Oh my goodness . . . YES!! I made out like a bandit with my Bellco CU indexed CD . . . bought circa two years ago. Think about it. Think about where short rates were two years ago and where they are now. My rate is up by that difference, well up now into the threes.
The problem for me at Bellco, though, is that my interest rate can go right back down into the two’s if the Fed cuts interest rates. There is no such downside at Bossier City. You get your 3.5% no matter what! But your rate can go up if the Fed raises rates.
Q: So Shin, are rates headed up or down? What is the Fed going to do going forward?
Don’t ask me, of all people! I have no clue. I do have an opinion which is as uncertain as everyone else’s opinion and not worth even sharing. Right now of course, today, rates seem to be holding steady. The future? Who knows.
Q: So what’s a mother to do?
What I try to do is to protect myself on both sides, both up and down. I use (currently very small) add-on certificates of deposit to protect me on the downside. I would only add money to those if rates fall.
To protect on the upside you would use something like this Bossier City deal . . . if you can even obtain the deal . . . which is in question! For me, currently, I am using my Bellco CU indexed deal, which as I said has worked out.
But with any indexed CD you must pay heed to the floor rate . . the guaranteed rate . . the rate you will receive if interest rates go to hell. That is what is so attractive about the Bossier City deal. It is a CD gift horse beyond question . . . if you can get it.
ETA
Just an additional thought on the Bossier City deal:
A quick visit to Ken’s website reveals the top two 5 year CDs are currently paying
3.56% APY at Harbor Bank and
3.51% APY at MACU
So the “cost” for the upside offered by Bossier City at 3.5% APY is, at least in my view, very very low!