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6% APY CD
Old 08-31-2006, 11:42 AM   #1
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6% APY CD

Pentagon Federal Credit Union is offering 6% APY on 3, 4 & 5 yr CDs ... any thoughts on whether to jump at this?*
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Re: 6% APY CD
Old 08-31-2006, 11:48 AM   #2
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Re: 6% APY CD

If you're thinking of buying CDs (or treasuries), absolutely.* *Buy all three terms -- you're getting about 120 bp over market.
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Re: 6% APY CD
Old 08-31-2006, 01:10 PM   #3
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Re: 6% APY CD

Quote:
Originally Posted by d
Pentagon Federal Credit Union is offering 6% APY on 3, 4 & 5 yr CDs ... any thoughts on whether to jump at this?*
They're doing that again? Crap. Yep, here it is-- Effective August 31, 2006 - September 27, 2006.

(Muttering expletives as I calculate the payback on a six-month penalty for cancelling a NFCU five-year 5% CD in only its second year.)

Duh, no calculator required. I'll lose 2.5% right away and gain 1% per year, so even the three-year CD at 6% is a better deal than continuing at 5%.

I'll be back later...
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Re: 6% APY CD
Old 08-31-2006, 01:58 PM   #4
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Re: 6% APY CD

Check out:

NavyFCU currently has an 18 mos. 6.25% CD and if longtime member (25 years or more) u can get an extra 1/4 point on it to 6.5%.
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Re: 6% APY CD
Old 08-31-2006, 02:20 PM   #5
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Re: 6% APY CD

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Originally Posted by retire53
Check out:
NavyFCU currently has an 18 mos. 6.25% CD and if longtime member (25 years or more) u can get an extra 1/4 point on it to 6.5%.
Good point.* Three issues:
1.)* We've already burned out our quarter-point raises (members since 1978 & '79).
2.)* We're one year into a five-year CD.* Cashing it in loses six months' interest (2.5%) and buying the 18-month CD at 6.25% only recovers 1.25x1.5=1.875%, so we'd still be short another 0.625% and hoping for renewal at no less than 5% for no less than 2.5 years.* I'd have to hope that would be at least 5% for no less than that time in order to maintain what we're getting now.
3.)* PenFed has rates almost as high but in much smaller minimum amounts.* I can break our years' spending cash into multiple smaller CDs instead of having to do this in transactions of NFCU's $15K or more.* That way if we happen to need to break a CD we'd only have to break them one at a time (for smaller penalties) instead of the whole account.

Setting up the PenFed CD was pretty painless.* $5 for a share savings account, $20 donated to the NMFA (the only way I'd qualify for membership), and requesting the CD with an EFT from our brokerage.* All done online in about 30 minutes, and reading the fine print was the toughest part of it.
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Re: 6% APY CD
Old 08-31-2006, 02:51 PM   #6
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Re: 6% APY CD

Quote:
Originally Posted by Nords
Setting up the PenFed CD was pretty painless.* $5 for a share savings account, $20 donated to the NMFA (the only way I'd qualify for membership), and requesting the CD with an EFT from our brokerage.* All done online in about 30 minutes, and reading the fine print was the toughest part of it.
It's even less painful if you already have an account. Took me a couple minutes to buy 4 CDs today. And I *love* that they let you prespecify maturity options. I still can't get over how many banks make you jump through hoops (within 7 days after maturity) to prevent a CD from rolling over at maturity.
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Re: 6% APY CD
Old 09-01-2006, 04:45 PM   #7
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Re: 6% APY CD

Quote:
Originally Posted by d
Pentagon Federal Credit Union is offering 6% APY on 3, 4 & 5 yr CDs ... any thoughts on whether to jump at this?*
IMO good CU, sounds like a good rate. Sure, if its in your plan, go for it. We're in with them. Wish I had known of this sooner.
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Re: 6% APY CD
Old 09-02-2006, 01:44 AM   #8
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Re: 6% APY CD

Quote:
Originally Posted by retire53
NavyFCU currently has an 18 mos. 6.25% CD and if longtime member (25 years or more) u can get an extra 1/4 point on it to 6.5%.
It's 2 Sep on the east coast as I type this, and NFCU has rendered the 6.25% discussion irrelevant.

They no longer offer their 18-month CD.

Maybe it'll be back-- they frequently change their mortgage rates. But I'm not hanging around this time...
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Re: 6% APY CD
Old 09-11-2006, 09:13 PM   #9
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Re: 6% APY CD

http://www.worldsavings.com/servlet/...home/home.html

15 mo. CD @6.01% APY
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Re: 6% APY CD
Old 09-27-2006, 12:40 PM   #10
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Re: 6% APY CD

Bump. This is the last day for the 6% CD deal (unless they extend it).

Most CD's in the 3-5 year range pay close to 5%, and treasuries pay even less. Not a bad deal.
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Re: 6% APY CD
Old 09-27-2006, 01:20 PM   #11
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Re: 6% APY CD

Need to watch the compounding on these things. If you read the fine print (who does?) you may note that there may be such terms as "simple", "daily", "monthly", "semi-annual" compounding. Of course "daily" is the best. Have seen some ads where the APY and APR are the same which indicates "annual compounding" which is not good. Have note done the Excel to see exactly how much you lose with annual versus daily but is it significant over a multi-year CD. Now that I mentioned this I will have go check......
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Re: 6% APY CD
Old 09-27-2006, 01:54 PM   #12
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Re: 6% APY CD

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Originally Posted by Old Army Guy
Now that I mentioned this I will have go check......
Well, for 6% annual interest compounded daily, the number would be
[1+(.06/365)]^365 - 1 = 6.18311% or an additional 3.05%. But I don't know if that relationship is linear.

2%: an additional 1.00%.

10%: an additional 5.16%.

14%: an additional 7.32%.

Seems close enough to linear over the range of interest rates we're likely to see...
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Re: 6% APY CD
Old 09-27-2006, 02:20 PM   #13
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Re: 6% APY CD

Checked and you are pretty correct -- actually reaches 3.118% advantage at 10 years on a 6% APR. Wish I knew where PFCU was going tomorrow.
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Re: 6% APY CD
Old 09-27-2006, 03:34 PM   #14
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Re: 6% APY CD

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Wish I knew where PFCU was going tomorrow
i'd sure be surprised if is isn't down.
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Re: 6% APY CD
Old 09-27-2006, 05:45 PM   #15
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Re: 6% APY CD

Me too -- I timed the T-Bill maturity wrong.... BTW anybody have any idea how long after maturity you will wait for the t-bill proceeds to hit the linked account?

Ok Old, you made your point, now drop the subject.........
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Re: 6% APY CD
Old 09-27-2006, 06:08 PM   #16
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Re: 6% APY CD

Quote:
Originally Posted by Old Army Guy
Need to watch the compounding on these things. If you read the fine print (who does?) you may note that there may be such terms as "simple", "daily", "monthly", "semi-annual" compounding. Of course "daily" is the best. Have seen some ads where the APY and APR are the same which indicates "annual compounding" which is not good. Have note done the Excel to see exactly how much you lose with annual versus daily but is it significant over a multi-year CD. Now that I mentioned this I will have go check......
I didn't realize that some financial institutions actually do daily compounding. Out of curiousity, do any do continual compounding by approximating e? Although I don't think it would make much of a percentage difference over daily compounding.
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Re: 6% APY CD
Old 09-27-2006, 06:30 PM   #17
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Re: 6% APY CD

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Out of curiousity, do any do continual compounding
... i do recall that it was the gimmick du jour some (many) years ago.* i think it fell out of favour when APY's were standardized.
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Re: 6% APY CD
Old 09-27-2006, 10:51 PM   #18
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Re: 6% APY CD

ok, at the risk of sounding dumb, I didn't think the compounding method really matters as long as the APY is higher.

For example, an annual compounding CD that pays an APY of 6.0% is better than a daily compounding CD that pays and APY of 5.99%.

If you're quoted the simple interest rate, then you need to do the math to figure out the effects of compounding, but if you're quoted an APY, the compounding isn't so important.

Am I confused?

Jim
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Re: 6% APY CD
Old 09-28-2006, 12:11 AM   #19
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Re: 6% APY CD

Quote:
Originally Posted by magellan
ok, at the risk of sounding dumb, I didn't think the compounding method really matters as long as the APY is higher.

For example, an annual compounding CD that pays an APY of 6.0% is better than a daily compounding CD that pays and APY of 5.99%.

If you're quoted the simple interest rate, then you need to do the math to figure out the effects of compounding, but if you're quoted an APY, the compounding isn't so important.

Am I confused?

Jim
I think you've got it right. The APY is simply a way to express the total annual yield, taking the compounding into consideration.

Banks are compelled to state the APY as a means to easily compare the real return against competing banks.
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Re: 6% APY CD
Old 09-28-2006, 01:05 AM   #20
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Re: 6% APY CD

Quote:
If you're quoted the simple interest rate, then you need to do the math to figure out the effects of compounding, but if you're quoted an APY, the compounding isn't so important.
Quote:
Banks are compelled to state the APY as a means to easily compare the real return against competing banks.
Right. Doesn't matter what period the compounding is done at. It is already accounted for in the APY.
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