CD rates on the rise. Should I break my CD...

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Tamales
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Joined: Sat Jul 05, 2014 10:47 am

CD rates on the rise. Should I break my CD...

Post by Tamales » Tue Feb 13, 2018 8:35 pm

2.5%+ for 60 month term at several places now.

Here's a calculator to help you decide whether to break (close) your CD, incur the EWP (early withdrawal penalty), and open a new one at the higher rate:
https://www.depositaccounts.com/tools/b ... lator.aspx

Assuming this calculator is right...I was surprised to find that my 2.3%, 60 month CD with 19 months left and 6 month EWP would require a new 60 month CD rate of at least 3.9% before it would just barely be better to break it.

PS you can enter any current balance if all you want is a yes/no decision, not a dollar amount.
You need to know the EWP terms of your CD, the APY, and the remaining life, to use this calculator.

nps
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Re: CD rates on the rise. Should I break my CD...

Post by nps » Tue Feb 13, 2018 9:15 pm

I think the calculator makes the assumption that the offered CD you are comparing remains available at the same rate through the end of your existing term. No one knows if that's correct, obviously.

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Nestegg_User
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Re: CD rates on the rise. Should I break my CD...

Post by Nestegg_User » Tue Feb 13, 2018 9:50 pm

I’ve just got 2% two year CD’s and I suspect that rates might go higher by the time of maturity. I deliberately didn’t have them automatically renew because of the expected rate increase. With only 19 months left really can’t see any benefit... you’ll be able to take advantage of increases when you set up your next rung of your CD ladder.

Tamales
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Joined: Sat Jul 05, 2014 10:47 am

Re: CD rates on the rise. Should I break my CD...

Post by Tamales » Tue Feb 13, 2018 11:33 pm

nps wrote:
Tue Feb 13, 2018 9:15 pm
I think the calculator makes the assumption that the offered CD you are comparing remains available at the same rate through the end of your existing term. No one knows if that's correct, obviously.
If the calculator could accurately account for future rates, I wouldn't have told anyone about it :wink: :moneybag

Alan S.
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Location: Prescott, AZ

Re: CD rates on the rise. Should I break my CD...

Post by Alan S. » Wed Feb 14, 2018 2:08 pm

The calculator should clarify that it assumes your CD is not in an IRA, where you cannot write off the EWD as an adjustment to income.

The break even rate would be higher for an IRA CD, and require a more refined calculator, even more refined if the difference between a TIRA and Roth IRA was reflected.

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dm200
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Location: Washington DC area

Re: CD rates on the rise. Should I break my CD...

Post by dm200 » Wed Feb 14, 2018 2:45 pm

Tamales wrote:
Tue Feb 13, 2018 8:35 pm
2.5%+ for 60 month term at several places now.
Here's a calculator to help you decide whether to break (close) your CD, incur the EWP (early withdrawal penalty), and open a new one at the higher rate:
https://www.depositaccounts.com/tools/b ... lator.aspx
Assuming this calculator is right...I was surprised to find that my 2.3%, 60 month CD with 19 months left and 6 month EWP would require a new 60 month CD rate of at least 3.9% before it would just barely be better to break it.
PS you can enter any current balance if all you want is a yes/no decision, not a dollar amount.
You need to know the EWP terms of your CD, the APY, and the remaining life, to use this calculator.
This morning Vanguard Brokerage was offering 5 year brokered CDs with a 2.80% rate.

2.85% for 5 year term recently
Last edited by dm200 on Mon Mar 05, 2018 3:27 pm, edited 1 time in total.

watchman1675
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Joined: Mon Mar 05, 2018 11:01 am

Re: CD rates on the rise. Should I break my CD...

Post by watchman1675 » Mon Mar 05, 2018 11:05 am

Just noticed today that BMO Harris has a 60 month CD special for 3.00% FDIC insured of course.

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