Best CD rates thread

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SlowMovingInvestor
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Re: Best CD rates thread

Post by SlowMovingInvestor » Sat Jan 04, 2020 8:23 pm

goaties wrote:
Sat Jan 04, 2020 7:30 pm

In the past year, interest rates on brokered CDs at both Vanguard and Fidelity have become non-competitive. In previous years, their CD rates were comparable, and sometimes better than, rates available directly from banks and credit unions. For me, the difference would amount to thousands in lost income, not $100-$200.

I wonder what's going on?
If you don't mind sharing, what is the rough difference in rates that you've seen ?

I figure that banks/credit unions might be willing to pay a little more in general to get customer information and upsell other products such as loans. But why that would change over the last year, I don't know …

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jeffyscott
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Re: Best CD rates thread

Post by jeffyscott » Sat Jan 04, 2020 8:32 pm

goaties wrote:
Sat Jan 04, 2020 7:30 pm
SlowMovingInvestor wrote:
Sat Jan 04, 2020 6:53 pm

BTW, it may have been covered in this thread before, but where do brokered CD rates typically fall vs bank CD rates ? Obviously, a lot of big bank CD rates are absurdly low to the point I wonder why they even bother to offer these CDs. But are brokered CDs typically 75th percentile or so compared to say online CD rates ? How many basis points off online CD rates for various durations ?

If you're only earning $100-$200 (pre tax, even less post tax) by yield chasing vs a Fido CD ladder, them the Fido ladder might be better.
In the past year, interest rates on brokered CDs at both Vanguard and Fidelity have become non-competitive. In previous years, their CD rates were comparable, and sometimes better than, rates available directly from banks and credit unions. For me, the difference would amount to thousands in lost income, not $100-$200.

I wonder what's going on?
Based on treasury rates, it seems like CDs should be about where the brokered ones are? The 5 year treasury is at about 1.6% and 5 year brokered CD is about 1.9%, based on Vanguard's site. And if the market were open, there might be some variation among the various offerings but I don't think it would be anything like what you see in direct CDs. For direct 5 year CDs you can get anywhere from 0.15% to just over 3%, based on depositaccounts.com.
Time is your friend; impulse is your enemy. - John C. Bogle

SlowMovingInvestor
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Re: Best CD rates thread

Post by SlowMovingInvestor » Sat Jan 04, 2020 8:58 pm

So I just saw that Goldman Sachs Bank (Marcus) is offering brokered CDs for 3 years at 1.85%.

If you go directly to their web site, it's 2.10%. 25 basis point difference.

For 5 years, 15 basis point difference, but the brokered CD is callable so not directly comparable.

For both durations, Marcus has the best rate in brokered CDs. But there are probably better rates in bank CDs.

Anyway, interesting data point.

SlowMovingInvestor
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Re: Best CD rates thread

Post by SlowMovingInvestor » Sat Jan 04, 2020 9:00 pm

jeffyscott wrote:
Sat Jan 04, 2020 8:32 pm

Based on treasury rates, it seems like CDs should be about where the brokered ones are? The 5 year treasury is at about 1.6% and 5 year brokered CD is about 1.9%, based on Vanguard's site. And if the market were open, there might be some variation among the various offerings but I don't think it would be anything like what you see in direct CDs. For direct 5 year CDs you can get anywhere from 0.15% to just over 3%, based on depositaccounts.com.
What should the expected relation be ? Treasuries are more liquid, no state taxes, no FDIC limit. Both have a sovereign guarantee (implicit for CDs)

How much difference should that translate into ? I don't actually know the answer to that, but I invite comments.

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VictoriaF
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Re: Best CD rates thread

Post by VictoriaF » Sun Jan 05, 2020 11:40 am

Please confirm that if I have both an IRA and a regular account at the same credit union, each account is separately NCUA insured up to $250,000.

Victoria
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elainet7
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Re: Best CD rates thread

Post by elainet7 » Sun Jan 05, 2020 12:04 pm

anyone buying agency bonds rather than cds

hudson
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Re: Best CD rates thread

Post by hudson » Sun Jan 05, 2020 12:48 pm

elainet7 wrote:
Sun Jan 05, 2020 12:04 pm
anyone buying agency bonds rather than cds
Elainet7,
On Vanguard, I see the highest yielding agency bonds at 1.9%...that's individual agency bonds.
That rate isn't attractive to me.
Vanguard bond funds like GNMA are paying more.

elainet7
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Re: Best CD rates thread

Post by elainet7 » Sun Jan 05, 2020 12:59 pm

thanx do own some ginnie maes
income investing is tough
we have some HY, PFFD(etf) and some long corporates to boost yield with more RISKJ obviously but confident with Vanguard

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Re: Best CD rates thread

Post by taurabora » Sun Jan 05, 2020 1:05 pm

SlowMovingInvestor wrote:
Sat Jan 04, 2020 9:00 pm

What should the expected relation be ? Treasuries are more liquid, no state taxes, no FDIC limit. Both have a sovereign guarantee (implicit for CDs)

How much difference should that translate into ? I don't actually know the answer to that, but I invite comments.
I generally try to find 10-year brokered CDs that are paying at least 0.5% more than treasuries.

nalor511
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Re: Best CD rates thread

Post by nalor511 » Sun Jan 05, 2020 1:54 pm

VictoriaF wrote:
Sun Jan 05, 2020 11:40 am
Please confirm that if I have both an IRA and a regular account at the same credit union, each account is separately NCUA insured up to $250,000.

Victoria
Here is a way to check yourself, using exactly your own situation/details, to be 100% sure: https://www.mycreditunion.gov/insurance-estimator

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jeffyscott
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Re: Best CD rates thread

Post by jeffyscott » Sun Jan 05, 2020 2:31 pm

taurabora wrote:
Sun Jan 05, 2020 1:05 pm
SlowMovingInvestor wrote:
Sat Jan 04, 2020 9:00 pm

What should the expected relation be ? Treasuries are more liquid, no state taxes, no FDIC limit. Both have a sovereign guarantee (implicit for CDs)

How much difference should that translate into ? I don't actually know the answer to that, but I invite comments.
I generally try to find 10-year brokered CDs that are paying at least 0.5% more than treasuries.
That's about what I averaged when I was buying 4 mo. to 5 year ones. Range was 0.13 to 0.95%, I estimated it at the time of each purchase. All but one were secondaries and I put some effort into finding what I thought were the best deals.
Time is your friend; impulse is your enemy. - John C. Bogle

50/50
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Re: Best CD rates thread

Post by 50/50 » Sun Jan 05, 2020 2:39 pm

VictoriaF wrote:
Sun Jan 05, 2020 11:40 am
Please confirm that if I have both an IRA and a regular account at the same credit union, each account is separately NCUA insured up to $250,000.

Victoria

Victoria,

You can get this information from the National Credit Union Administration www.mycreditunion.gov/estimator

Scooter57
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Re: Best CD rates thread

Post by Scooter57 » Sun Jan 05, 2020 3:01 pm

There is very little extra hassle involved in buying credit union CDs, and I like having my assets distributed among several institutions, not just Vanguard. That is more secure should Vanguard be hacked.

It has been easy to link the CU share (savings) account, where matured CDs' proceeds go, to Vanguard and pull the proceeds in one day.

The customer service is very good at the CUs I invest in, unlike Vanguard of late. And my money is being used for very low rate home and auto loans that help people, not to swell the coffers of the big banks that offer brokered CDs.

The brokered CDs can't be closed early for a small penalty and are expensive to sell, if you even can find a buyer, too.

Bond funds including GNMAs have much more risk.

Financial advisors have brainwashed people into ignoring CDs which is good for those of us who love them, but forces naive investors into bond funds, which may be the victim of our next debt-fueled crisis.

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jeffyscott
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Re: Best CD rates thread

Post by jeffyscott » Sun Jan 05, 2020 3:10 pm

Scooter57 wrote:
Sun Jan 05, 2020 3:01 pm
There is very little extra hassle involved in buying credit union CDs...
Is your comment applicable to IRA assets, or only taxable?
Time is your friend; impulse is your enemy. - John C. Bogle

jmk
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Re: Best CD rates thread

Post by jmk » Sun Jan 05, 2020 3:18 pm

SlowMovingInvestor wrote:
Sat Jan 04, 2020 9:00 pm
jeffyscott wrote:
Sat Jan 04, 2020 8:32 pm

Based on treasury rates, it seems like CDs should be about where the brokered ones are? The 5 year treasury is at about 1.6% and 5 year brokered CD is about 1.9%, based on Vanguard's site. And if the market were open, there might be some variation among the various offerings but I don't think it would be anything like what you see in direct CDs. For direct 5 year CDs you can get anywhere from 0.15% to just over 3%, based on depositaccounts.com.
What should the expected relation be ? Treasuries are more liquid, no state taxes, no FDIC limit. Both have a sovereign guarantee (implicit for CDs)

How much difference should that translate into ? I don't actually know the answer to that, but I invite comments.
Forgive a bit of a side track, but I'm intrigued by how the relationship between treasuries and CDs seems to change over time. Graph I put together at FRED:

5 year treasury / 5 y jumbo cd rate
Last edited by jmk on Sun Jan 05, 2020 5:06 pm, edited 1 time in total.

lazyday
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Re: Best CD rates thread

Post by lazyday » Sun Jan 05, 2020 3:44 pm

Scooter57 wrote:
Sun Jan 05, 2020 3:01 pm
There is very little extra hassle involved in buying credit union CDs
I've found it to be quite a hassle, at least for IRA CDs.

You need to:

0 wait for a good CD, checking websites or forums
1 read fine print and/or call and discuss, to avoid problems
1b if there's something you don't like, go back to step 0
2 meet CU eligibility requirements
3 setup an id, sometimes requiring several security questions and/or credit check questions
4 fill out paperwork
5 send a copy of photo id
5b you may need to wait a few days. check every day, the rate won't last forever!
6 sometimes you need to set up another id because the first one was just used to apply
7 for CU: either link a bank account and send a little money or sometimes you can pay with a credit card.
8 fill out more paperwork to open an IRA, and to transfer IRA funds
8b after waiting 1 week, log in every couple days to see if funds have arrived
9 if the rate is still available, open the cd
10 if the rate is no longer available by the time the CU or bank gets the check sent from your broker, then you need to have the money sent back to your broker
11 especially for smaller CU or banks: correct mistakes if necessary
12 more paperwork for beneficiary/TOD unless you could do it in an earlier step
13 in some cases, send a penny once a year to your taxable account to be sure it doesn't become inactive.

It might be possible to have IRA funds wired, but so far I haven't succeeded. Maybe I should try harder.

When there's a good CD rate, it can be difficult to deal with a CU or bank. In my experience, they can be unresponsive to email and secure messages. Phone calls may work better, but expect long hold times.

For me it's not a fun process at all. But for large CDs, it can be well worth it. It makes rebalancing more difficult or in some cases impractical because of early withdrawal penalties, but sometimes you can earn a significantly higher yield than on a comparable Treasury.

RetireBy55
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Re: Best CD rates thread

Post by RetireBy55 » Sun Jan 05, 2020 4:07 pm

VictoriaF wrote:
Sun Jan 05, 2020 11:40 am
Please confirm that if I have both an IRA and a regular account at the same credit union, each account is separately NCUA insured up to $250,000.

Victoria
The short answer is "yes". Each depositor is insured up to $250K via the NCUA, per account type. So, if you have an IRA - that's insured up to $250K. CD, Checking or Share Savings - up to $250K.

A joint owner on a taxable account adds another $250K. And you can add beneficiaries for another $250K each on taxable (not IRA) accounts - although the first beneficiary on a jointly owned account only results in a total of $500K insurance for that jointly owned account. You need 2 beneficiaries to get to a total of $750K, 3 for a total of $1M, etc.

Note that the beneficiary trick does not apply to IRAs. The NCUA only insures each depositor up to a total of $250K per IRA. There's no way (that I've ever found) to increase the IRA insurance amount.

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VictoriaF
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Re: Best CD rates thread

Post by VictoriaF » Sun Jan 05, 2020 4:10 pm

RetireBy55 wrote:
Sun Jan 05, 2020 4:07 pm
VictoriaF wrote:
Sun Jan 05, 2020 11:40 am
Please confirm that if I have both an IRA and a regular account at the same credit union, each account is separately NCUA insured up to $250,000.

Victoria
The short answer is "yes". Each depositor is insured up to $250K via the NCUA, per account type. So, if you have an IRA - that's insured up to $250K. CD, Checking or Share Savings - up to $250K.

A joint owner on a taxable account adds another $250K. And you can add beneficiaries for another $250K each on taxable (not IRA) accounts - although the first beneficiary on a jointly owned account only results in a total of $500K insurance for that jointly owned account. You need 2 beneficiaries to get to a total of $750K, 3 for a total of $1M, etc.

Note that the beneficiary trick does not apply to IRAs. The NCUA only insures each depositor up to a total of $250K per IRA. There's no way (that I've ever found) to increase the IRA insurance amount.
Thank you, RetireBy55, this is helpful,

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

Scooter57
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Re: Best CD rates thread

Post by Scooter57 » Sun Jan 05, 2020 6:02 pm

lazyday wrote:
Sun Jan 05, 2020 3:44 pm

I've found it to be quite a hassle, at least for IRA CDs.

You need to:

0 wait for a good CD, checking websites or forums
1 read fine print and/or call and discuss, to avoid problems
1b if there's something you don't like, go back to step 0
2 meet CU eligibility requirements
3 setup an id, sometimes requiring several security questions and/or credit check questions
4 fill out paperwork
5 send a copy of photo id
5b you may need to wait a few days. check every day, the rate won't last forever!
6 sometimes you need to set up another id because the first one was just used to apply
7 for CU: either link a bank account and send a little money or sometimes you can pay with a credit card.
8 fill out more paperwork to open an IRA, and to transfer IRA funds
8b after waiting 1 week, log in every couple days to see if funds have arrived
9 if the rate is still available, open the cd
10 if the rate is no longer available by the time the CU or bank gets the check sent from your broker, then you need to have the money sent back to your broker
11 especially for smaller CU or banks: correct mistakes if necessary
12 more paperwork for beneficiary/TOD unless you could do it in an earlier step
13 in some cases, send a penny once a year to your taxable account to be sure it doesn't become inactive.

It might be possible to have IRA funds wired, but so far I haven't succeeded. Maybe I should try harder.

When there's a good CD rate, it can be difficult to deal with a CU or bank. In my experience, they can be unresponsive to email and secure messages. Phone calls may work better, but expect long hold times.

For me it's not a fun process at all. But for large CDs, it can be well worth it. It makes rebalancing more difficult or in some cases impractical because of early withdrawal penalties, but sometimes you can earn a significantly higher yield than on a comparable Treasury.
I don't do CD IRAs as I use my IRA for higher yielding stock funds that put out end of the year distributions, but even with the list of things you mentioned that have to be done to open any CD it is worth pointing out:

1. Once you get a CD set up you can ignore it for the next 3, 4 or 5 years completely, save for downloading statements (which I do every 3 month.)

2. Brokered CDs do not reinvest the money, and they all pay out interest at different times (CDs usually pay out at month end). So you are always having to go into your brokerage settlement money market account where you have small payments deposited, often every month, and then figure out what to do with sums that are too small to put into new CDs and end up earning the paltry returns of the money market fund. This goes on every month for the term of the CD. Much more annoying than the small amount of time dedicated to setting up a CU CD.

3. I often contact customer support before buying a CD to check on all the terms, how transfers can be made, etc. If I have trouble with that initial call, I am likely not to invest no matter how good the term.

4. The very few mistakes I have had to correct with CDs are balanced by the issues I have had to correct with Vanguard over the years. Vanguard has become abominable to deal with. Every time I call I talk to another person who has no idea who I am and often gives me different information than the previous rep. So far I have found CUs very easy to deal with and the few times I have done things that have caused me to be charged penalties (legitimately) a single phone call or secure message has been all it has taken to have the charge reversed.

5. Vanguard has been able to wire money to CUs where time was of the essence. In other cases, the rate is held until a mailed check arrives, or I can deposit via the Shared Branch that is located next to where I do my weekly shopping. I always check on this before opening a CD. I do not open CDs where the CU won't hold the rate after I open the account and apply for the CD. So far, no issues with this.

6. You can check the capitalization and other financial health metrics of Credit Unions (and banks) at depositaccounts.com. Doing this has taught me that several of my local institutions (where I used to invest) are much riskier than ones at the other end of the country because of their small size and unpaid loan balances. I have been at this long enough now that I have a pretty good idea of which institutions I want to invest in. I have missed out on a couple 4% CDs because I didn't want to deal with the institution based on stuff I've read.

7. I have found it is a whole lot faster to close an online CD and get the proceeds into Vanguard than it is to close a local account where I end up having to sit in the officer's cubicle forever while she runs around fiddling with paperwork that has to be printed upstairs, etc, etc. and then insists on issuing a cashier's check that takes more time and isn't anything I like to be walking around with.

I know IRAs are more complex, but there is some discussion of this issue elsewhere on Bogleheads and I believe Kevin M has addressed it at length.

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Kevin M
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Re: Best CD rates thread

Post by Kevin M » Sun Jan 05, 2020 6:25 pm

RetireBy55 wrote:
Sun Jan 05, 2020 4:07 pm
VictoriaF wrote:
Sun Jan 05, 2020 11:40 am
Please confirm that if I have both an IRA and a regular account at the same credit union, each account is separately NCUA insured up to $250,000.

Victoria
The short answer is "yes". Each depositor is insured up to $250K via the NCUA, per account type. So, if you have an IRA - that's insured up to $250K. CD, Checking or Share Savings - up to $250K.

A joint owner on a taxable account adds another $250K. And you can add beneficiaries for another $250K each on taxable (not IRA) accounts - although the first beneficiary on a jointly owned account only results in a total of $500K insurance for that jointly owned account. You need 2 beneficiaries to get to a total of $750K, 3 for a total of $1M, etc.

Note that the beneficiary trick does not apply to IRAs. The NCUA only insures each depositor up to a total of $250K per IRA. There's no way (that I've ever found) to increase the IRA insurance amount.
This is mostly correct, except for the part that's underlined.

It's correct that for the joint account category, each owner is entitled to a total of $250K across all joint accounts for which that owner is an owner. But if you name a beneficiary on an account with more than one owner, it is no longer in the joint account category, but in the revocable trust account category.

For accounts in the revocable trust account (RTA) category, each owner is insured up to $250K per beneficiary for five or fewer beneficiaries across all accounts in the RTA category at that credit union.

So for a single account (only) at a CU with two owners and two beneficiaries, each owner has up to $500K in coverage, so total coverage would be up to $1M, not $750K. For two owners with three beneficiaries, each owner would be covered up to $750K, so a total of $1.5M for the account, not $1M.

Others have already provided a link to the CU share insurance estimator. Read this FAQ carefully for revocable trusts, including an example that should help clarify: What is a revocable trust account?.

Kevin
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RetireBy55
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Re: Best CD rates thread

Post by RetireBy55 » Sun Jan 05, 2020 7:13 pm

Good clarification, Kevin. Thanks.

SlowMovingInvestor
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Re: Best CD rates thread

Post by SlowMovingInvestor » Sun Jan 05, 2020 7:28 pm

jmk wrote:
Sun Jan 05, 2020 3:18 pm

Forgive a bit of a side track, but I'm intrigued by how the relationship between treasuries and CDs seems to change over time. Graph I put together at FRED:

5 year treasury / 5 y jumbo cd rate
It's not really a side track, since Treasuries are an alternative to CDs. Certainly fascinating. And Treasuries are state tax free too.

But this chart would indicate that for at least the 5 year maturity, Treasuries are worse than CDs most of the time.

SlowMovingInvestor
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Re: Best CD rates thread

Post by SlowMovingInvestor » Sun Jan 05, 2020 7:36 pm

taurabora wrote:
Sun Jan 05, 2020 1:05 pm

I generally try to find 10-year brokered CDs that are paying at least 0.5% more than treasuries.
So if it's (say) 0.4%, you would get the Treasury.
That premium almost certainly exceeds the state tax bite. Is the rest the premium you're paying for liquidity ?

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Kevin M
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Re: Best CD rates thread

Post by Kevin M » Sun Jan 05, 2020 7:52 pm

goaties wrote:
Sat Jan 04, 2020 7:30 pm
SlowMovingInvestor wrote:
Sat Jan 04, 2020 6:53 pm
BTW, it may have been covered in this thread before, but where do brokered CD rates typically fall vs bank CD rates ? Obviously, a lot of big bank CD rates are absurdly low to the point I wonder why they even bother to offer these CDs. But are brokered CDs typically 75th percentile or so compared to say online CD rates ? How many basis points off online CD rates for various durations ?

If you're only earning $100-$200 (pre tax, even less post tax) by yield chasing vs a Fido CD ladder, them the Fido ladder might be better.
In the past year, interest rates on brokered CDs at both Vanguard and Fidelity have become non-competitive. In previous years, their CD rates were comparable, and sometimes better than, rates available directly from banks and credit unions. For me, the difference would amount to thousands in lost income, not $100-$200.

I wonder what's going on?
With the exception of a maybe a year or so, ending maybe a couple of years ago, I have not found brokered CDs to be competitive with the best direct CD deals in the last 10 years. During that year or so, I also found Treasuries and individual munis to be relatively attractive in taxable accounts.

Since late October 2010, my average direct CD yield premium over Treasuries of same maturities has been about 115 basis points (e.g., with Treasury yield at 2%, CD yield would be 3.15%). If we assume an average brokered CD yield premium of 30-40 basis points over Treasuries, then my average direct CD yield premium over brokered CDs would have been around 75 basis points or more.

So I don't think it's just the last year during which brokered CDs have been uncompetitive compared to the best direct CDs, unless you're just comparing to the year or two before that.

Kevin
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lazyday
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Re: Best CD rates thread

Post by lazyday » Sun Jan 05, 2020 9:02 pm

Scooter57 wrote:
Sun Jan 05, 2020 6:02 pm
1. Once you get a CD set up you can ignore it for the next 3, 4 or 5 years completely, save for downloading statements (which I do every 3 month.)
That's an important counter to my complaints. I prefer 5 or 7 year CDs for this reason.
5. .... I do not open CDs where the CU won't hold the rate after I open the account and apply for the CD. So far, no issues with this.
Sometimes the rate is good enough that I'll risk it. I've only bothered to ask about a hold either when I've already had to call for another reason, or when I only will open the CD if they'll hold the rate. When I've asked, I've usually been told no. I don't know how often a rate is held because someone asks, and not because the rate is held for everyone even if they didn't ask. Just in case, perhaps I should try every time.

I remember two credit unions where the rate changed and the special rate was not honored. But at two other CUs, the special rate was honored. I don't recall running into a rate change at a bank.
6. You can check the capitalization and other financial health metrics of Credit Unions (and banks) at depositaccounts.com. .... I have missed out on a couple 4% CDs because I didn't want to deal with the institution based on stuff I've read.
For direct CDs, I've only done this if I was having trouble deciding if I should buy. I suppose it could be a nuisance if the CU or bank goes bankrupt, but is it bad enough to not buy a good CD?

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Re: Best CD rates thread

Post by jmk » Sun Jan 05, 2020 9:17 pm

SlowMovingInvestor wrote:
Sun Jan 05, 2020 7:28 pm
jmk wrote:
Sun Jan 05, 2020 3:18 pm

Forgive a bit of a side track, but I'm intrigued by how the relationship between treasuries and CDs seems to change over time. Graph I put together at FRED:

5 year treasury / 5 y jumbo cd rate
It's not really a side track, since Treasuries are an alternative to CDs. Certainly fascinating. And Treasuries are state tax free too.

But this chart would indicate that for at least the 5 year maturity, Treasuries are worse than CDs most of the time.
One rub is that in my own CD buying (through banks not secondary market) I've gotten about 0.75 above the Treasury rate, because I tend to buy among the highest yielding CDs not the average FRED uses. Secondary CDs at Vanguard seems to be about 0.42 above this FRED figure.

So adjusting the graph to reflect that .42 it looks a lot better for CDs:
Image

But even then we see periods in which treasuries are higher.

FRED explains that,
The rate cap is determined by adding 75 basis points to the national rate. The national rate is calculated by the FDIC as a simple average of rates paid (uses annual percentage yield) by all insured depository institutions and branches for which data are available. Data used to calculate the national rates are gathered by RateWatch. Savings and interest checking account rates are based on the $2,500 product tier while money market and certificate of deposit are based on the $10,000 and $100,000 product tiers for non-jumbo and jumbo accounts, respectively. Account types and maturities are those most commonly offered by the banks and branches for which data is available- no fewer than 49,000 locations and as many as 81,000 locations reported. The deposit rates of credit unions are not included in the calculation
(my emphasis)
Last edited by jmk on Sun Jan 05, 2020 11:47 pm, edited 4 times in total.

TravelGeek
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Re: Best CD rates thread

Post by TravelGeek » Sun Jan 05, 2020 9:19 pm

Those of you who shop all over the country for the best CD rates, how many different banks/CUs do you typically deal with at any given point in time, and do you close your share accounts once you are “done” with a CD and moved the funds elsewhere? For example, I bought a bunch of PenFed CDs about five years ago during one of their winter promos. The CDs have matured, and the renewal rates didn’t seem great, so I moved funds to my Ally “hub” last year. And now I have orphan share account and wonder if it is worth keeping it alive just in case they become competitive again...

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Re: Best CD rates thread

Post by mr.masku » Mon Jan 06, 2020 1:04 am

TravelGeek wrote:
Sun Jan 05, 2020 9:19 pm
Those of you who shop all over the country for the best CD rates, how many different banks/CUs do you typically deal with at any given point in time, and do you close your share accounts once you are “done” with a CD and moved the funds elsewhere? For example, I bought a bunch of PenFed CDs about five years ago during one of their winter promos. The CDs have matured, and the renewal rates didn’t seem great, so I moved funds to my Ally “hub” last year. And now I have orphan share account and wonder if it is worth keeping it alive just in case they become competitive again...
I had become a PenFed member many years back to take advantage of their very good 5/5 ARM rates. After I refinanced away from PenFed, I had the Share account sitting with $5 for a long time. Now I'm back to PenFed for their 2% cash-back-on-everything Credit Card. Wasn't a big deal to have the Share account sitting there for several years with just $5 in it.

Scooter57
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Re: Best CD rates thread

Post by Scooter57 » Mon Jan 06, 2020 12:35 pm

TravelGeek wrote:
Sun Jan 05, 2020 9:19 pm
Those of you who shop all over the country for the best CD rates, how many different banks/CUs do you typically deal with at any given point in time, and do you close your share accounts once you are “done” with a CD and moved the funds elsewhere? For example, I bought a bunch of PenFed CDs about five years ago during one of their winter promos. The CDs have matured, and the renewal rates didn’t seem great, so I moved funds to my Ally “hub” last year. And now I have orphan share account and wonder if it is worth keeping it alive just in case they become competitive again...
I have been closing accounts at institutions where the enticing rate turned out to be a one off once my CD matures. Right now I have active accounts at six CUs and three banks, two of them small local banks just down the street from me, and one of which I use for writing checks. I will be closing three of my-CD only accounts this year when the 5 yr CDs held there mature. Penfed has offered poor rates the past few years, but they were very good for long enough that I haven't given up on them and I still use their credit card, too. I keep $5 in my share account there. If another year goes by when they aren't attractive, I might close the account, to simplify things. But I don't find it a burden to check my balances once a month.

One other nice thing about Credit Union CDs which I forgot to mention is that if you open an account that you are qualified for, often your children or parents can also open accounts at that CU because of your relationship, even if they live in other states or wouldn't otherwise qualify. This can be a nice perk.

EvelynTroy
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Re: Best CD rates thread

Post by EvelynTroy » Mon Jan 06, 2020 12:58 pm

mr.masku wrote:
Mon Jan 06, 2020 1:04 am
TravelGeek wrote:
Sun Jan 05, 2020 9:19 pm
Those of you who shop all over the country for the best CD rates, how many different banks/CUs do you typically deal with at any given point in time, and do you close your share accounts once you are “done” with a CD and moved the funds elsewhere? For example, I bought a bunch of PenFed CDs about five years ago during one of their winter promos. The CDs have matured, and the renewal rates didn’t seem great, so I moved funds to my Ally “hub” last year. And now I have orphan share account and wonder if it is worth keeping it alive just in case they become competitive again...
I had become a PenFed member many years back to take advantage of their very good 5/5 ARM rates. After I refinanced away from PenFed, I had the Share account sitting with $5 for a long time. Now I'm back to PenFed for their 2% cash-back-on-everything Credit Card. Wasn't a big deal to have the Share account sitting there for several years with just $5 in it.
Right now I have 7 CU / Bank CD's - 3 of them mature in 2020. I have one CU local for my checking account. I bank online Discover that will be closed soon, tiny amount of money in a savings account - they had nice promotion with 2% savings account. Now much lower so moved almost all money out.

Like you I had PenFed CD's - I waited about a year before I closed the share account - just didn't seem to be competitive. No formula to when I close a share account. I do close them because I want my $5 or $10 back. I'm not in a big hurry to close them though.

Evelyn

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jeffyscott
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Re: Best CD rates thread

Post by jeffyscott » Mon Jan 06, 2020 2:05 pm

lazyday wrote:
Sun Jan 05, 2020 3:44 pm
Scooter57 wrote:
Sun Jan 05, 2020 3:01 pm
There is very little extra hassle involved in buying credit union CDs
I've found it to be quite a hassle, at least for IRA CDs.

You need to:

0 wait for a good CD, checking websites or forums
1 read fine print and/or call and discuss, to avoid problems
1b if there's something you don't like, go back to step 0
2 meet CU eligibility requirements
3 setup an id, sometimes requiring several security questions and/or credit check questions
4 fill out paperwork
5 send a copy of photo id
5b you may need to wait a few days. check every day, the rate won't last forever!
6 sometimes you need to set up another id because the first one was just used to apply
7 for CU: either link a bank account and send a little money or sometimes you can pay with a credit card.
8 fill out more paperwork to open an IRA, and to transfer IRA funds
8b after waiting 1 week, log in every couple days to see if funds have arrived
9 if the rate is still available, open the cd
10 if the rate is no longer available by the time the CU or bank gets the check sent from your broker, then you need to have the money sent back to your broker
11 especially for smaller CU or banks: correct mistakes if necessary
12 more paperwork for beneficiary/TOD unless you could do it in an earlier step
13 in some cases, send a penny once a year to your taxable account to be sure it doesn't become inactive.

It might be possible to have IRA funds wired, but so far I haven't succeeded. Maybe I should try harder.

When there's a good CD rate, it can be difficult to deal with a CU or bank. In my experience, they can be unresponsive to email and secure messages. Phone calls may work better, but expect long hold times.

For me it's not a fun process at all. But for large CDs, it can be well worth it. It makes rebalancing more difficult or in some cases impractical because of early withdrawal penalties, but sometimes you can earn a significantly higher yield than on a comparable Treasury.
Thank you for writing up all those details. I'd seen a few general comments in the past about IRA CDs being a hassle, but not too much explanation of why and how.

Since IRA is the only place I'd have CDs, I'll likely continue to stay away from direct ones. I've got some time before most of the brokered ones that I have mature.
Time is your friend; impulse is your enemy. - John C. Bogle

protagonist
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Re: Best CD rates thread

Post by protagonist » Mon Jan 06, 2020 6:48 pm

Keesler CU is easy to join if you join the LA or MS Amer. Cancer Society Cancer Action Network with a min.$10 donation.
They are offering a 30 mo step up CD with a cumulative APY of 3.1-3.2% depending on how much you deposit.
The EWP is a maximum of 90 days interest.
I just purchased one...the application is rather long but not difficult. https://www.kfcu.org/
My experience with customer service was positive.

Their rates potentially revise on Wednesdays so if they drop please don't shoot the messenger.

Good luck.

SlowMovingInvestor
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Re: Best CD rates thread

Post by SlowMovingInvestor » Mon Jan 06, 2020 7:12 pm

protagonist wrote:
Mon Jan 06, 2020 6:48 pm
Keesler CU is easy to join if you join the LA or MS Amer. Cancer Society Cancer Action Network with a min.$10 donation.
They are offering a 30 mo step up CD with a cumulative APY of 3.1-3.2% depending on how much you deposit.
The EWP is a maximum of 90 days interest.
I just purchased one...the application is rather long but not difficult. https://www.kfcu.org/
I tried to figure out their rate chart, but I really can't. How do you get 3.1% - 3.2% interest ?

inbox788
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Re: Best CD rates thread

Post by inbox788 » Mon Jan 06, 2020 7:16 pm

SlowMovingInvestor wrote:
Mon Jan 06, 2020 7:12 pm
protagonist wrote:
Mon Jan 06, 2020 6:48 pm
Keesler CU is easy to join if you join the LA or MS Amer. Cancer Society Cancer Action Network with a min.$10 donation.
They are offering a 30 mo step up CD with a cumulative APY of 3.1-3.2% depending on how much you deposit.
The EWP is a maximum of 90 days interest.
I just purchased one...the application is rather long but not difficult. https://www.kfcu.org/
I tried to figure out their rate chart, but I really can't. How do you get 3.1% - 3.2% interest ?
https://www.kfcu.org/rates/
Average blended rate? 4.0% or 4.1% during final (3/3) 10 months.

SlowMovingInvestor
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Re: Best CD rates thread

Post by SlowMovingInvestor » Tue Jan 07, 2020 12:33 pm

inbox788 wrote:
Mon Jan 06, 2020 7:16 pm

https://www.kfcu.org/rates/
Average blended rate? 4.0% or 4.1% during final (3/3) 10 months.
Thanks !

Another question -- if I'm someone who really doesn't want doesn't want to open too many accounts, doesn't want to do too many transfers, is below FDIC limits, what would be reasonable places to open accounts for 2-3 year CDs ? I realize that the best rate, or close to it, varies a lot depending on promo offers, an institution's own funding needs etc., but I'm wondering if there are some places that are generally 'good enough', if not best.

For example, when looking at MMFs, VG is pretty much always the best. Any equivalent Credit Union/online banks ?

nalor511
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Re: Best CD rates thread

Post by nalor511 » Tue Jan 07, 2020 1:38 pm

SlowMovingInvestor wrote:
Tue Jan 07, 2020 12:33 pm

Another question -- if I'm someone who really doesn't want doesn't want to open too many accounts, doesn't want to do too many transfers, is below FDIC limits, what would be reasonable places to open accounts for 2-3 year CDs ? I realize that the best rate, or close to it, varies a lot depending on promo offers, an institution's own funding needs etc., but I'm wondering if there are some places that are generally 'good enough', if not best.

For example, when looking at MMFs, VG is pretty much always the best. Any equivalent Credit Union/online banks ?
There isn't one that consistently has close to the best rate on CDs, IMO. There were a bunch of 3.5-4% CDs over the past 18 months, all of which now offer pretty low rates, I guess once they met their short/long term funding goals they clamped up. It's pretty common practice. I've only once ever gone back for a second CD after the first one expired, and that was with an Ally no-penalty CD. Andrews FCU seems to frequently offer special 3-3.25% CDs, they're the only CU I've seen in the last 6 mo offer multiple promotions. Patelco sometimes does, but they don't seem to have anything now. Depositaccounts.com is a really good resource. I think you're going to run around to multiple CUs, if you want to rate chase. Or just accept the Vanguard MMF rate. Or go to Fidelity and buy Treasuries directly using auto-roll (auto-renew)

mr.masku
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Re: Best CD rates thread

Post by mr.masku » Tue Jan 07, 2020 1:42 pm

protagonist wrote:
Mon Jan 06, 2020 6:48 pm
Keesler CU is easy to join if you join the LA or MS Amer. Cancer Society Cancer Action Network with a min.$10 donation.
They are offering a 30 mo step up CD with a cumulative APY of 3.1-3.2% depending on how much you deposit.
The EWP is a maximum of 90 days interest.
I just purchased one...the application is rather long but not difficult. https://www.kfcu.org/
My experience with customer service was positive.

Their rates potentially revise on Wednesdays so if they drop please don't shoot the messenger.

Good luck.
Early Withdrawal Penalty seems to be up to 180 days.
https://www.kfcu.org/media/disclosures/tis.pdf

SlowMovingInvestor
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Re: Best CD rates thread

Post by SlowMovingInvestor » Tue Jan 07, 2020 2:27 pm

nalor511 wrote:
Tue Jan 07, 2020 1:38 pm
There isn't one that consistently has close to the best rate on CDs, IMO. There were a bunch of 3.5-4% CDs over the past 18 months, all of which now offer pretty low rates, I guess once they met their short/long term funding goals they clamped up. It's pretty common practice. I've only once ever gone back for a second CD after the first one expired, and that was with an Ally no-penalty CD. Andrews FCU seems to frequently offer special 3-3.25% CDs, they're the only CU I've seen in the last 6 mo offer multiple promotions. Patelco sometimes does, but they don't seem to have anything now. Depositaccounts.com is a really good resource. I think you're going to run around to multiple CUs, if you want to rate chase. Or just accept the Vanguard MMF rate. Or go to Fidelity and buy Treasuries directly using auto-roll (auto-renew)
Thanks for the reference to Andrews FCU. I'm not really interested in the 'best yields' per se, but good yields, maybe in the 75th percentile range. From what I can see, brokered CDs (let alone Treasuries) fall below that threshold.

Is there any bank/CU that is at say the 75th percentile range ? The usual suspects (Ally, Marcus, Capital One, Purepoint) maybe ?

lazyday
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Re: Best CD rates thread

Post by lazyday » Tue Jan 07, 2020 2:29 pm

mr.masku wrote:
Tue Jan 07, 2020 1:42 pm
Early Withdrawal Penalty seems to be up to 180 days.
https://www.kfcu.org/media/disclosures/tis.pdf
Of course the step-up nature of the CD also can make for a steep penalty.

nalor511
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Re: Best CD rates thread

Post by nalor511 » Tue Jan 07, 2020 2:39 pm

SlowMovingInvestor wrote:
Tue Jan 07, 2020 2:27 pm
nalor511 wrote:
Tue Jan 07, 2020 1:38 pm
There isn't one that consistently has close to the best rate on CDs, IMO. There were a bunch of 3.5-4% CDs over the past 18 months, all of which now offer pretty low rates, I guess once they met their short/long term funding goals they clamped up. It's pretty common practice. I've only once ever gone back for a second CD after the first one expired, and that was with an Ally no-penalty CD. Andrews FCU seems to frequently offer special 3-3.25% CDs, they're the only CU I've seen in the last 6 mo offer multiple promotions. Patelco sometimes does, but they don't seem to have anything now. Depositaccounts.com is a really good resource. I think you're going to run around to multiple CUs, if you want to rate chase. Or just accept the Vanguard MMF rate. Or go to Fidelity and buy Treasuries directly using auto-roll (auto-renew)
Thanks for the reference to Andrews FCU. I'm not really interested in the 'best yields' per se, but good yields, maybe in the 75th percentile range. From what I can see, brokered CDs (let alone Treasuries) fall below that threshold.

Is there any bank/CU that is at say the 75th percentile range ? The usual suspects (Ally, Marcus, Capital One, Purepoint) maybe ?
For longer term CDs, specifically, Andrews has been pretty reliably 75, sure, in fact they're the only one I've seen with multiple (3 or more) promos worth doing in the past 3 years

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tfb
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Re: Best CD rates thread

Post by tfb » Tue Jan 07, 2020 3:46 pm

lazyday wrote:
Sun Jan 05, 2020 3:44 pm
It might be possible to have IRA funds wired, but so far I haven't succeeded. Maybe I should try harder.
It's possible. I just had Fidelity wire IRA money to Navy Fed for the 3.0% 37-month CD there. If you do it at a credit union where you are already a member, the steps are reduced to:

0 wait for a good CD, checking websites or forums <-- saw the mention here, also checked Navy Fed website from time to time

4 fill out paperwork <-- opened IRA savings account online, filled out Transfer IRA form, checked the wire transfer box, signed, scanned, sent by secure message to Navy Fed

8b after waiting 1 week, log in every couple days to see if funds have arrived <-- received alert from Fidelity a wire is going out

9 if the rate is still available, open the cd <-- opened CD online, using IRA savings account as source of funding

Navy Fed often has these CD specials.
Harry Sit, taking a break from the forums.

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jeffyscott
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Re: Best CD rates thread

Post by jeffyscott » Tue Jan 07, 2020 3:56 pm

nalor511 wrote:
Tue Jan 07, 2020 2:39 pm
SlowMovingInvestor wrote:
Tue Jan 07, 2020 2:27 pm
nalor511 wrote:
Tue Jan 07, 2020 1:38 pm
There isn't one that consistently has close to the best rate on CDs, IMO. There were a bunch of 3.5-4% CDs over the past 18 months, all of which now offer pretty low rates, I guess once they met their short/long term funding goals they clamped up. It's pretty common practice. I've only once ever gone back for a second CD after the first one expired, and that was with an Ally no-penalty CD. Andrews FCU seems to frequently offer special 3-3.25% CDs, they're the only CU I've seen in the last 6 mo offer multiple promotions. Patelco sometimes does, but they don't seem to have anything now. Depositaccounts.com is a really good resource. I think you're going to run around to multiple CUs, if you want to rate chase. Or just accept the Vanguard MMF rate. Or go to Fidelity and buy Treasuries directly using auto-roll (auto-renew)
Thanks for the reference to Andrews FCU. I'm not really interested in the 'best yields' per se, but good yields, maybe in the 75th percentile range. From what I can see, brokered CDs (let alone Treasuries) fall below that threshold.

Is there any bank/CU that is at say the 75th percentile range ? The usual suspects (Ally, Marcus, Capital One, Purepoint) maybe ?
For longer term CDs, specifically, Andrews has been pretty reliably 75, sure, in fact they're the only one I've seen with multiple (3 or more) promos worth doing in the past 3 years
I noticed that, like many, they allow anyone to become a member. But unlike most with a universal back-door, theirs says: You can join the American Consumer Council at no charge.
Time is your friend; impulse is your enemy. - John C. Bogle

lazyday
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Re: Best CD rates thread

Post by lazyday » Tue Jan 07, 2020 5:16 pm

tfb wrote:
Tue Jan 07, 2020 3:46 pm
filled out Transfer IRA form, checked the wire transfer box,
Fantastic!

Haven’t noticed that option on a form before, so googled a bit. Seems Ally had it in 2018, but even with a wire:
anonyx wrote:
Tue May 08, 2018 3:24 pm
I have to snail mail them the form, which they will snail mail to Vanguard, etc. and that the process may take up to "6 weeks!"
Penfed might accept a wire to an IRA from a bank, if the other bank allows it: (2014)
learning_head wrote:
Tue Jan 21, 2014 7:25 pm
Originating bank refused to send IRA-to-IRA wire for trustee-to-trustee transfer.
Sharonview might prefer or require a wire:
EvelynTroy wrote:
Wed Mar 07, 2018 6:55 pm
for an IRA CD like mine was they only accepted a wire transfer

protagonist
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Re: Best CD rates thread

Post by protagonist » Wed Jan 08, 2020 11:17 pm

lazyday wrote:
Tue Jan 07, 2020 2:29 pm
mr.masku wrote:
Tue Jan 07, 2020 1:42 pm
Early Withdrawal Penalty seems to be up to 180 days.
https://www.kfcu.org/media/disclosures/tis.pdf
Of course the step-up nature of the CD also can make for a steep penalty.
Yes, but I think the risk of holding for 30 months is rather low. I would feel differently if this was, say, a 5 year CD. The rep told me that the EWP was "up to 90 days interest", but she may have been misinformed.

4th and Inches
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Re: Best CD rates thread

Post by 4th and Inches » Thu Jan 09, 2020 5:26 pm

Assuming it was in your area since you have to go there to sign-up/apply, how would you feel about a 30-month CD at 2.89% APR, BUT a 360 early withdrawal penalty? That is a great rate, but very stiff penalty. I have not fully researched the terms and conditions and whether the rate is even available still, but this bank is near me.

https://www.mvbofc.com/rates#CDs

https://www.depositaccounts.com/banks/m ... html#rates

nalor511
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Re: Best CD rates thread

Post by nalor511 » Thu Jan 09, 2020 5:30 pm

4th and Inches wrote:
Thu Jan 09, 2020 5:26 pm
Assuming it was in your area since you have to go there to sign-up/apply, how would you feel about a 30-month CD at 2.89% APR, BUT a 360 early withdrawal penalty? That is a great rate, but very stiff penalty. I have not fully researched the terms and conditions and whether the rate is even available still, but this bank is near me.

https://www.mvbofc.com/rates#CDs

https://www.depositaccounts.com/banks/m ... html#rates
I would run away quickly.

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jeffyscott
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Re: Best CD rates thread

Post by jeffyscott » Thu Jan 09, 2020 6:13 pm

4th and Inches wrote:
Thu Jan 09, 2020 5:26 pm
Assuming it was in your area since you have to go there to sign-up/apply, how would you feel about a 30-month CD at 2.89% APR, BUT a 360 early withdrawal penalty? That is a great rate, but very stiff penalty. I have not fully researched the terms and conditions and whether the rate is even available still, but this bank is near me.

https://www.mvbofc.com/rates#CDs

https://www.depositaccounts.com/banks/m ... html#rates
EWD penalty would not matter at all to me, I have plenty of IRA money that'll not be used by anyone for much longer than the 30 month term.
Time is your friend; impulse is your enemy. - John C. Bogle

SlowMovingInvestor
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Re: Best CD rates thread

Post by SlowMovingInvestor » Thu Jan 09, 2020 6:18 pm

4th and Inches wrote:
Thu Jan 09, 2020 5:26 pm
Assuming it was in your area since you have to go there to sign-up/apply, how would you feel about a 30-month CD at 2.89% APR, BUT a 360 early withdrawal penalty? That is a great rate, but very stiff penalty. I have not fully researched the terms and conditions and whether the rate is even available still, but this bank is near me.

The KFCU rate posted earlier is 3.1% for the same term, the EWP is probably around the same (180 days, but step up, so you lose higher interest years).

jmk
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Re: Best CD rates thread

Post by jmk » Thu Jan 09, 2020 9:05 pm

SlowMovingInvestor wrote:
Tue Jan 07, 2020 2:27 pm
Is there any bank/CU that is at say the 75th percentile range ? The usual suspects (Ally, Marcus, Capital One, Purepoint) maybe ?
My go-to list of such banks/CDs includes: Andrews, Mountain America FCU, Live Oak bank and Connexu. In the last few years they've tended to be toward the top consistently, though different ones at different times.

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Re: Best CD rates thread

Post by abuss368 » Thu Jan 09, 2020 9:29 pm

I have not invested in a CD in over 20 years.
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

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