends up being a good deal over the next 5 years. My crystal ball is not all that clear either. It’s a judgement call.

Personally, I’d lean more toward either (or a combination of) bank transfer bonuses (something like the Capital One Performance Savings Bonus) and/or wait out a promotional CD with more compelling terms than 2.05% for 5-years. That may not end up being a lot more than 2.05%, but hopefully would not require a 5-year lock-up and at a 12-month EWP. In the meantime, get those funds out of an account earning nothing or next to nothing (Ally or Marcus no-penalty CD’s (open a number of them) being a good temporary place for that cash).
Thanks Mike, no I don't see 2.05% for 5 yrs. in the least bit compelling - but what we have is what we have as far as this environment. It is always a judgement call when locking in for 5 yrs. for me.

Thought had crossed my mind to do some sort of bank high yield savings or checking - but there was always (at least the ones I saw) some sort of glitch I didn't care for like having to make debit card purchases, or a recurring deposit. Granted I didn't look at many, and surely no expert on this types of accounts. I did last year do a savings acct. with Discover for a $200 bonus and a 2% rate - wasn't long that rate dropped like a rock. That is why I am leary of savings accounts.
Thanks for the nice nudge to "get that money out of next to nothing account."
Evelyn

It may be the best that is available today, but that does not mean it's better than what might be available next week or month or this summer. For example, I opened two CD's with NFCU in early March of 2020 (one a 37-month IRA CD at 3.0% and one a 17-month traditional CD at 2.25%). At that time, no one was offering anything close to these rates. Another example, back in October of 2019 I opened three CD's with the PSECU (36-month at 3.25% and 24-month at 3.0%). I opened two more of those PSECU CD's in November of 2019. At that time, no one else was offering anything close to those rates.

So what's my point? Promotional CD's come up from time to time. You need to be patient and when they show up you need to clear the decks and focus all of your efforts to open the account and fund the CD as quickly as possible and before the promotion ends. While I like doing things online, I always call the financial institution and have them help me open the account in the fastest way possible (usually a combination of online and phone help by the CSR). Checking Deposit Accounts daily is a good way to find these opportunities. I continue to check each day for 24 and 36 month IRA CD's.

Understand your desire to be cautious with new financial institutions and reading the fine print. This forum and Deposit Accounts two good places to do your diligence. Plus, a google search as a third way to vet the offer and make sure you understand the fine print. I don't do deals that require debit card purchases (those are almost always associated with checking accounts) or recurring or automated deposits (those too also generally tied to checking accounts). Ally and Marcus are safe bets and many on this forum use one or the other or both. FWIW, I use both and have ten no-penalty CD's spread across them as well as five traditional CD's at Ally. Been an Ally customer for well over a decade and a Marcus customer for about one year now.

EvelynTroy · Post by **EvelynTroy** » Wed May 20, 2020 7:37 am

MikeG62 wrote: ↑Wed May 20, 2020 7:14 am
EvelynTroy wrote: ↑Wed May 20, 2020 6:36 am
MikeG62 wrote: ↑Wed May 20, 2020 6:25 am
EvelynTroy wrote: ↑Tue May 19, 2020 2:33 pm I believe Hudson in an earlier post pointed out The Federal Savings Bank 5 yr. 2.05% CD. They have an A+ financial rating at depositaccounts.com.
I've been procrastinating and not purchasing anything for far too long.
I have a large amount sitting in the Schwab Cash Account earning nothing.
I'm uneasy about going about 5 years, but on the other hand this environment may take a long time until we see CD rates improving.
Any thoughts about going out 5 years - would be appreciative.
While I accept that this is about as good an advertised deal as one can currently locate on Deposit Accounts, I personally don’t find 2.05% for a 5-year lock up particularly compelling. I might do ~2% for up to a 2-year term if I had excess cash I did not need, but don’t think I’d do 5-years. (Note that I did do 2.25% back in March of this year for 17-month term). Of course, it could turn out that this ends up being a good deal over the next 5 years. My crystal ball is not all that clear either. It’s a judgement call.

Personally, I’d lean more toward either (or a combination of) bank transfer bonuses (something like the Capital One Performance Savings Bonus) and/or wait out a promotional CD with more compelling terms than 2.05% for 5-years. That may not end up being a lot more than 2.05%, but hopefully would not require a 5-year lock-up and at a 12-month EWP. In the meantime, get those funds out of an account earning nothing or next to nothing (Ally or Marcus no-penalty CD’s (open a number of them) being a good temporary place for that cash).
Thanks Mike, no I don't see 2.05% for 5 yrs. in the least bit compelling - but what we have is what we have as far as this environment. It is always a judgement call when locking in for 5 yrs. for me.

Thought had crossed my mind to do some sort of bank high yield savings or checking - but there was always (at least the ones I saw) some sort of glitch I didn't care for like having to make debit card purchases, or a recurring deposit. Granted I didn't look at many, and surely no expert on this types of accounts. I did last year do a savings acct. with Discover for a $200 bonus and a 2% rate - wasn't long that rate dropped like a rock. That is why I am leary of savings accounts.
Thanks for the nice nudge to "get that money out of next to nothing account."
Evelyn
It may be the best that is available today, but that does not mean it's better than what might be available next week or month or this summer. For example, I opened two CD's with NFCU in early March of 2020 (one a 37-month IRA CD at 3.0% and one a 17-month traditional CD at 2.25%). At that time, no one was offering anything close to these rates. Another example, back in October of 2019 I opened three CD's with the PSECU (36-month at 3.25% and 24-month at 3.0%). I opened two more of those PSECU CD's in November of 2019. At that time, no one else was offering anything close to those rates.

So what's my point? Promotional CD's come up from time to time. You need to be patient and when they show up you need to clear the decks and focus all of your efforts to open the account and fund the CD as quickly as possible and before the promotion ends. While I like doing things online, I always call the financial institution and have them help me open the account in the fastest way possible (usually a combination of online and phone help by the CSR). Checking Deposit Accounts daily is a good way to find these opportunities. I continue to check each day for 24 and 36 month IRA CD's.

Understand your desire to be cautious with new financial institutions and reading the fine print. This forum and Deposit Accounts two good places to do your diligence. Plus, a google search as a third way to vet the offer and make sure you understand the fine print. I don't do deals that require debit card purchases (those are almost always associated with checking accounts) or recurring or automated deposits (those too also generally tied to checking accounts). Ally and Marcus are safe bets and many on this forum use one or the other or both. FWIW, I use both and have ten no-penalty CD's spread across them as well as five traditional CD's at Ally. Been an Ally customer for well over a decade and a Marcus customer for about one year now.

Thank you Mike - no argument from me. I hold those same CD's you mentioned, and I completely understand any CD you purchase at any time does not mean something will be better in the future. I have 3% CD, maturing 3/2021 Freedom Credit Union, FL., 3% CD's maturing 2021 at two local CU's that were promotions I grabbed. The time I purchased no one was offering anything close to those rates. Those CD's look great today, but interest rates could have skyrocket and today there could have been much better deals to be had, but we know that didn't happen. I never made predictions - just what was best at the time I needed to purchase.

I do very same things that you are suggesting, and use deposit accounts and this forum, and I don't do deals with accompanying requirements. I get it, and have been steadfast in monitoring and acting fast when I had cash to invest.

That said - I got off course when I came into this large amount of money suddenly in the middle of this pandemic, and markets and rates dropping like a rock. Sort of paralyzed and did nothing for 6-8 weeks. Now I'm trying to correct this and get this money to work, and like I typically try to do, not panic and jump on something because I've kind of come out of the fog.
I very much appreciate your thoughts - I mirror them. Evelyn

indexfundfan · Post by **indexfundfan** » Wed May 20, 2020 7:40 am

Did anyone look at MYGAs? Recently there was a thread on this

https://bogleheads.org/forum/viewtopic.php?p=5231074

CDs are guaranteed by FDIC (within limits), while admittedly there is no such guarantee for MYGAs. MYGAs may be covered by the state's insurance guaranty fund (less secure than FDIC for sure).

MYGA current rates :

https://www.blueprintincome.com/fixed-annuities

3yr 2.25% (North American, AM Best A+)
5yr 2.65% (Mutual of Omaha, AM Best A+)

Just for information. I have not purchase any of this (yet?).

hudson · Post by **hudson** » Wed May 20, 2020 7:44 am

MikeG62 wrote: ↑Wed May 20, 2020 7:14 am It may be the best that is available today, but that does not mean it's better than what might be available next week or month or this summer.

So what's my point? Promotional CD's come up from time to time. You need to be patient and when they show up you need to clear the decks and focus all of your efforts to open the account and fund the CD as quickly as possible and before the promotion ends.

[ quote formatted by admin LadyGeek]

Mike,
You are probably correct.
Part of my thinking is exactly that. Part says go with the 2%.
At this time, I have nothing to invest, but I've been trying to decide what I'd do if I did have funds to invest.
If I had 250K to invest today, I'd bite on 2%.

MikeG62 · Post by **MikeG62** » Wed May 20, 2020 8:09 am

EvelynTroy wrote: ↑Wed May 20, 2020 7:22 am
...Perhaps another option is the ETF I used for temporary cash parking (although this time I haven't used it) - iShares Ultra Short-Term Bond ETF ICSH
This is ultra-short bond fund - SEC yield 1.92%, Duration less than a year, Expense Ratio 0.08%.

I began investing in ICSH in 2019. Probably had mid-six figures in ICSH early this year. Sold it all the first week in March when I became concerned about credit markets. It fell considerably a week after I sold it. It's since recovered. Not saying the situation with credit is the same anymore as the Fed and Treasury have done a great job restoring calm to that market. Maybe worth considering go back into ICSH with some funds I have sitting in a very low yielding treasury MMF in my IRA.

Edited to add - I see a 30-day SEC yield of only 1.53% as of May 18, 2020.

Post by **LadyGeek** » Wed May 20, 2020 7:43 pm

I moved EvelynTroy's discussion regarding high quality muni bonds into a new thread. This thread was getting derailed. See: [High quality muni bonds for parking cash]

This thread is now in the Personal Finance (Not Investing) forum (CD rates).

hudson · Post by **hudson** » Thu Jun 11, 2020 5:39 pm

Anyone can join by joining an organization for $10

https://www.lfcu.org/personal/bank/savings.aspx

nalor511 · Post by **nalor511** » Thu Jun 11, 2020 6:02 pm

hudson wrote: ↑Thu Jun 11, 2020 5:39 pm Anyone can join by joining an organization for $10
2%/5yr CD
https://www.lfcu.org/personal/bank/savings.aspx

5 years is a long time to lock in a 2% rate, considering 3% was easily gettable for a 3yr, only 3 months ago. This environment will not last... Now what it will change to, is anyone's guess

Right now I'd rather have a 1.2% 11mo NPCD than lock in 5yr/2% with an EWP.

Kevin M · Post by **Kevin M** » Thu Jun 11, 2020 6:57 pm

nalor511 wrote: ↑Thu Jun 11, 2020 6:02 pm
hudson wrote: ↑Thu Jun 11, 2020 5:39 pm Anyone can join by joining an organization for $10
2%/5yr CD
https://www.lfcu.org/personal/bank/savings.aspx
5 years is a long time to lock in a 2% rate, considering 3% was easily gettable for a 3yr, only 3 months ago. This environment will not last... Now what it will change to, is anyone's guess

Right now I'd rather have a 1.2% 11mo NPCD than lock in 5yr/2% with an EWP.

The 2.02% APY is excellent for a 5-year term, considering that the 5-year Treasury yield is 0.32% and 5y brokered CD yield is 0.70%. What I don't like is the early withdrawal penalty (EWP) of 600 days of interest.

A better option, if you have at least $100K, is Financial Partners Credit Union 5-year at 2.00% APY and EWP of 90 or 180 days of interest; DepositAccount says 180 days, but I thought I saw 90 days somewhere on their website, but can't find it now.

With the Fed indicating it's unlikely that they'll increase rates until 2022, we could be in for a long spell of low CD rates. Of course a super deal might pop up anytime.

With a good EWP, like at Financial Partners, you are not "locked in" for five years. If a good enough deal pops up, you pay the 1% penalty (assuming 180 days of interest) to do an early withdrawal, and go for the better deal. If you can get 3%, you earn back the penalty in one year.

If I knew I could lock in the 5-year 2% at FPCU, I think I would transfer the proceeds of my Synchrony CD maturing next week into it. I've been lazy about calling to see if they'll lock the rate once they get the IRA transfer form, but perhaps will do so if the rate is still 2% next week.

Kevin

nalor511 · Post by **nalor511** » Thu Jun 11, 2020 7:07 pm

I still have 2 more years on my 3% CDs, and the balances I don't have locked up are small, so the 1.2% NPCDs are more enticing too me, but I hear what you're saying Kevin

hudson · Post by **hudson** » Fri Jun 12, 2020 8:02 am

nalor511, I see your point; it's a toss up. When I have funds to invest, I usually take the best available 5-7 year CD and take my lumps.
Other not so good options for me would be Vanguard's intermediate TIPs fund or a AAA/AA muni fund. If CD rates drop below 2%, that's where I might go.

Kevin M, thanks for the info on the early withdrawal (EWP); I couldn't find it. With your info, I would go with
FPCU. If I had to use a bank with a 600 day EWP, I'd go with five or more small CDs instead of one large one.

Lazy about calling?

He who hesitates is...

Kevin M · Post by **Kevin M** » Fri Jun 12, 2020 2:49 pm

nalor511 wrote: ↑Thu Jun 11, 2020 7:07 pm I still have 2 more years on my 3% CDs, and the balances I don't have locked up are small, so the 1.2% NPCDs are more enticing too me, but I hear what you're saying Kevin

The Ally NP CD yield has fallen to 1.05%, with the online savings yield now at 1.10%. More importantly, I don't want to mess around with another IRA transfer sooner than I have to, so an 11-month term is not attractive to me for an IRA.

For a taxable account with no better options, the NP CD still is relatively attractive in this environment.

Kevin

nalor511 · Post by **nalor511** » Fri Jun 12, 2020 2:55 pm

Kevin M wrote: ↑Fri Jun 12, 2020 2:49 pm
nalor511 wrote: ↑Thu Jun 11, 2020 7:07 pm I still have 2 more years on my 3% CDs, and the balances I don't have locked up are small, so the 1.2% NPCDs are more enticing too me, but I hear what you're saying Kevin
The Ally NP CD yield has fallen to 1.05%, with the online savings yield now at 1.10%. More importantly, I don't want to mess around with another IRA transfer sooner than I have to, so an 11-month term is not attractive to me for an IRA.

For a taxable account with no better options, the NP CD still is relatively attractive in this environment.

Kevin

Yep, no CDs in IRAs for me, only taxable thus far, thankfully was able to lock in that 1.2... Who would have thought I'd be excited about locking in 1.2? Yeesh

protagonist · Post by **protagonist** » Fri Jun 12, 2020 3:33 pm

I would go short term, or keep money in a high-yield bank account (I am in SFGI Direct- current yield 1.36% APY).
Inflation for the year ending April was 0.3%, so for now that is still about !% real, and I expect inflation numbers will drop or go negative, so the low yields for now are still beating inflation.

If you lock into a 2% CD for 5 years you are gambling that inflation will stay low , and whether that rate will keep up with inflation over 5 years is a risky gamble. I suppose it's not such a big gamble if you get a CD with a 6 month EWP, but they are getting harder to find. It's true that inflation may increase out of proportion to interest rates on savings accounts or yields, but a bird in the hand.....

Plus a high yield savings account gives you the flexibility to jump into a good CD promo if and when one pops up.

Just my two cents.

AerialWombat · Post by **AerialWombat** » Fri Jun 12, 2020 3:41 pm

For those of you that have traditionally done CD ladders at a single financial institution, how are you doing so now in this low yield environment? Are you spreading the love across multiple financial institutions? Or opting for simplicity and just taking what you can get?

I've spent the last hour hunting and pecking, as I have some 6-month CDs that are all maturing very soon. I already have banking relationships with 16 different financial institutions, and quite frankly, I'm more interested in consolidating than anything else. I used to be a hard core credit card churner, but I've been closing accounts left and right this year.

I do not currently have any Ally accounts, but they do look attractive for a variety of reasons, including the NP CD.

AerialWombat · Post by **AerialWombat** » Fri Jun 12, 2020 3:45 pm

hudson wrote: ↑Fri Jun 12, 2020 8:02 am ...Vanguard's intermediate TIPs fund or a AAA/AA muni fund. If CD rates drop below 2%, that's where I might go.

I'm still twitching about it, but I have decided to redirect some of my monthly new cash accumulation into Vanguard Intermediate Tax Exempt (VWITX). I already held some of this as part of my overall AA, but will add more to it instead of HYS as I hunt for CD yield, I guess.

OAG · Post by **OAG** » Fri Jun 12, 2020 3:53 pm

I use 3 CU's and all have CD's in a 5 year Ladder. The ROI for the next approx 4.5 years is 3.09%. Plan is to roll all maturing CD's at these CU's to 12 mo CD's for the time being. 1-1.25% current rates.

Easy to set rollover's automatically via their web-sites (Penfed, NFCU & WPFCU).

If rates go up (doubtful for the next 2 to 3 years) I will make modifications.

I give up jumping around to varions Banks or CU to chase rates. Frankly, I have grown tired of that game.

AerialWombat · Post by **AerialWombat** » Fri Jun 12, 2020 4:00 pm

OAG wrote: ↑Fri Jun 12, 2020 3:53 pm I use 3 CU's and all have CD's in a 5 year Ladder. The ROI for the next approx 4.5 years is 3.09%. Plan is to roll all maturing CD's at these CU's to 12 mo CD's for the time being. 1-1.25% current rates.

Easy to set rollover's automatically via their web-sites (Penfed, NFCU & WPFCU).

If rates go up (doubtful for the next 2 to 3 years) I will make modifications.

I give up jumping around to varions Banks or CU to chase rates. Frankly, I have grown tired of that game.

That's how I feel, also. Thank you for detailing your approach. PenFed is one I have but don't use much, and as of today they do have the 2nd best 12-month CD rates of my 16, so they're certainly an option. Thanks!

AerialWombat · Post by **AerialWombat** » Fri Jun 12, 2020 4:48 pm

Action taken today: Turns out Discover CDs were slightly higher than PenFed, so I just opened a 12-month (1.01%) and 18-month (1.05%) CD at Discover in equal amounts to start building a ladder there. There are higher rates elsewhere, but I hold part of cash in Discover HYS, so the money was already there, and I like the UI of their website, compared to many others.

I really don't like extending the term out all the way to 18 months, since these monies are part of my rental property reserves, but I'll stretch a tiny bit for the yield.

Thanks for all the info in this thread!

OAG · Post by **OAG** » Sat Jun 13, 2020 6:42 am

AerialWombat wrote: ↑Fri Jun 12, 2020 4:48 pm Action taken today: Turns out Discover CDs were slightly higher than PenFed, so I just opened a 12-month (1.01%) and 18-month (1.05%) CD at Discover in equal amounts to start building a ladder there. There are higher rates elsewhere, but I hold part of cash in Discover HYS, so the money was already there, and I like the UI of their website, compared to many others.

I really don't like extending the term out all the way to 18 months, since these monies are part of my rental property reserves, but I'll stretch a tiny bit for the yield.

Thanks for all the info in this thread!

Kind of "after the fact" but NFCU had 12 month 1.25 APY CD's on the 11th of June (2 days ago; my last purchase). I know NFCU entry is a bit tough but it has been a good place to park money lately (if you can call +.05% good).

MikeG62 · Post by **MikeG62** » Sat Jun 13, 2020 7:11 am

Lafayette Federal Credit Union has a 12-month CD at 1.61% (EWP is 180 days). Membership available to those outside their area by joining Home Ownership Financial Literacy Council ($10 one time fee). Never done business with them, but top tier rate on a 12-month CD these days.

dollarsaver · Post by **dollarsaver** » Sat Jun 13, 2020 8:40 am

MikeG62 wrote: ↑Sat Jun 13, 2020 7:11 am Lafayette Federal Credit Union has a 12-month CD at 1.61% (EWP is 180 days). Membership available to those outside their area by joining Home Ownership Financial Literacy Council ($10 one time fee). Never done business with them, but top tier rate on a 12-month CD these days.

I opened a Lafayette FCU IRA CD last week and it was an easy process even with an IRA direct transfer. Excellent customer service.

AerialWombat · Post by **AerialWombat** » Sat Jun 13, 2020 10:50 am

OAG wrote: ↑Sat Jun 13, 2020 6:42 am Kind of "after the fact" but NFCU had 12 month 1.25 APY CD's on the 11th of June (2 days ago; my last purchase). I know NFCU entry is a bit tough but it has been a good place to park money lately (if you can call +.05% good).

Thanks for the info. Sadly, I burned NFCU on a mortgage in my bankruptcy during the last recession, so I am banned for life from ever becoming an NFCU member again.

I did notice yesterday that NASA FCU has a promotional 1.5% 9-month CD. Money must be deposited by end of June. One can become a NASA FCU member via a free membership to a space advocacy group.

Ricchan · Post by **Ricchan** » Sat Jun 13, 2020 3:15 pm

dollarsaver wrote: ↑Sat Jun 13, 2020 8:40 am
MikeG62 wrote: ↑Sat Jun 13, 2020 7:11 am Lafayette Federal Credit Union has a 12-month CD at 1.61% (EWP is 180 days). Membership available to those outside their area by joining Home Ownership Financial Literacy Council ($10 one time fee). Never done business with them, but top tier rate on a 12-month CD these days.
I opened a Lafayette FCU IRA CD last week and it was an easy process even with an IRA direct transfer. Excellent customer service.

I was looking at Lafayette Federal Credit Union a few weeks ago and noticed they have a health rating of B over at DepositAccounts. If you look at the health report, their lowest score component is capitalization:

Both FDIC and NCUA consider capitalization levels of banks and credit unions to be of high importance. Higher capitalization allows for a greater buffer when cover loans that may fail in the future. Lafayette Federal Credit Union has $681.42 million in assets with $53.45 million in equity, resulting in a capitalization level of 7.84%, which is below average.

Is this a cause for concern?

MikeG62 · Post by **MikeG62** » Sat Jun 13, 2020 3:22 pm

Ricchan wrote: ↑Sat Jun 13, 2020 3:15 pm
dollarsaver wrote: ↑Sat Jun 13, 2020 8:40 am
MikeG62 wrote: ↑Sat Jun 13, 2020 7:11 am Lafayette Federal Credit Union has a 12-month CD at 1.61% (EWP is 180 days). Membership available to those outside their area by joining Home Ownership Financial Literacy Council ($10 one time fee). Never done business with them, but top tier rate on a 12-month CD these days.
I opened a Lafayette FCU IRA CD last week and it was an easy process even with an IRA direct transfer. Excellent customer service.
I was looking at Lafayette Federal Credit Union a few weeks ago and noticed they have a health rating of B over at DepositAccounts. If you look at the health report, their lowest score component is capitalization:

Both FDIC and NCUA consider capitalization levels of banks and credit unions to be of high importance. Higher capitalization allows for a greater buffer when cover loans that may fail in the future. Lafayette Federal Credit Union has $681.42 million in assets with $53.45 million in equity, resulting in a capitalization level of 7.84%, which is below average.
Is this a cause for concern?

In my opinion no, as long as you maintain a balance within the NCUA insurance limit.

Kevin M · Post by **Kevin M** » Sat Jun 13, 2020 8:19 pm

MikeG62 wrote: ↑Sat Jun 13, 2020 3:22 pm
Ricchan wrote: ↑Sat Jun 13, 2020 3:15 pm
dollarsaver wrote: ↑Sat Jun 13, 2020 8:40 am
MikeG62 wrote: ↑Sat Jun 13, 2020 7:11 am Lafayette Federal Credit Union has a 12-month CD at 1.61% (EWP is 180 days). Membership available to those outside their area by joining Home Ownership Financial Literacy Council ($10 one time fee). Never done business with them, but top tier rate on a 12-month CD these days.
I opened a Lafayette FCU IRA CD last week and it was an easy process even with an IRA direct transfer. Excellent customer service.
I was looking at Lafayette Federal Credit Union a few weeks ago and noticed they have a health rating of B over at DepositAccounts. If you look at the health report, their lowest score component is capitalization:

Both FDIC and NCUA consider capitalization levels of banks and credit unions to be of high importance. Higher capitalization allows for a greater buffer when cover loans that may fail in the future. Lafayette Federal Credit Union has $681.42 million in assets with $53.45 million in equity, resulting in a capitalization level of 7.84%, which is below average.
Is this a cause for concern?
In my opinion no, as long as you maintain a balance within the NCUA insurance limit.

I wouldn't be concerned about losing much money if within NCUA limit. The main issue with failure is that your CD is closed early or the rate is reduced a lot, you have to move the money somewhere else when you might not be able to find a good rate, and you lose some interest during the time it takes to do this.

I wouldn't worry too much about it for a 1-year term, since you're probably going to be looking for another CD in one year anyway.

Kevin

jeffyscott · Post by **jeffyscott** » Mon Jun 15, 2020 2:07 pm

I am thinking about finally taking the plunge and doing my first IRA transfer to a Credit Union CD.

What is the best way to begin the process, money will be coming from Schwab? They do have an online transfer that would let me transfer from the IRA to an external account, but I imagine it can not be done that way, even if might be possible to set up an IRA savings account at the credit union and add that as an external account.

Engaging in sloth · Post by **Engaging in sloth** » Mon Jun 15, 2020 2:22 pm

jeffyscott wrote: ↑Mon Jun 15, 2020 2:07 pm I am thinking about finally taking the plunge and doing my first IRA transfer to a Credit Union CD.

What is the best way to begin the process, money will be coming from Schwab? They do have an online transfer that would let me transfer from the IRA to an external account, but I imagine it can not be done that way, even if might be possible to set up an IRA savings account at the credit union and add that as an external account.

I did a similar type transfer recently: Fidelity to a CU CD

jeffyscott · Post by **jeffyscott** » Mon Jun 15, 2020 3:03 pm

Engaging in sloth wrote: ↑Mon Jun 15, 2020 2:22 pm
jeffyscott wrote: ↑Mon Jun 15, 2020 2:07 pm I am thinking about finally taking the plunge and doing my first IRA transfer to a Credit Union CD.

What is the best way to begin the process, money will be coming from Schwab? They do have an online transfer that would let me transfer from the IRA to an external account, but I imagine it can not be done that way, even if might be possible to set up an IRA savings account at the credit union and add that as an external account.
I did a similar type transfer recently: Fidelity to a CU CD

Were you able to do it online there? I am having trouble figuring out where I would start at Schwab.

Under transfer and distribution forms, they have "IRA Distribution Request Form" (which actually only goes to the electronic transfer process, there is no actual paper form) and one for "transfer an account to Schwab".

I will probably be talking to someone at the credit union tomorrow, it does not appear that they have an online process for becoming a member and opening a new account.

Kevin M · Post by **Kevin M** » Mon Jun 15, 2020 4:16 pm

jeffyscott wrote: ↑Mon Jun 15, 2020 2:07 pm I am thinking about finally taking the plunge and doing my first IRA transfer to a Credit Union CD.

What is the best way to begin the process, money will be coming from Schwab? They do have an online transfer that would let me transfer from the IRA to an external account, but I imagine it can not be done that way, even if might be possible to set up an IRA savings account at the credit union and add that as an external account.

I've done many such IRA transfers, and I've always used the new custodian's form to do the transfer, which in this case would be the credit union's IRA transfer form. Normally you don't even have to discuss it with the current custodian, in this case Schwab.

The typical process is:

Join the credit union.
Open an IRA at the credit union.
Obtain and complete the credit union IRA transfer form, then mail or FAX it back to the credit union. Typically you can indicate on the transfer form what you want the money deposited into; e.g., a specific CD.
Credit union mails or faxes it to the current custodian.
Current custodian mails a check to new custodian (credit union).
Current custodian opens and funds the IRA CD when money received, although you may have to do some additional steps depending on the credit union.

I've typically just used mail for the form, but on a recent transfer from Fidelity to a credit union, I FAXed the form to the CU, and they FAXed it to Fidelity. Fidelity confirmed to me that they would accept a FAXed transfer form, and provided the FAX number to use. Using FAX resulted in the entire process taking a few days, while with mail it typically takes about three weeks.

The biggest issue is that the CU might lower the CD rate before they receive the money. Some will guarantee the rate once they receive the transfer form, but many will not. It's on my list of things to do to call a CU I'm thinking of doing a transfer to to see what their policies are on this.

Kevin

jeffyscott · Post by **jeffyscott** » Mon Jun 15, 2020 4:37 pm

Thanks, Kevin. I will definitely go the fax route. I assume the money being transferred would need to be in cash at the time the current custodian (Schwab) receives the transfer form?

I did plan to ask about a guarantee on the rate.

I'd been thinking that I'd be obtaining and mailing a check made out to the new custodian, like when I rolled employer plan to Schwab.

Kevin M · Post by **Kevin M** » Mon Jun 15, 2020 5:27 pm

jeffyscott wrote: ↑Mon Jun 15, 2020 4:37 pm Thanks, Kevin. I will definitely go the fax route.

Of course you'll need to confirm that Schwab will accept a FAXed IRA transfer form. Some institutions want an original signature. I've done IRA transfers out of Schwab, but not in a long time, and used mail.

I assume the money being transferred would need to be in cash at the time the current custodian (Schwab) receives the transfer form?

I almost always have it in a money market fund at Fidelity or Vanguard, and specify the MM fund as the source of the cash on the transfer form. Since all the rates are so low, having it in your cash settlement fund is fine. You might be able to specify a bond or stock fund as the source, but I don't recall ever doing that.

I'd been thinking that I'd be obtaining and mailing a check made out to the new custodian, like when I rolled employer plan to Schwab.

That's fine too, but that would be an IRA rollover (as opposed to a direct custodian to custodian transfer), which you can only do once per year. There are different rules and procedures for rollovers from employer plans and transfers/rollovers from IRAs. An IRA rollover can be a good choice if the deal is great and you don't want to risk missing it. You could just have Schwab do a distribution to your Schwab taxable account, then ACH or wire the money to the credit union, saving time over mail.

For a direct transfer, the current custodian mails the check directly to the new custodian. Vanguard once accidentally mailed the check to me, and rather than having me forward it on to the new custodian, they cancelled the check and mailed a new one to the new custodian.

You just want to be careful not to end up taking a distribution, unless you are intentionally doing an IRA rollover instead of a direct transfer.

Kevin

Kevin M · Post by **Kevin M** » Mon Jun 15, 2020 5:34 pm

I was kind of getting ready to call Financial Partners CU (FPCU) about their transfer policies, but noticed that the 5-year rate has already dropped from 2.00% to 1.75% APY, so missed that boat.

For now I just called Synchrony Bank and told them to put the proceeds of my maturing IRA CD into the IRA MMA, currently earning 0.6% (the 1-year CD is at 1.00%).

I do see a couple of other 2% ballpark alternatives at some smaller credit unions that come up nationwide alternatives in the DA search specifically for IRA 5-year CDs that don't come up in the standard 5-year CD search.

I also see a couple of 3% 5-year IRA CDs at credit unions when I remove the geographic restrictions, but they don't appear to offer a way to join that would work for me. In the past, I've found one or two opportunities this way, when there was a way to join, but for some reason they didn't show up as nationwide alternatives in the DA search. Something to keep in mind.

Kevin

jeffyscott · Post by **jeffyscott** » Tue Jun 16, 2020 7:47 am

Kevin M wrote: ↑Mon Jun 15, 2020 5:34 pmI also see a couple of 3% 5-year IRA CDs at credit unions when I remove the geographic restrictions, but they don't appear to offer a way to join that would work for me. In the past, I've found one or two opportunities this way, when there was a way to join, but for some reason they didn't show up as nationwide alternatives in the DA search. Something to keep in mind.

I just tried that, while looking at 3 year. There was an actual bank, but in a recent comment someone posted that you had to appear in person. One other bank was still called a "Savings and Loan", Massena Savings & Loan, a couple very old comments from 2009, 2010 indicate local only and I have not checked if that's still the case (I figured with 2-3% on IRA CDs, it would've been posted about here and/or had more recent comments).

There was one credit union for members of a handful of churches, but also included members of knights of columbus. I have no idea who can be a member of that, but if I were a member or willing to become one, that credit union would appear to be available to me even though it did not show up otherwise.

hudson · Post by **hudson** » Tue Jun 16, 2020 8:03 am

Generations, A Division of Community 1st Credit Union
https://www.generationscreditunion.com/ ... s-fees.htm

Anyone is eligible if they join an organization for a small fee....IF YOU ARE LOCAL

Halicar · Post by **Halicar** » Tue Jun 16, 2020 10:56 am

AerialWombat wrote: ↑Fri Jun 12, 2020 3:41 pm For those of you that have traditionally done CD ladders at a single financial institution, how are you doing so now in this low yield environment? Are you spreading the love across multiple financial institutions? Or opting for simplicity and just taking what you can get?

I've spent the last hour hunting and pecking, as I have some 6-month CDs that are all maturing very soon. I already have banking relationships with 16 different financial institutions, and quite frankly, I'm more interested in consolidating than anything else. I used to be a hard core credit card churner, but I've been closing accounts left and right this year.

I do not currently have any Ally accounts, but they do look attractive for a variety of reasons, including the NP CD.

I'm opting for simplicity and taking what I can get. I have a ladder of 10 5-year CD's at Ally, staggered so that one matures every six months. My overall APY right now is 2.51% but that will drop a bit on July 1st when I renew.

Kevin M · Post by **Kevin M** » Tue Jun 16, 2020 11:35 am

hudson wrote: ↑Tue Jun 16, 2020 8:03 am Generations, A Division of Community 1st Credit Union
https://www.generationscreditunion.com/ ... s-fees.htm

Anyone is eligible if they join an organization for a small fee.

Fairly recent comment at DA:

Carpline | May 19, 2020

I called Generations CU and the rates are still good. But, you have to open a CD at a branch location: no mailing/emailing/faxing of documents to open a CD. And the early withdrawal penalty is only 90 days.

Kevin

jeffyscott · Post by **jeffyscott** » Tue Jun 16, 2020 2:18 pm

jeffyscott wrote: ↑Tue Jun 16, 2020 7:47 amOne other bank was still called a "Savings and Loan", Massena Savings & Loan, a couple very old comments from 2009, 2010 indicate local only and I have not checked if that's still the case (I figured with 2-3% on IRA CDs, it would've been posted about here and/or had more recent comments).

I did now confirm, that this "Savings and Loan", which is an FDIC insured bank is not available. Sent them a message and response was "No I'm sorry we only service our immediate area". I never heard of banks restricting who can be a customer before.

Too bad, maybe I'd have gone for one of their "NOW" accounts, too. I could pretend it's the 1970s or 80s

with a NOW account at a Savings and Loan.

hudson · Post by **hudson** » Tue Jun 16, 2020 3:53 pm

Kevin M wrote: ↑Tue Jun 16, 2020 11:35 am
hudson wrote: ↑Tue Jun 16, 2020 8:03 am Generations, A Division of Community 1st Credit Union
https://www.generationscreditunion.com/ ... s-fees.htm

Anyone is eligible if they join an organization for a small fee.
Fairly recent comment at DA:
Carpline | May 19, 2020

I called Generations CU and the rates are still good. But, you have to open a CD at a branch location: no mailing/emailing/faxing of documents to open a CD. And the early withdrawal penalty is only 90 days.
Kevin

Thanks again Kevin

jeffyscott · Post by **jeffyscott** » Tue Jun 16, 2020 4:40 pm

Kevin M wrote: ↑Mon Jun 15, 2020 4:16 pmThe biggest issue is that the CU might lower the CD rate before they receive the money. Some will guarantee the rate once they receive the transfer form, but many will not. It's on my list of things to do to call a CU I'm thinking of doing a transfer to to see what their policies are on this.

Kevin

Looks like I am in luck, the one I am working with says they will guarantee the rate as long as they have the transfer form. It's a 1.9% 3 year CD, which is the best rate showing up for my location, only a 90 day penalty for early withdrawal. And it's even a credit union that I am legitimately eligible to join, no shenanigans of donating to X required (or offered by them)

.

I never thought I would be chasing a measly 1.9%...

AerialWombat · Post by **AerialWombat** » Wed Jun 17, 2020 10:25 am

Halicar wrote: ↑Tue Jun 16, 2020 10:56 am I'm opting for simplicity and taking what I can get. I have a ladder of 10 5-year CD's at Ally, staggered so that one matures every six months. My overall APY right now is 2.51% but that will drop a bit on July 1st when I renew.

Thanks for the reply. This is what I ended up doing also, at Discover. Easy button.

Loon11 · Post by **Loon11** » Fri Jun 26, 2020 8:20 pm

Discovered a 9 month CD at Nasa FCU that pays 1.5%. If opened this month, one has 10 days to fund, has a 10K minimum. I added funds via mobile app and bought 2 CDs - doubt if anything better will happen in the next few months.

hudson · Post by **hudson** » Tue Jun 30, 2020 6:59 pm

The websites that show the best CD rates don't tell the whole story. You may see a great rate, but when you look hard, you find some kind of exception that keeps you out.

I just looked up Five Year CD rates for banks or credit unions that I know about. There may be higher rates?

5 Yr CDs
Live Oak...1%
Marcus...1.15%
Navy Federal CU...1.25%
Penfed...1.19%
My Local Credit Union... 0.85%
Andrews Federal CU...0.2%
Ally...1.15%
Amex Bank...1.10%

Marcus, Amex, and Ally should work for most. Andrews, Penfed, and Navy Federal probably have a military requirement.

Shortsellforfun · Post by **Shortsellforfun** » Tue Jun 30, 2020 11:37 pm

CUs are interesting. The typical CD search sites seem to only provide Ally, Marcus, etc.

For today, NGFCU has 60 month at 1.51% but may drop after 1-July. Sure beats a Treasury or Brokered CD.

https://www.ngfcu.us/rates/termrates.aspx

Join via "Members of the Southern California Historical Aviation Foundation (SCHAF)."

Best.

anonsdca · Post by **anonsdca** » Tue Jun 30, 2020 11:55 pm

Shortsellforfun wrote: ↑Tue Jun 30, 2020 11:37 pm CUs are interesting. The typical CD search sites seem to only provide Ally, Marcus, etc.

For today, NGFCU has 60 month at 1.51% but may drop after 1-July. Sure beats a Treasury or Brokered CD.

https://www.ngfcu.us/rates/termrates.aspx

Join via "Members of the Southern California Historical Aviation Foundation (SCHAF)."

Best.

Agree, you're not going to get near the best rate out there if you dont search out local/other credit unions. Here is another 60 month 1.5%

https://www.pnwfcu.org/accounts/deposit-rates/

The others you mentioned Ally and Marcus, CapOne, etc., just got a big following and a lot of folks just stay, which is understandable for an EF. However, if you have major cash and are using it as your bond allocation, you need to look around. I am 5 months into a 9-month CD at my local CU at 2.5%. It will suck when that goes away.

hudson · Post by **hudson** » Wed Jul 01, 2020 7:00 am

anonsdca wrote: ↑Tue Jun 30, 2020 11:55 pm Agree, you're not going to get near the best rate out there if you dont search out local/other credit unions.

https://www.bankrate.com/banking/cds/cd-rates/

I agree. I've learned the hard way that looking at a credit union's membership page doesn't give full information.
Bankrate's top 5 year CD is for 1.56% at Connexus Credit Union. https://www.connexuscu.org/discover/membership/

If you look at Connexus's membership page, it says that if you join the Connexus Association for $5, you're in. It says "Nationwide access."
That sounds like they could work. One would probably be wise to call and check it out before investing any time.

Connexus has a great FAQ page that answers the early withdrawal question; it's hard to find this information for many credit unions. Connexus gets an A+. https://www.connexuscu.org/accounts/share-certificates/ (scroll to the bottom to see Frequently Asked Questions (FAQ))

Are there penalties for withdrawals before the maturity date?
If your account has an original term of one year or less: The penalty will equal 90 days dividends on the amount withdrawn subject to penalty. If your account has an original term of more than one year, but less than five years: The penalty we may impose will equal 180 days dividends on the amount withdrawn subject to penalty. If your account has an original term of five years or greater: The penalty we may impose will equal 365 days dividends on the amount withdrawn subject to penalty.

SlowMovingInvestor · Post by **SlowMovingInvestor** » Wed Jul 01, 2020 2:25 pm

It seems like Kessler FCU has some good CD rates, but you have to be a resident of Louisiana or MS ?

jeffyscott · Post by **jeffyscott** » Thu Jul 02, 2020 8:37 am

SlowMovingInvestor wrote: ↑Wed Jul 01, 2020 2:25 pm It seems like Kessler FCU has some good CD rates, but you have to be a resident of Louisiana or MS ?

Opinions/experiences appear to vary, which you can see if you search this discussion for "Keesler".

JackoC · Post by **JackoC** » Thu Jul 02, 2020 9:36 am

hudson wrote: ↑Tue Jun 30, 2020 6:59 pm The websites that show the best CD rates don't tell the whole story. You may see a great rate, but when you look hard, you find some kind of exception that keeps you out.

I just looked up Five Year CD rates for banks or credit unions that I know about. There may be higher rates?

5 Yr CDs
Live Oak...1%
Marcus...1.15%
Navy Federal CU...1.25%
Penfed...1.19%
My Local Credit Union... 0.85%
Andrews Federal CU...0.2%
Ally...1.15%
Amex Bank...1.10%

Marcus, Amex, and Ally should work for most. Andrews, Penfed, and Navy Federal probably have a military requirement.

It's probably mentioned somewhere if not many times in preceding many pages, but IMO https://www.depositaccounts.com/
is a better reference than bankrate, at the very least should also be looked at. There are a large number of offers there now higher than 1.25% for 5 yr CD's, up to 2%. Those are predominantly CU's, where you have to look and see if you qualify to join, and there can be issues dealing with small CU's, as mentioned just before (will they hold the rate until they get the money, and other issues like getting them the money, with one I dealt with recently electronic transfer didn't practically work, mailing a check was the final answer). Although some CU's are just as smooth and professional as the specialist online banks, and some big banks are a quite a pain to deal with (I recently opened a checking acct with Citi, for a bonus, and it turned out like the small CU I mentioned, I had to finally mail Citi a check to fund the account: the automated fund xfer think on website just would not work for me, computer or phone, no semi manual way [micro deposits etc] offered online, 30min+ waits to chat with CSR's halfway around the world who kept saying 'wait a few more days and try again'

).

Penfed has virtually universal access BTW, but they don't have such good CD rates lately. They did for awhile, and might again. They've offered some existing customer checking/CC bonuses I've taken advantage of though, having left $5 in savings acct there after excellent rate CD of 5+ yrs ago matured.