CD Discussion Thread

Finance
345

File this under “better late than never”:

A sweet outcome today, finally, regarding my Bellco Index Advantage CD. They finally got 'round to increasing my interest rate. It went to 3.4% APY today.

Q: Shin, are you aware this is not a big deal? How long is the CD?

It’s a 44 month that’ll mature spring of 2021.

Q: OK, so 3.4%, plus or minus, is in the ballpark for a CD like that today. Are you unaware?

Agreed. But I acquired this CD back in 2017 at an APY of 2.4%. Interest rates were lower back then.

Q: So how is the interest rate now 3.4%?

It’s an index CD. The interest rate is indexed to the Federal Funds (FF) rate. The Federal Funds rate is up since I bought the CD.

Q: Yeah, but the FF rate went up back in September. And your rate only increased today?

It’s a wrinkle in the terms of my CD. They increase my rate based on the FF rate on the 25th of the prior month. It was bad luck back in September. The FOMC increased their rate effective the 26th of September. I missed it by one day and had to wait an entire month for the increase.

Q: So is Bellco still offering these things?

Naaaa. They pulled the product back in 2017, shortly after I jumped in.

Q: All right. Are you aware of these indexed CDs being offered today by any other financial institution?

I’m not aware of CDs now available indexed to the FF rate. There are probably CDs out there indexed to other things.

Q: Would you even buy such a CD today . . if it were available?

Not until after next week’s election, that’s for certain. Interest rates could fall.

Q: Fall? So if the FF rate falls, so does the APY of your CD?

Yeah, that’s the risk of this particular CD. The interest rate so far has done nothing but rise. But it can fall equally easily if the FF rate descends.

Q: So some people think there could be another FF rate increase in December. If that happens will your CD interest rate go up again?

Yup. I’m hoping the FOMC “does the right thing” in December! :grinning:

Q: How about 2019? Can your interest rate keep going up? Or is there a ceiling?

No ceiling. CD interest rate just continues to ascend if the FF rate does likewise.

Q: Not that is appears likely; but if interest rates fall, if the FF rate falls out of bed, can your CD interest rate go to zero?

Not to zero. There is a floor, a minimum interest rate for the CD. I think it is around 2% (not sure). I don’t think the FF rate will be down there before the CD matures.

Q: But regardless what you “think”, your APY could fall. Right?

Yes, it could. Am hoping for the best. But so far so good. :wink:

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346

Good deal for you shinobi. I have some CD’s with the old 2+% rate. I would sure like to have those funds in my hands right now. But, breaking the CD’s now would probably cost me more than I could make at the going rates today.

To bad for me! But I’m still waiting for those 4%r’s that we predicted…

347

Be aware of the 3.15% 19 month add-on CD documented here:

Linky

Buy-in is only $500. As with any add on, this is as much an insurance policy as anything else. For $500 you lock in the rate for the term of the CD.

Note not all states are included. But the list of included states is quite long.

ETA

More here

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348

I’ve decided to go with the United Bank 19-mo Flex (add-on) CD, 3.15% APY. Yes, I’m taking this one as an insurance policy & it only cost $500. We can make up to 5 addition deposits during the term.

This was a very easy online membership application. The small deposits should be in my checking acct tomorrow & the opening $500 added to the United Bank CD shortly afterwards.

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349

Three for one!

Ken featuring this morning the Greenwood three for one deal. Location is Rhode Island.

I remember three for five and then later last February I did three for three at Freedom. Cannot recall seeing prior any three for one deals.

Depending how things turn out tonight with the elections guess I might be sending some $$$ to “Little Rhody”. :grinning:

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shinobi, please tell me what you mean by “3 for 1”.

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Usually that means a CD at 3% APY for 1 year.

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shinobi,

Is there a good reason to go for a CD at 12-mo 3% as apposed to United Bank 19-mo Flex 3.15%? I usually go for the shortest term @ the highest % rate. In this case I don’t see much difference.

I started the process for the United Bank’s deal but deposited the minimum $500. I’d like to wait it out to see if rates do indeed go up. But, if not I can always add-on to the Flex CD.

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My apologies. And my thanks to Shandril! I was not trying to be cute . . . . . . . . . . or opaque.

Yes, Shandril is correct. Three for five was 3% for five years. It’s a descriptive term I first saw on Ken’s website many months ago. And as Shandril wrote, three for one just means 3% for one year. Sorry.

354

Taking last first: you almost cannot lose with the United Bank deal. You “spend” $500 to lock in that interest rate (for any future deposits) for 19 months. Then they return your $500 after having paid you 3.15% interest on the money in the interim. :open_mouth: I mean, that to me is a no-brainer. It’s an inexpensive insurance policy against falling rates.

Now, on your other inquiry which I assume could involve investment of a MUCH larger amount of money:

That’s strictly a personal decision. It certainly is for me. I will await the outcome of today’s election before making any moves. If Republicans retain control of Congress I expect the stock market to rally and interest rates to continue upward; both owing to a positive outlook for economic activity going forward. In this situation I would lean toward shorter stuff (shorter CDs) in anticipation of those higher interest rates down the line.

If Democrats take control of the House I’m not certain what will happen. The current economic resurgence, beneath Republican leadership, does not bode well for Democrats who wish to acquire more power. You will have to decide for yourself how far a Democrat House would go to derail things. But curtailment of today’s economic expansion would mitigate in favor of locking in somewhat longer CDs at the highest interest rates you can find . . . using Ken’s website no doubt.

“Longer” in the above does not mean five years. And the interest premium if you go out five years is not all that much anyway. But purchase of circa two year CDs, if the Democrats win the House, would not be out of the question for me. You would need to bridge over to the next election, in 2020, when things could change again.

355

There is a “four for five” CD deal at Connexus Credit Union. Open to all. That’s 4% APY for five years . . . like Sharonview was.

Ken is most likely writing this deal up right now. It should appear on his blog very soon.

There is a $5000 minimum needed to get in.

ETA

Contrary to what I just wrote up thread, I have jumped in on this deal and opened a membership and a modestly sized 4% CD. 4% CDs are not out there growing on trees so I have jumped in without waiting for the outcome of the election.:wink:

I chose funding by check so I guess I still could back out of this deal. But I candidly have no intention of backing out. And I do not intend to send them a check. Will wait for approval and issuance of member number, then ACH funds to Connexus. Did not want to rely on them doing an ACH pull.

356

USA credit union interest rates available here:

CU lookup - USA interest rates

357

That 4 for 5 deal has been around for a while hasn’t it? I have a cd maturing mid January that I’d like to roll into this offer. Do you think it will still be around? I have some funds I currently have in an MMA at a lower rate that I could use for now and then have them freed up in January so just looking at my options.

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Not as far as I am aware. I believe it is a brand new offering. Obtaining 4% is a tough get right now. I don’t think the election’s outcome will make things any easier.

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359

The newly mentioned(depositaccounts.com) Garden Savings Federal Credit Union is offering 4.08% for a 4 year CD. Of additional note is beyond the typical 250K NCUA insurance they also offer another additional 250K through Excess Share Insurance. Membership via American Consumer Council or use promo code “Consumer” to bypass fee. This is same association used by Andrews Federal Credit Union and a 2nd CU I signed up for so you may already have membership.

I’ll more than likely be breaking my 84 month Andrews CD paying 3%. It’s at the two year window which means after penalty the money will have earned 2.25%. With 5 years remaining to it, it makes more sense to move it to making 4%.

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Yes famewolf, this is a good deal!

I went ahead & opened this Garden Savings FCU offer of 4.08% 4yr CD. Actually I only opened the Savings acct with the $5. for now. I have a large CD that matures 12/14, so I’ll hold on until that date to open this CD. (hopefully it will still be around). I hesitate to break some CD’s with a 2% rate. Later on I may change my mind,

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Hi pattyb53. Want to wish you best of luck. I will be sending my check to Garden State tomorrow. I figure I have about a 50-50 shot at getting the CD assuming my check arrives, by snail mail, next Tuesday (Monday is a holiday). If this 4.08% deal remains available in December I will be very, VERY surprised. The rep who spoke with me said they are swamped at a level not witnessed prior.

At the same time:

The Garden State deal HAS to be stealing action from the Connexus 4% deal, which is a poorer deal than Garden State. This should extend the life of the Connexus CD deal.

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That link is misspelled. It goes to a squatter domain. The correct link is Depositaccounts

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Yes shinobi, I will be surprised if Garden Savings will still be offering deal in Dec.

The $5 opening from my CC is showing now. I have not received that e-mail about opening this account. You said you mailed your check for the CD, but did you received an e-mail confirming the acct first. What was the timetable for you.

364

Yes, I think I did receive a telephone call. And I was able to obtain my member number later by calling them and giving a Garden Savings representative the account number found in the Docusign document they emailed to me. Be certain to write down that account number, which would be your savings account number.

My letter containing a check for the CD is outside now awaiting pickup by the postman. Fingers are crossed that they do not end the deal tomorrow (Friday) at close of business. Here is why:

I do not live in New Jersey. But I have some knowledge of the northern New Jersey region served by Garden Savings. They are in a very wealthy region of the state. So I would anticipate Garden Savings receiving much more walk-in participation on this deal than might be the case with other CD deals I have done, we all have done, over the years. It’s not just going to be visitors to Ken’s website this time. It’s also going to be local people living there in northern New Jersey.