CD Discussion Thread

Finance
2298

This post is for former Tobyhanna/Valor members. Your CD(s) are now in the possession of Pentagon Federal CU (PenFed). They will mature in several months. As you know, those certificates of deposit were originally add-ons.

New posts on Ken’s website this morning are saying PenFed is honoring the original Valor/Toby terms, including the add-on provisions. However, you must ask. This, again, according to a poster there.

As you know, the CDs in question offer an APY of over 3%. This is significantly in excess of yields available elsewhere today. So if you have money available and own one or more of these Toby/Valor (now PenFed) CDs, it would be worth a call to PenFed to make inquiry about this.

ETA

There might be something in the original terms and conditions about a $100k maximum for these CDs. I am uncertain about that. I can tell you I bought five of them, way back nearly seven years ago. I might have done that because of a $100k limitation per CD.

Anyway, this is something for which to be on watch. I really cannot say whether the $100k limitation exists or not.

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2299

I wonder why this had never been disclosed on the depositaccounts site or anywhere else in the last 5 yrs? You would think something this important would have been revealed way before now.

2300

I certainly agree with you, goldendog. I was very surprised to see this.

Please bear in mind I am merely your humble reporter here. I have not tried personally to add money at PenFed as I have other add-on options with higher yields. However, I thought this was sufficiently important to post regardless. You call them. Worst that can happen is they say “no”.

But even for a few more months there is a significant difference between 3+% and 1%, or whatever, especially if a large sum of money is involved.

2301

I have El Paso TFCU & noticed new deal. 60 mo Jumbo CD’s 1.61% or regular $5k+ 1.51%.

Prospects of rates moving upward???

2302

No, don’t move to El Paso… :>

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2303

Depends on the early withdrawal penalty. It may prove to be a good deal for the next 2-3 years, but I dont know about 5 years. Unless you’re putting a trivial amount into it, I’d make sure to know the early exit costs before committing. 3 months could be reasonable to upgrade your rate should market rates rise modestly, but a 6- or 12-month penalty would be much harder to swallow for all but the most extreme rate increases.

2304

A correction - Contrary to implications in all of their email and written correspondence, Ally doesn’t require a cell number.

I had a small amount in savings and a couple of CDs that sadly matured into my checking account. Attempted logins from the machine I’ve always used, with no change in cookies, yielded a "Since we don’t recognize this machine, for your safety, we require that you confirm blah, blah. We will text you a code to confirm your identity. "

A call to Ally to close all of the accounts yielded a “we don’t require a cell number. We can send an email.”

So, I’ve still got my Ally checking as a backup to Discover. On a positive note, both banks’ customer service personnel are impressive. Chase and Amex were this way 10 years ago, but they seem to have slowly off-shored the vast majority of their customer service calls.

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2305

It’s that time.

As happens once each quarter, updated credit union ratings are being released. These ratings reflect Q4 2020 financial data and are the most recent available. Specifically:

Ken has updated his ratings

Bauer’s Star Ratings are updated

Weiss?

As usual, Weiss is tardy. The Weiss credit union ratings continue to be based on old Q3 2020 financial data. However, updated ratings from Weiss can be expected to be released quite soon. It could happen today.

2306

GTE update

I’m just off the telephone with my contact at GTE Financial. I had not spoken with her for many months. I know others here care about GTE, so:

They are in OK shape. The Tampa region itself is BOOMING! This has had a salutary impact on GTE. I was reminded by my contact the locals now refer to their region as “Champa” because they have four championship teams in four different sports (football, baseball, hockey, soccer). But all the excitement is good for business and spirits are running high. People are moving to Tampa and want to be there. Also, of course, Tampa is in Florida which has no state income tax. It’s no wonder Tom and Gisele are there.

Anyway, all that helps to support the health of GTE. On the downside, I was reminded, there are huge inflows of funds because of all the Promo add-on CDs paying 3.25% APY. This is an expense for GTE which they must support. But so far so good because everything else is so favorable in the Tampa region. I was told GTE management is aware they can discontinue the add-on deal with 30 days’ notice. But they are doing their best to avoid that for business reasons.

Bottom line it is business as usual at GTE today. But it never hurts to keep a weather eye. Stuff can change between now and 2024 when our CDs will finally mature. :wink:

1 Like
2307

i’m assuming that rate is no longer available for new CDs?

2308

Don’t you have anything better to do than reminding them they can end the add-ons with 30-day notice. First, it’s not going to be that easy. There will be tremendous blowback for them if they do it. It will be extremely controversial. There’s a reason why they rescinded it last time they tried to do it (with or without the 30 day notice). I also don’t want to discuss this with you. What’s the point discussing something that’s entirely hypothetical. Lastly, use whatever commonsense you have (if you have any) before you talk to them again.

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2309

I apologize, goldendog, for having upset you. I hope you are OK. Rest assured my GTE contact is not at an organizational level where anything I say will have any impact. She does “know stuff” simply because she works at GTE and lives in the region, and I was grateful for her having shared the items I posted above.

Point is, the higher up people at GTE who matter are already aware they can shut down our add-ons after offering us 30 days of notice. They choose not to do so because they fear it would impact both business and the reputation of the credit union. All of that said, and not wanting to set you off again:

I do have the impression it is the excellent business climate currently existing in the Tampa region which is saving us. And it is a long time until 2024. This circumstance could easily change by then; matters in Tampa could head south. So it is best for us to keep our eyes wide open.

Correct. The 3.25% APY add-on CD’s are long gone.

On a personal note, I can relate this story.

Back when this CD was available, close to the end of its availability, it took $100,000 to obtain one of these. I had to scrape together every dime I had to get mine open, and even then I needed to beg for extra time to deposit the full $100,000. I just barely made the cutoff. That was then, this is now, and things are very different today. This CD is a valuable asset. Like goldendog, I certainly hope it remains available to us.

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2310

Dept of the Interior FCU has a 56-month .75% CD offer. Some here may already have a 3% CD with them maturing later this summer.

Of course, a sub 1% rate for nearly 5 years isn’t attractive at all - but this does have a “bump up” feature that lets you increase the rate at some point during the term. So you won’t be left entirely in the dust should rates start rising significantly.

Hey, it’s an option. One I do not plan to avail myself of, but an option nonetheless.

1 Like
2311

Just curious - would you really expect a frontline CSR to say anything except some version of “Of course everything is going great!”?

2312

Difficult to say. I candidly do not know any front line CSRs at GTE.

2313

Ok, any back-office employee would even better know not to imply any institutional risk when speaking to customers…

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2314

I was moved by goldendog’s post, above. If you have not read it, you should.

Want to take a moment or two to write about defensive strategies for those of us who own add-on CDs. Clearly these accounts are pivotal to our well being lest we otherwise fall prey to today’s absolutely horrid CD interest rates. I see two levels of threat:

  1. The lower level of threat would be recission of the add-on privilege by our financial institution.

  2. The greater threat would come from outright failure of the financial institution where we have our add-on CD account.

Presumably, but not with absolute certainty, were the situation to become dire the financial institution’s management would invoke 1. (above) in order to forestall 2. (above). And prior to invocation of 1. (above) the NCUA mandates they provide us 30 days of notice. And that is key.

Since commencement of the pandemic I have closed four CDs, at four separate financial institutions, without paying a penalty. Some (NOT all) financial institutions are allowing early, penalty free, CD closures because of the pandemic. Generally, you have to ask. My own CD closures so far have been for strategic financial purposes, and they have been helpful in that regard.

Thus, those waiting for CDs to mature elsewhere so the money can be moved to an add-on might want to consider early, penalty-free, withdrawals (if permitted) and then immediate movement of those funds to your add-on CD. This would circumvent 1. (above) but would not offer any help in the event of 2. (above). At the least you might want to make inquiry at other financial institutions, where you have existing CDs, as to whether or not they allow early, penalty free, withdrawal. That way you would know where you stand.

I myself am relying on the 30 day notice period. Upon receipt of such notice I will move into action and close whatever CDs must be closed, moving funds to my add-on before the thirty days expires. It does help a bit that I have more than one add-on CD at more than one financial institution; belt and suspenders as the old saying goes.

Bottom line, it is a good idea to think about this in advance and have a game plan should the situation with your add-on CD deteriorate.

2 Likes
2315

Which 4 financial institutions let you close CD’s without a penalty? Did you have to tell them you were financially impacted by the pandemic?

2316

A lot of credit unions let you close CDs with no penalty. Keesler was one. I am not certain, but believe that Ally joined that party as well.

Keep in mind that this was during a period of falling interest rates, so it shouldn’t have really cost them much, other than fewer funds on deposit. I wonder how many would have been so eager to drop the penalty if rates were rising.

ETA: Keesler did not require any excuse.

3 Likes
2317

Agreed, Honkinggoose. I remember in one instance I contacted the president of the credit union directly. He did not get back to me personally. Instead he assigned one of his close assistants to telephone me and set up the withdrawals (there was more than just a single withdrawal, though eventually the CD was drawn down to zero and closed). Back then (no longer) I was funding my PSECU add-on CD accounts and needed a stream of money to accomplish that. I also earned a slightly higher rate of interest at PSECU than I was earning from the CD account I was drawing down. The president did not require me to pay any sort of penalty.

And as Honkinggoose made mention, the CD I was drawing down was paying a MUCH higher interest rate than the rates that credit union was paying its depositors back then and today as well. So it was a “win-win” insofar as I could tell. It is always a good thing when both parties to a transaction do well.

I also can recall, once or twice, being turned down when requesting early penalty-free withdrawal of a CD. Of course if you don’t ask you don’t get. I didn’t mind being turned down. Just had to try elsewhere. Did have more successes than failures, but you have to make inquiry, in a gentle and polite manner of course. :wink:

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