Got that? OK, now let’s get down to the important stuff, the early withdrawal penalty (EWP):
Within 365 days from the open date of the certificate, the penalty will be the last 365 days of dividends earned.
After 365 days from the open date of the certificate have elapsed, the penalty will be 30% of gross amount of dividends that would have been earned if the certificate had reached maturity.
Knowing that penalty, you now can decide whether or not you like this deal.
ETA
They also are offering a seven year CD paying 2.75% APY . . . .
but having those same “you bet your life” EWP terms. Be thoughtful and careful.
I dont know if it means 30% of what would’ve been earned over the remaining term, or what would’ve been earned for the full 5 year term. But either way, there is a window where you could walk away with less than your principle.
Basically, they know 2.5% will bait people today, but they also know that 2.5% isnt going to be competitive in a couple years and a lot of people will want to bail early.
2. Certificates Having a Term Greater Than Six Months
a. If redeemed within the first year, all dividends will be forfeited.
b. If redeemed thereafter, but prior to the maturity date, the early withdrawal penalty will equal 30% of what would have been earned if the certificate had been held to maturity, not to exceed total dividends earned.
I missed that last part.
Or did I? Because I just went back to the PenFed link I posted, above up thread a little, and the language I posted remains in place at PenFed itself. And it is not the language Ken has posted.
My bottom line suggestion is for you to be very careful regarding the EWP of this one. Do your own homework and research, and proceed with extreme caution. It certainly makes a difference whether or not you might be required to surrender interest you have not even earned.
I regret, goldendog, my inability to be of more help. It’s because I’m not doing this PenFed deal personally. I have no need now to open CDs.
I’m able only to reiterate my earlier counsel to be extremely careful and watchful before jumping in. Certainly this would include a chat with (at least) a PenFed supervisor. Regarding their early withdrawal penalty I remain, at this writing, unclear.
This post intended for owners of the GTE Financial (Tampa, FL) 3.25% APY CDs
Our prospects on those 3.25% APY certificates might be looking up. After being in the red for too long on those CDs, GTE’s situation seems to be improving. Here is a link to current GTE mortgage rates:
As you can see, GTE is finally able to make money using our money. This I hope will enable GTE to remain afloat until our certificates mature . . . and beyond, of course. At the same time:
Obviously if GTE turned turtle, and if that meant we got our money back, our reinvestment prospects are not as dire now as was the case a year or two ago. However, it remains today difficult to obtain 3.25% APY on (what has now become) a two plus year CD. So I hope GTE remains solvent until maturity. So far so good.
True, this rate is still attractive even with the recent rise in rates, however, we might be singing a different tune in 12 months. 3.25% might look pretty bad in the not too distant future.
But it’s also double what you can get elsewhere while waiting for those higher rates to materialize. Which let’s you bank a lot of excess earnings now, to offset any future lag.
That’s pretty much been the strategy for this CD over the past couple years too. No matter where rates are the last 12 months, I’ll be happy with the CD’s total earnings.
The dilemma I foresee with the GTE 3.25% CD and with other CDs which mature that far out (mid 2024) is:
The time to “go long” with CDs or with other safe investments (govvies) is when inflation “breaks”. This will be near to the interest rate peak. And that peak moment might happen prior to mid 2024 in light of the fall election that year. Course:
Last time there did exist “residual” CD deals which materialized after the peak. The wonderful NFCU 3.5% APY CDs fall into this category. Those CDs also mature mid 2024 and the 3.5% APY offers us CD fans a slightly larger cushion. And of course NFCU is more highly rated, health wise, than GTE Financial . . . . which is nice. You don’t have equivalent concerns.
Wish I could tell you when that peak will happen. But I don’t know. Timing is everything. Nevertheless all we can do is hope for the best.
If long term CD rates are north of 6% in one year (and you think rates are peaking), I would definitely consider cashing out the GTE CDs and paying the EWP at that time.
I acknowledge not everyone does. But I follow bank and credit union health ratings and I post such news here routinely.
In the past we have relied on three services: Ken (depositaccounts.com), Bauer, and Weiss. I regret having to post some bad news:
As regards the updated ratings, based on Q4 2021 data, Ken and Bauer posted their results timely over one month ago. Weiss has still not updated his bank or his credit union ratings. If you go to his page you will see his ratings remain based on Q3 2021 data, which is rather worthless.
Weiss, in the past, was always last of the “big three” to update ratings. However, I recall no past instance where Weiss has been this late with an update, now roughly a month overdue . . . even for Weiss!
Because I care about this I will continue to check Weiss with hope for progress. But so far things are not looking at all good.
Everyone is a trust account person If you name beneficiaries. This rule is for formal and informal trusts. In other words, it includes PODs and formal living trusts. It really doesn’t change anything if you have less than $1,250,000 per account owner at a single bank. Funds exceeding $1,250,000 per owner will no longer be insured even if you have more than 5 beneficiaries. Irrevocable and revocable accounts are no longer treated differently. It looks like this only applies to FDIC banks and not credit unions unless NCUA adopts these new rules.
not sure to post this here, but Element Finacial is paying 4% up to 20k. Just a small hoop,(easy) 15 debits or other action on acct each month. I set up 1.00 1.15 and 1.25 to my elec company and same for Comcast and some very small payments to credit card balances. Similar to presidential bank @ 2.25 up to 25k with 1 DD of 500 monthly (Alliant works) and 7 debits. High Interest Checking | Elements FinancialPresidential Bank Personal Checking MD | VA | DC
Just a heads up here, nothing specific. And this will come as no shock whatsoever to anyone who has been paying attention:
CD interest rates are up and heading higher. As I forecast up thread, some of today’s action is anticipatory. But the Fed meets next week and at least a half point rate increase is baked into the cake, with presumably more to follow. This is not necessarily determinative for longer CDs, but from what I’m seeing those interest rates are heading north as well.
Bottom line, before you invest be aware CD interest rates are on the move up. Adjust your CD purchases and timing accordingly.
