CD Discussion Thread

They do send a 1099 for the interest accrued for the year. I have another with the same terms at another bank.

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The above was posted here two weeks ago.

Sorry to report this:

That was then. This is now. Things have changed BIG time.

SJP FCU has closed this deal to everyone except for persons living in NY State.

Let’s face fact. It’s a small credit union and where else you gonna get 2% APY these days.

If you wanted this deal, jumped on it and got it, congrats. It’s too late now for most people. :slightly_frowning_face:

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It would be very hard to buy a 2% CD for 7 long yrs. Someday I may be in this situation, but I truly hope to god rates will be significantly higher before I ever have to make that decision.

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Ken has just gone up with an interesting NPCD. You need at least $500 to play, and the limit is just a single penalty-free withdrawal.

Beyond that, I cannot compete with Ken’s excellent write ups so I will instead give you the needed link:

Ken’s new NPCD deal

You really think this is a good deal? The rate is .62%. I am almost getting this from my cash accounts. No way I am going through the hassle of opening another account for a few basis points. We’re talking about maybe another $100 over the course of 13 months. I’m not that desperate.

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I am grateful for the question. Thank you, goldendog, for asking. This question offers me opportunity, once again, to remind participants here of the following:

Anyone is permitted to post CD deals here and all are encouraged to do so. When I post a deal please do not think it’s also a personal endorsement or something in which I myself am participating. These days especially, most often, it is not. But I am aware of the varying financial circumstances of those who read this thread. I well realize what might be a doggy deal for me could be the best another reader can do. And this thread is not just for people in my special circumstance. It is for everyone . . . . or at least that is the goal here.

So please feel free to post deals which, though they might not work for you, could nevertheless end up helping someone else. And I will do the same. Thanks

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Federal Reserve Chairman Jerome Powell just warned that the risk of inflation “could turn out to be higher and more persistent than we expected” following a decision to keep the interest rate unchanged for now.

So where does this leave us savers who invest in certificates of deposit? This is only my opinion and, as always, I could be full of prunes:

I like the strategy being used by pattyb53. She is keeping her money liquid while still earning 1.5% APY on her funds. Is that not a better idea than, for example, locking into a seven year CD at 2% APY?

Of course not everyone has that 1.5% uncapped liquid funds option. If your available option is poorer it mitigates in favor of locking in a higher rate using a CD. But I would be hesitant to tie money up for an extended length of time, given this announcement by Chairman Powell. My hesitation would be mitigated somewhat if your chosen CD’s early withdrawal penalty is not too severe.

Bottom line it is a most difficult time for us savers. Good options have mostly evaporated. On a personal note:

I am fortunate still to have available to me 3.25% APY options using add-on CDs. But with inflation running north of 4%, all this means is I’m losing money more slowly than others who lack this option. Also, importantly:

By using those add-on CDs I am locking up my funds until 2024. By then, or well prior, prevailing CD interest rates could easily exceed 3.25% because of runaway inflation. I can certainly respect anyone who thinks it is a better idea right now to keep your funds liquid and available!

I mostly agree with what you’ve said, with one caveat - putting money into your add-on CD, it’ll only take about a year for the extra you earn (over liquid rates) to offset many early withdrawal penalties. I understand the inclination to consider CD money locked up (I generally feel the same way), but it really isn’t - you’ll just have to give back some of the higher interest you have earned, to get the money early.

There’s also the laws of averages - getting 3.25% for the next 3 years can net you more than getting 1.5% now and 5% two years from now. Your earning rate would have to go up 1.75% over 18 months, and another 1.75% the following 18 months, for that 3.25%/3yr CD to become the worse deal.

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I have a PSECU 24mo CD coming due early September. Slim pickings on CDs so the money will probably go into a MYGA.

Agreed, glitch99.

I was merely trying to point out, especially for readers here who might not have that option available, that a 3.25% add-on is not necessarily the bed of roses it might at first appear to be. Even with a 3.25% APY CD, with the forward interest rate uncertainty today, there are concerns.

Going forward, and waiting a short while to see how things unfold, I might take a portion of my CD money and follow pattyb53’s approach. Like her, I am also fortunate to have that Keesler HIMMA Plus option available. There will be an informational convergence as we move into 2022, to wit:

  1. We will learn whether or not Keesler will continue to make HIMMA Plus available, and

  2. We will learn whether or not Powell gets a second term as Fed Chairman

These two things will become known at more or less the same time, or at least in the same general time frame.

Finally I would note that rising inflation mitigates in favor of HIMMA Plus continuation. But it is not alone determinative. Business conditions also enter into the consideration.

Of course. And I was also just trying to point out that patiently sitting on cash will [relatively] quickly cost you more than you’ll ever gain from waiting. :slight_smile:

Again, I have no argument with your thinking. You are correct.

But I still recall trying to survive, and invest wisely, back in the early 1980’s when inflation just took off. I once owned some 20 year munis (I was into muni bonds back then) paying 11% YTM (yield to maturity).

When it comes to interest rates going forward, there are a lot of known unknowns around now . . . . not to mention the unknown unknowns! :grinning:

Now you are just being cruel, to remind us of such returns… :slight_smile:

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It’s mostly off topic. So I will be brief. But I have an admission:

I bought those bonds only hesitantly, and with concern. At the time interest rates appeared to be unbounded on the high side.

I guess interest rates generally are on topic here. Nobody should ever listen to any interest rate forecast I might make. I have no more clue now than I did back then, and I struggle a lot trying to plot a course forward.

When a large CD matures, how to move the money out is always something requiring a lot of thought.

I had a fairly large CD mature last Sunday, the funds becoming available to me early Monday morning. I telephoned the financial institution when the call center opened and wired the funds, all of them, to where they were going. It cost me $15 to accomplish this. Everything went off without a hitch, my funds were at their destination before noon, and I could move on to other things.

[Explanatory note: As is often the case, I was not permitted by the receiving financial institution to wire the funds straightaway into the account which was their true final destination. I instead had to designate a savings account in the wire instructions. Thereafter I needed to telephone that same financial institution and request the funds be moved into the CD account where I wanted them to be. And of course I could not call until my funds arrived in the first place. So a higher level of attentiveness was needed than otherwise would have been the case.]

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That’s $15 certainly worth the time and effort to make sure funds don’t just “hang out for days”.

Happening now for me.

Next time I go for the wire. Have to do some research. :wink:

For a large CD, the wiring fee is well worth it to quickly move the money.

For my PSECU CD that will mature in September, I plan to write a check and deposit to my Fidelity account. At the same time, I will use Fidelity’s same-day ACH to move the money to the destination.

Interesting. If you are writing about a paper check I’m surprised Fidelity will make the funds available to you straightaway, with no hold whatsoever imposed.

Fidelity makes the funds available to me because it is a margin investment account.

Note: NO margin interest is charged pending the availability of the funds from the check.

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Briefly, wire requirements are quite variable depending on the particular financial institution. You have to prepare in advance and be certain to comply with whatever special requirements and conditions they throw at you. For example:

In order to facilitate that wire I mentioned I dispatched earlier this week I needed to, a couple of weeks back, first visit a branch of my financial institution, sit down personally with a rep, provide a telephone wire password, and sign a form. That signature was then notarized by the rep, who happened to be a notary. But that notarization was a requirement.

Not all financial institutions require all that stuff. Actual requirements vary widely and you have to ask about the rules for dispatching funds via wire and then comply.

I knew in advance, obviously, when my CD would mature. That was my deadline for completing preparation to send the wire. Having followed in advance all of the financial institution’s rules for wiring funds, the actual dispatch of the money went quite smoothly. I was able to complete the entire transaction from home by telephone.