Maturing Credit Union 3% CD's this year

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dollarsaver
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Maturing Credit Union 3% CD's this year

Post by dollarsaver » Fri Jun 01, 2018 8:22 am

Hello,
I and many other Bogleheads have CDs maturing in 2018 in Pen Fed , NWFCU, etc. My question is when I have the proceeds transferred back to Vanguard to purchase either CDs or Treasury bills, what happens to the small amount of money in the credit union savings account.
Do you keep it there to leave the account open or pull that out as well and close the account? I assume you are still a member of the credit union with or without an account.
Thanks for all advice.
Last edited by dollarsaver on Fri Jun 01, 2018 8:42 am, edited 1 time in total.

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friar1610
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Re: Maturing Credit Union 3% CD's this year

Post by friar1610 » Fri Jun 01, 2018 8:36 am

There are 3 CUs that I use for CDs, depending on rates being offered. Even though I may not use any one, two or three of them for a considerable period of time I always leave the $5 or so in the Share Savings accounts during periods I don't own any CDs there. Inevitably, one of them eventually offers a rate I want to take advantage of and its just simpler if I've maintained my membership.
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dollarsaver
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Re: Maturing Credit Union 3% CD's this year

Post by dollarsaver » Fri Jun 01, 2018 8:42 am

friar1610 wrote:
Fri Jun 01, 2018 8:36 am
There are 3 CUs that I use for CDs, depending on rates being offered. Even though I may not use any one, two or three of them for a considerable period of time I always leave the $5 or so in the Share Savings accounts during periods I don't own any CDs there. Inevitably, one of them eventually offers a rate I want to take advantage of and its just simpler if I've maintained my membership.
Good idea! Thanks

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alpenglow
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Re: Maturing Credit Union 3% CD's this year

Post by alpenglow » Fri Jun 01, 2018 8:57 am

I imagine a lot of money came into PenFed for that 3% CD offer. I wonder if they will have a good offer to retain those funds. Otherwise, I'll be transferring back to Fidelity where it came from.

BTW, I discovered that my CDs at PenFed were set to auto-roll. You change the setting online to have it go to the share account at maturity.

If you end up transferring out and it's an IRA, use PenFed form 735 to make the move.

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Re: Maturing Credit Union 3% CD's this year

Post by Flobes » Fri Jun 01, 2018 3:08 pm

dollarsaver wrote:
Fri Jun 01, 2018 8:22 am
Hello,
I and many other Bogleheads have CDs maturing in 2018 in Pen Fed , NWFCU, etc.
Re Northwest Credit Union (NWFCU):

You can now roll that into a new 5-year CD.

Here's where new NWFCU CDs get really juicy:
* If you are 62+ you garner "Heritage" member status
* Heritage members get a bonus bump in interest rates
* Heritage member CDs have no early withdrawal penalty

With a phone call, I converted my 3% autumn-maturity "Dream" CD to a 5-year Heritage CD earning 3.31%. With no early withdrawal penalty! What's not to love?

EvelynTroy
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Re: Maturing Credit Union 3% CD's this year

Post by EvelynTroy » Fri Jun 01, 2018 5:44 pm

Re Northwest Credit Union (NWFCU):

You can now roll that into a new 5-year CD.

Here's where new NWFCU CDs get really juicy:
* If you are 62+ you garner "Heritage" member status
* Heritage members get a bonus bump in interest rates
* Heritage member CDs have no early withdrawal penalty
I too have the above NWFCU CD maturing in Oct. and a PenFed one in Dec. Appreciate this discussion.
Thanks for the heads up re to NWFCU - I do have Heritage member status.
My question ( sure don't know the ins and outs of CDs) - is it a good idea to renew for 5 yrs. in what seems like a rising interest rate environment. A lot could change by Dec. with much better deal somewhere else or even NWFCU?
Thanks for your thoughts.
Evelyn

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capitalG
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Re: Maturing Credit Union 3% CD's this year

Post by capitalG » Fri Jun 01, 2018 5:55 pm

If you're confident you don't need the money for 5 years, go for a Treasury Note via your brokerage, rates are ~2.75% and risk free if held to maturity. Of course, if you sell sooner you are exposed to yield risk but likewise you will pay a penalty to break your CD early. Personally, given the rising rate environment and the relatively high short term rates, I have parked my cash in 6m bills (~2%).

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Re: Maturing Credit Union 3% CD's this year

Post by boater07 » Fri Jun 01, 2018 6:07 pm

Where do you find info on Heritage details.

Sorry, I misunderstood--thought that was a Penfed feature
Last edited by boater07 on Fri Jun 01, 2018 6:56 pm, edited 1 time in total.

dollarsaver
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Re: Maturing Credit Union 3% CD's this year

Post by dollarsaver » Fri Jun 01, 2018 6:25 pm

capitalG wrote:
Fri Jun 01, 2018 5:55 pm
If you're confident you don't need the money for 5 years, go for a Treasury Note via your brokerage, rates are ~2.75% and risk free if held to maturity. Of course, if you sell sooner you are exposed to yield risk but likewise you will pay a penalty to break your CD early. Personally, given the rising rate environment and the relatively high short term rates, I have parked my cash in 6m bills (~2%).

capG
Agree, when my CDs mature will go in 6-12 or 24 month T-bills or CDs with Vanguard.

dollarsaver
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Re: Maturing Credit Union 3% CD's this year

Post by dollarsaver » Fri Jun 01, 2018 6:27 pm

Flobes wrote:
Fri Jun 01, 2018 3:08 pm
dollarsaver wrote:
Fri Jun 01, 2018 8:22 am
Hello,
I and many other Bogleheads have CDs maturing in 2018 in Pen Fed , NWFCU, etc.
Re Northwest Credit Union (NWFCU):

You can now roll that into a new 5-year CD.

Here's where new NWFCU CDs get really juicy:
* If you are 62+ you garner "Heritage" member status
* Heritage members get a bonus bump in interest rates
* Heritage member CDs have no early withdrawal penalty

With a phone call, I converted my 3% autumn-maturity "Dream" CD to a 5-year Heritage CD earning 3.31%. With no early withdrawal penalty! What's not to love?
No penalty for early withdrawal for any reason? I'll call on Monday. Thanks

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Flobes
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Re: Maturing Credit Union 3% CD's this year

Post by Flobes » Fri Jun 01, 2018 6:42 pm

EvelynTroy wrote:
Fri Jun 01, 2018 5:44 pm
I too have the above NWFCU CD maturing in Oct. and a PenFed one in Dec. Appreciate this discussion.
Thanks for the heads up re to NWFCU - I do have Heritage member status.
My question ( sure don't know the ins and outs of CDs) - is it a good idea to renew for 5 yrs. in what seems like a rising interest rate environment. A lot could change by Dec. with much better deal somewhere else or even NWFCU?
There's no early withdrawal penalty on Heritage CDs. If/when rates rise, we can simply withdraw the money and put it into a new higher rate CD, at NWFCU or elsewhere. If rates stabilize, we're good; if rates go down, we're golden; if rates go up, we move.

Meanwhile, making the changeover increased current interest rate (from 3% to 3.31%) and added sweet benefit of no early withdrawal penalty for my money that's already there, with minimal effort.

NB Friendly customer service rep on the phone was able to set it up, but it required a manager's approval to add the no-penalty feature. No problem; hold please; confirmed by phone call. On their end, it's a three step: first is rolling the money from the existing CD before its maturity (waiving the penalty), and second is opening new CD with higher Heritage rate, and third is adding Heritage no penalty features to new CD.

I too also have PenFed CDs maturing in December. We'll wait see what they might offer to entice us to keep money there.

As OP stated, lots of Bogleheads plowed money into both the PenFed 5-yr and Northwest 3-yr 3% CDs, all ripening this fall. The Forum is sure to be all lit up with best CD opportunities.

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Re: Maturing Credit Union 3% CD's this year

Post by Kevin M » Fri Jun 01, 2018 6:55 pm

alpenglow wrote:
Fri Jun 01, 2018 8:57 am
If you end up transferring out and it's an IRA, use PenFed form 735 to make the move.
Interesting. I've always used the form of the receiving custodian to do IRA transfers, so in this case would normally use Fidelity's form. However, looking over PenFed Form 735, it looks like it is set up to do a push transfer, and you can specify to transfer the CD at maturity, so can mail the form to PenFed a few weeks before maturity to minimize dead-money time.

You can also specify to transfer at maturity on Fidelity's form, which is what I've done for my last few IRA transfers from CUs to Fidelity.

Has anyone actually used the PenFed form to do a push transfer from PenFed to another custodian? Did it work smoothly?

Kevin
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EvelynTroy
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Re: Maturing Credit Union 3% CD's this year

Post by EvelynTroy » Fri Jun 01, 2018 7:00 pm

There's no early withdrawal penalty on Heritage CDs. If/when rates rise, we can simply withdraw the money and put it into a new higher rate CD, at NWFCU or elsewhere. If rates stabilize, we're good; if rates go down, we're golden; if rates go up, we move.

Meanwhile, making the changeover increased current interest rate (from 3% to 3.31%) and added sweet benefit of no early withdrawal penalty for my money that's already there, with minimal effort.
Of course, just escaped me the whole no EWP - don't know what I was thinking.
And yes I too will confirm no EWP for any reason.
Thanks again.
Evelyn

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Re: Maturing Credit Union 3% CD's this year

Post by Kevin M » Fri Jun 01, 2018 7:07 pm

capitalG wrote:
Fri Jun 01, 2018 5:55 pm
If you're confident you don't need the money for 5 years, go for a Treasury Note via your brokerage, rates are ~2.75% and risk free if held to maturity.
A much better deal in an IRA is a 2-year CD at 2.80% for new issue, and I've been getting 2.85% or better on secondary market at Fidelity. Higher yield than the 5-year Treasury and much less term risk. New-issue 3-year CD is 3.00%, and I've been getting 3.07% or better on secondary market.

In a taxable account, the state tax exemption may swing things in favor of Treasuries--it does for me. But Treasury yield curve flattens out a lot after 1-year maturity, so I too am keeping maturities fairly short with new cash.

The CD yield curve is very steep to 2-year maturity--there's actually a steep peak at 2-year maturity, so I'm favoring 2-year CDs in IRAs.

Kevin
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Re: Maturing Credit Union 3% CD's this year

Post by alpenglow » Fri Jun 01, 2018 7:12 pm

Kevin M wrote:
Fri Jun 01, 2018 6:55 pm
alpenglow wrote:
Fri Jun 01, 2018 8:57 am
If you end up transferring out and it's an IRA, use PenFed form 735 to make the move.
Interesting. I've always used the form of the receiving custodian to do IRA transfers, so in this case would normally use Fidelity's form. However, looking over PenFed Form 735, it looks like it is set up to do a push transfer, and you can specify to transfer the CD at maturity, so can mail the form to PenFed a few weeks before maturity to minimize dead-money time.

You can also specify to transfer at maturity on Fidelity's form, which is what I've done for my last few IRA transfers from CUs to Fidelity.

Has anyone actually used the PenFed form to do a push transfer from PenFed to another custodian? Did it work smoothly?

Kevin
The PenFed CSR directed me to form 735, but I haven't used it yet. I could also use Fidelity to pull the funds as you mentioned.

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Re: Maturing Credit Union 3% CD's this year

Post by Kevin M » Fri Jun 01, 2018 7:14 pm

EvelynTroy wrote:
Fri Jun 01, 2018 7:00 pm
There's no early withdrawal penalty on Heritage CDs. If/when rates rise, we can simply withdraw the money and put it into a new higher rate CD, at NWFCU or elsewhere. If rates stabilize, we're good; if rates go down, we're golden; if rates go up, we move.

Meanwhile, making the changeover increased current interest rate (from 3% to 3.31%) and added sweet benefit of no early withdrawal penalty for my money that's already there, with minimal effort.
Of course, just escaped me the whole no EWP - don't know what I was thinking.
And yes I too will confirm no EWP for any reason.
Thanks again.
Evelyn
Is this in taxable accounts as well as IRAs?

One thing I'd be careful about is that usually there is language in the CD disclosures that allows the bank or CU to deny an early withdrawal, or to change the early withdrawal terms. If the yield is good enough, I don't worry much about this, but 3.3% for a 5-year CD is not so good these days, when you can get 3.05% on a 3-year brokered CD.

For anyone age 59 1/2 or older with an IRA CD at Achieva CU, I recently did a penalty free withdrawal from a couple of 2.7% IRA CDs and rolled them into a penalty-free Achieva 5-year IRA CD at 4.2%. That rate is good enough that I'm comfortable with the risk of a penalty-free early withdrawal being denied.

Kevin
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Re: Maturing Credit Union 3% CD's this year

Post by dollarsaver » Fri Jun 01, 2018 7:15 pm

Kevin M wrote:
Fri Jun 01, 2018 7:07 pm
capitalG wrote:
Fri Jun 01, 2018 5:55 pm
If you're confident you don't need the money for 5 years, go for a Treasury Note via your brokerage, rates are ~2.75% and risk free if held to maturity.
A much better deal in an IRA is a 2-year CD at 2.80% for new issue, and I've been getting 2.85% or better on secondary market at Fidelity. Higher yield than the 5-year Treasury and much less term risk. New-issue 3-year CD is 3.00%, and I've been getting 3.07% or better on secondary market.

In a taxable account, the state tax exemption may swing things in favor of Treasuries--it does for me. But Treasury yield curve flattens out a lot after 1-year maturity, so I too am keeping maturities fairly short with new cash.

The CD yield curve is very steep to 2-year maturity--there's actually a steep peak at 2-year maturity, so I'm favoring 2-year CDs in IRAs.

Kevin
[/

EvelynTroy
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Re: Maturing Credit Union 3% CD's this year

Post by EvelynTroy » Fri Jun 01, 2018 7:37 pm

Kevin M wrote:
Fri Jun 01, 2018 7:14 pm
EvelynTroy wrote:
Fri Jun 01, 2018 7:00 pm
There's no early withdrawal penalty on Heritage CDs. If/when rates rise, we can simply withdraw the money and put it into a new higher rate CD, at NWFCU or elsewhere. If rates stabilize, we're good; if rates go down, we're golden; if rates go up, we move.

Meanwhile, making the changeover increased current interest rate (from 3% to 3.31%) and added sweet benefit of no early withdrawal penalty for my money that's already there, with minimal effort.
Of course, just escaped me the whole no EWP - don't know what I was thinking.
And yes I too will confirm no EWP for any reason.
Thanks again.
Evelyn
Is this in taxable accounts as well as IRAs?

One thing I'd be careful about is that usually there is language in the CD disclosures that allows the bank or CU to deny an early withdrawal, or to change the early withdrawal terms. If the yield is good enough, I don't worry much about this, but 3.3% for a 5-year CD is not so good these days, when you can get 3.05% on a 3-year brokered CD.

For anyone age 59 1/2 or older with an IRA CD at Achieva CU, I recently did a penalty free withdrawal from a couple of 2.7% IRA CDs and rolled them into a penalty-free Achieva 5-year IRA CD at 4.2%. That rate is good enough that I'm comfortable with the risk of a penalty-free early withdrawal being denied.

Kevin
Thanks Kevin - I will be cautious on the disclosures, but as soon as I posted it dawned on me 3.3% for 5 yr CD is not that great. PurePoint internet only bank has 36 mo. 3%. Or as you noted the 3 yr. brokered CD 3.05%. I don't meet eligibility for the FlA. Achieva CU. My renewals are taxable accounts.
I'm not going to look into the NWFCU renewing under the Heritage program. Just think by Oct. and Dec. lots can change. I've never done early withdrawal of any kind - just don't think I want to do it. Think its better for me just to be patient.
Evelyn

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Re: Maturing Credit Union 3% CD's this year

Post by dollarsaver » Fri Jun 01, 2018 7:40 pm

EvelynTroy wrote:
Fri Jun 01, 2018 7:37 pm
Kevin M wrote:
Fri Jun 01, 2018 7:14 pm
EvelynTroy wrote:
Fri Jun 01, 2018 7:00 pm
There's no early withdrawal penalty on Heritage CDs. If/when rates rise, we can simply withdraw the money and put it into a new higher rate CD, at NWFCU or elsewhere. If rates stabilize, we're good; if rates go down, we're golden; if rates go up, we move.

Meanwhile, making the changeover increased current interest rate (from 3% to 3.31%) and added sweet benefit of no early withdrawal penalty for my money that's already there, with minimal effort.
Of course, just escaped me the whole no EWP - don't know what I was thinking.
And yes I too will confirm no EWP for any reason.
Thanks again.
Evelyn
Is this in taxable accounts as well as IRAs?

One thing I'd be careful about is that usually there is language in the CD disclosures that allows the bank or CU to deny an early withdrawal, or to change the early withdrawal terms. If the yield is good enough, I don't worry much about this, but 3.3% for a 5-year CD is not so good these days, when you can get 3.05% on a 3-year brokered CD.

For anyone age 59 1/2 or older with an IRA CD at Achieva CU, I recently did a penalty free withdrawal from a couple of 2.7% IRA CDs and rolled them into a penalty-free Achieva 5-year IRA CD at 4.2%. That rate is good enough that I'm comfortable with the risk of a penalty-free early withdrawal being denied.

Kevin
Thanks Kevin - I will be cautious on the disclosures, but as soon as I posted it dawned on me 3.3% for 5 yr CD is not that great. PurePoint internet only bank has 36 mo. 3%. Or as you noted the 3 yr. brokered CD 3.05%. I don't meet eligibility for the FlA. Achieva CU. My renewals are taxable accounts.
I'm not going to look into the NWFCU renewing under the Heritage program. Just think by Oct. and Dec. lots can change. I've never done early withdrawal of any kind - just don't think I want to do it. Think its better for me just to be patient.
Evelyn
+1

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Re: Maturing Credit Union 3% CD's this year

Post by hudson » Sat Jun 02, 2018 12:11 pm

Kevin M wrote:
Fri Jun 01, 2018 6:55 pm
alpenglow wrote:
Fri Jun 01, 2018 8:57 am
If you end up transferring out and it's an IRA, use PenFed form 735 to make the move.
Interesting. I've always used the form of the receiving custodian to do IRA transfers, so in this case would normally use Fidelity's form. However, looking over PenFed Form 735, it looks like it is set up to do a push transfer, and you can specify to transfer the CD at maturity, so can mail the form to PenFed a few weeks before maturity to minimize dead-money time.

You can also specify to transfer at maturity on Fidelity's form, which is what I've done for my last few IRA transfers from CUs to Fidelity.

Has anyone actually used the PenFed form to do a push transfer from PenFed to another custodian? Did it work smoothly?

Kevin
Thanks Kevin and Alpenglow!

I used Vanguard to pull 2 expired Roth IRAs from Penfed. It took a few weeks. The Form 735 looks promising; I won't believe it until someone tests it.
I've got two to move ...one in December and one in January.

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Re: Maturing Credit Union 3% CD's this year

Post by Kevin M » Sat Jun 02, 2018 1:27 pm

I had forgotten that one of my recent transfers was a pull into a Fidelity Roth IRA from a matured PenFed Roth IRA CD. As long as you get the form to PenFed before the CD matures, whichever way you do it, it shouldn't take more than about a week after maturity for the proceeds to reach the receiving custodian.

I took the transfer form to the local Fidelity office a couple of weeks before the CD matured on 4/28, so PenFed would have received it before the CD matured, and I received the proceeds at Fidelity on 5/3, so six calendar days and four business days after maturity.

On an IRA transfer from Mountain America CU to Fidelity I did the same way, CD matured on 5/14 and the proceeds were at Fidelity on 5/17, so three days. That was the fastest I've ever seen.

Kevin
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Re: Maturing Credit Union 3% CD's this year

Post by Kevin M » Sat Jun 02, 2018 1:32 pm

One advantage to using the Fidelity form is that you can complete it online, then just print it and sign it. I much prefer typing than filling in a paper form, so I'll probably stick with using the Fidelity form. I also like that I can drop it off at the local office, and it gets to the Fidelity back office faster that way.

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Re: Maturing Credit Union 3% CD's this year

Post by dollarsaver » Sat Jun 02, 2018 1:50 pm

Kevin M wrote:
Sat Jun 02, 2018 1:27 pm
I had forgotten that one of my recent transfers was a pull into a Fidelity Roth IRA from a matured PenFed Roth IRA CD. As long as you get the form to PenFed before the CD matures, whichever way you do it, it shouldn't take more than about a week after maturity for the proceeds to reach the receiving custodian.

I took the transfer form to the local Fidelity office a couple of weeks before the CD matured on 4/28, so PenFed would have received it before the CD matured, and I received the proceeds at Fidelity on 5/3, so six calendar days and four business days after maturity.

On an IRA transfer from Mountain America CU to Fidelity I did the same way, CD matured on 5/14 and the proceeds were at Fidelity on 5/17, so three days. That was the fastest I've ever seen.

Kevin
I thought, but not sure that the PenFed transfer form gets mailed directly to PenFed a few week before the CD matures at Penfed to go to Vanguard. Why did you have to take the transfer form to Fidelity first? Thanks

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Re: Maturing Credit Union 3% CD's this year

Post by Kevin M » Sat Jun 02, 2018 3:22 pm

dollarsaver wrote:
Sat Jun 02, 2018 1:50 pm
I thought, but not sure that the PenFed transfer form gets mailed directly to PenFed a few week before the CD matures at Penfed to go to Vanguard. Why did you have to take the transfer form to Fidelity first? Thanks
Because I used the Fidelity form, not the PenFed form.

As previously explained, the typical process is to use receiving custodian's form, fill it out and sign it, mail it to receiving custodian who fills out their part then mails it to sending custodian, who then processes it and mails the check to receiving custodian. I just drop the form off at the local Fidelity office instead of mailing it to them.

If you use the PenFed form, you would fill it out, sign it, and mail it directly to PenFed. They would then mail the check to Fidelity.

I've never done a push transfer, but have done many pull transfers.

Kevin
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Re: Maturing Credit Union 3% CD's this year

Post by mouses » Sat Jun 02, 2018 3:44 pm

Kevin M wrote:
Fri Jun 01, 2018 7:14 pm

For anyone age 59 1/2 or older with an IRA CD at Achieva CU, I recently did a penalty free withdrawal from a couple of 2.7% IRA CDs and rolled them into a penalty-free Achieva 5-year IRA CD at 4.2%. That rate is good enough that I'm comfortable with the risk of a penalty-free early withdrawal being denied.

Kevin
I did something similar this morning at a tiny local credit union. I had two Traditional IRA five year with two years left CDs at 2% and wanted to early withdraw and put them in their new 2 year 3% Traditional IRA CD, and the person said Much easier I will just change the rate on the CDs and you keep the same account numbers and it is invisible to the IRS. Also no early withdrawal penalty.

Plus so far all the local credit unions do not charge an early withdrawal penalty when one takes an IRA RMD or even more.

Sometimes it is good to be old :-) I think a lot of this stuff kicks in at age 65, although I am not sure that was the age I was told some time ago.

It does not work on withdrawals for non-IRA money.

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Re: Maturing Credit Union 3% CD's this year

Post by hudson » Sat Jun 02, 2018 5:07 pm

According to livesoft, it's better to pull than push. He said that the pushers might forget you.
I recently tried to do a push from a brokerage to Vanguard and it took 3 months.

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Re: Maturing Credit Union 3% CD's this year

Post by protagonist » Fri Jun 08, 2018 9:45 am

dollarsaver wrote:
Fri Jun 01, 2018 6:27 pm


No penalty for early withdrawal for any reason? I'll call on Monday. Thanks
I believe that is only the case for CDs held by Heritage Club members (translate: old folks like me) in IRA accounts. I'm almost certain of this.
To keep it insured, you cannot invest more than would leave you $250K at maturity.

Back to OP's original question....I leave enough money in to keep my account open, since it is usually a trivial amount. I figure worst case scenario is I become senile (hopefully at age 100 or older), and I lose $100 or less because I forget where it is. I can live with that uncertainty.

I recently prematurely closed a 3% CD at Penfed to buy a 4.2% CD at Achieva...both with no EWP in an IRA. It was quick and easy.
Last edited by protagonist on Fri Jun 08, 2018 9:57 am, edited 2 times in total.

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Re: Maturing Credit Union 3% CD's this year

Post by Sheepdog » Fri Jun 08, 2018 9:55 am

I also have those Penfed 3% 5 year CDs maturing at the end of the year. They sent me an email yesterday that they are offering to members 2.25% 1 year and 3% 5 year CDs once again.
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Re: Maturing Credit Union 3% CD's this year

Post by BrandonBogle » Fri Jun 08, 2018 10:31 am

Kevin M wrote:
Fri Jun 01, 2018 7:07 pm
I've been getting 2.85% or better on secondary market at Fidelity. Higher yield than the 5-year Treasury and much less term risk. New-issue 3-year CD is 3.00%, and I've been getting 3.07% or better on secondary market.
Kevin,
I have a Fidelity Brokerage account (taxable though). From what I can tell, there aren't fees to buy brokered CDs, new issue or on the secondary market. Has that been your experience as well? If you wanted to sell on the secondary market, would fees be involved? I have options to do this elsewhere, but I figured I would ask about Fidelity since you have had good experiences with it.

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Re: Maturing Credit Union 3% CD's this year

Post by Kevin M » Fri Jun 08, 2018 12:10 pm

BrandonBogle wrote:
Fri Jun 08, 2018 10:31 am
Kevin M wrote:
Fri Jun 01, 2018 7:07 pm
I've been getting 2.85% or better on secondary market at Fidelity. Higher yield than the 5-year Treasury and much less term risk. New-issue 3-year CD is 3.00%, and I've been getting 3.07% or better on secondary market.
Kevin,
I have a Fidelity Brokerage account (taxable though). From what I can tell, there aren't fees to buy brokered CDs, new issue or on the secondary market. Has that been your experience as well? If you wanted to sell on the secondary market, would fees be involved? I have options to do this elsewhere, but I figured I would ask about Fidelity since you have had good experiences with it.
There is no fee to buy new-issue, but there is a $1/CD ($1,000 face value, so 0.1%) commission to buy secondary CDs. I am always able to beat new-issue on secondary market even after commission. For example, today I bought some of a 31-month CD with a net (after commission) yield of 3.07% and a 26.5-month CD with a net yield of 3.02%, so both higher than the new-issue 3-year yield of 3.00%, but with shorter terms.

I believe the same commission applies to selling CDs, but I would not sell before maturity due to generally high bid/ask spreads.

Treasuries have higher yields out to about 1-year maturity, although you probably want to buy at auction for smaller quantities, and in a taxable account, Treasuries might have higher taxable-equivalent yields at even longer maturities if you pay state income tax. Compared to new issues, currently Treasury TEY for me beats new-issue CD yields to about 2-year maturity, and they are essentially tied at 3-year maturity, so I would favor Treasuries in a taxable account at my tax rates.

Kevin
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BrandonBogle
Posts: 2046
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Re: Maturing Credit Union 3% CD's this year

Post by BrandonBogle » Fri Jun 08, 2018 1:12 pm

Kevin M wrote:
Fri Jun 08, 2018 12:10 pm
BrandonBogle wrote:
Fri Jun 08, 2018 10:31 am
Kevin M wrote:
Fri Jun 01, 2018 7:07 pm
I've been getting 2.85% or better on secondary market at Fidelity. Higher yield than the 5-year Treasury and much less term risk. New-issue 3-year CD is 3.00%, and I've been getting 3.07% or better on secondary market.
Kevin,
I have a Fidelity Brokerage account (taxable though). From what I can tell, there aren't fees to buy brokered CDs, new issue or on the secondary market. Has that been your experience as well? If you wanted to sell on the secondary market, would fees be involved? I have options to do this elsewhere, but I figured I would ask about Fidelity since you have had good experiences with it.
There is no fee to buy new-issue, but there is a $1/CD ($1,000 face value, so 0.1%) commission to buy secondary CDs. I am always able to beat new-issue on secondary market even after commission. For example, today I bought some of a 31-month CD with a net (after commission) yield of 3.07% and a 26.5-month CD with a net yield of 3.02%, so both higher than the new-issue 3-year yield of 3.00%, but with shorter terms.

I believe the same commission applies to selling CDs, but I would not sell before maturity due to generally high bid/ask spreads.

Treasuries have higher yields out to about 1-year maturity, although you probably want to buy at auction for smaller quantities, and in a taxable account, Treasuries might have higher taxable-equivalent yields at even longer maturities if you pay state income tax. Compared to new issues, currently Treasury TEY for me beats new-issue CD yields to about 2-year maturity, and they are essentially tied at 3-year maturity, so I would favor Treasuries in a taxable account at my tax rates.

Kevin
Thank you. That is very helpful. I guess I misread Fidelity's site and the "hypothetical trade" didn't include commissions. I will have to keep brokered CDs in mind when my PenFed CDs mature.

Scooter57
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Joined: Thu Jan 24, 2013 9:20 am

Re: Maturing Credit Union 3% CD's this year

Post by Scooter57 » Sun Jun 10, 2018 11:09 am

You can add beneficiaries to CDs at NWFCU which will let you cover more than $250K with insurance.

protagonist
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Re: Maturing Credit Union 3% CD's this year

Post by protagonist » Tue Jun 12, 2018 9:46 am

Scooter57 wrote:
Sun Jun 10, 2018 11:09 am
You can add beneficiaries to CDs at NWFCU which will let you cover more than $250K with insurance.
That is true in most institutions....you have to do separate "POD" accounts. It does not work for money in IRA accounts.

Again, I am pretty sure that The "no EWP" policy at NWFCU for seniors only applies to IRA CDs. If I am wrong please correct this statement for those seeking one of their products. Unless I missed it, I don't think the OP stated that his maturing CD was in an IRA.

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alpenglow
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Re: Maturing Credit Union 3% CD's this year

Post by alpenglow » Tue Jun 12, 2018 9:58 am

Thanks Kevin. Despite mentioning the push option, I'll likely use the Fidelity form in December to pull the funds.

Scooter57
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Joined: Thu Jan 24, 2013 9:20 am

Re: Maturing Credit Union 3% CD's this year

Post by Scooter57 » Tue Jun 12, 2018 5:16 pm

I called NWFCU Moday and was told by the CSR that Heritage Club members can not withdraw without penalty.

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