Best CD & MM Rates Thread 2019 - Please post updates here

[Momcpa]

2.73% for 15 months C.D at a small local credit union. The additional notation says that the offer can be pulled any day they want.

 

[Sunset]

I'm going to make a plug for iBonds here. This April is the last month you can get the current offering of a 2.83% rate.

Currently the iBond is offering a fixed rate of 0.5% which is much higher than it the recent past when it was mostly 0% and occasionally 0.1% or 0.2% and and just once prior to this 6 months it was 0.3%. You have to go 10 years back to find a higher fixed rate.

I think this fixed rate will drop considerably next month due to recent CPI being quite low - 0% in fact for 3 of the past 6 months, and if you look at the patterns in the past with iBonds, the fixed rate tends to drop to 0% or close when inflation is low. You can see the historical fixed rates offered in this chart. https://www.treasurydirect.gov/indiv/research/indepth/ibonds/IBondRateChart.pdf

I am planning to buy some - I did last fall replacing some iBonds paying 0% fixed rate, and this time I'll replace some iBonds paying a 0.2% fixed rate.

I'm a complete dummy about buying bonds, I understand the theory, but the actual mechanics of buying/selling/redeeming them is weird.

edit >> I found past rates https://www.treasurydirect.gov/instit/annceresult/annceresult.htm

 

[ShokWaveRider]

Find of the day. Suncoast Credit Union special... 3.5% on a 5 year Jumbo CD... $100k minimum... 180 day EWP.... partial withdrawals allowed... $100k minimum.... NCUA.

A little better on the other sun coast (Space Coast CU) for IRA Money 5 Year 3.8 5APY...

12 Months, 3.00%, 3.03%, $500

18 Months,3.05%, 3.09%, $500

24 Months, 3.25%, 3.29%, $500

30 Months, 3.30%, 3.34%, $500

36 Months, 3.45%, 3.49%, $500

42 Months, 3.50%, 3.55%, $500

48 Months, 3.65%, 3.70%, $500

54 Months, 3.70%, 3.75%, $500

60 Months, 3.80%, 3.85%, $500

 

[pb4uski]

^^^ That would be inviting but it is a long ways away and I would not qualify for membership.

 

[Big_Hitter]

we just did a 3% one-year CD with UBS

 

[Timeisprecious]

What's UBS? I'm interested.

 

[njhowie]

UBS is a Swiss investment bank. They have a US presence.

Think of it like Goldman Sachs.

 

[Big_Hitter]

What's UBS? I'm interested.

https://www.ubs.com/us/en.html

 

[Timeisprecious]

Thank you

https://www.ubs.com/us/en.html

Thank you much. I'll check it out.

 

[audreyh1]

Yesterday March CPU announcement, so inflation component is known for next six months for iBonds.

Depositaccounts.com article spells it out:

Based on September and March CPI-U numbers, the inflation component for the May I Bond should be 1.40% (annualized). This number is added on to the I Bond fixed rate (currently 0.50%) to derive the I Bond composite rate. The current I Bond inflation component is 2.32%.

Due to this lower inflation component (1.40%), I Bonds purchased this month won’t be a good deal compared to top 1-year CDs. However, there is another reason to consider an I Bond purchase for this month. The current I Bond fixed rate of 0.50% is the highest it has been since 2009. Based on how Treasury yields have declined since November, the I Bond fixed rate may decline in May. So if you are looking at I Bonds as a long-term investment, you may want to purchase in April.

I Bond Rates of Return for April 2019 Purchase

If you buy I Bonds before May, your I Bond will have a fixed rate of 0.50% and an inflation component of 2.32%. This results in a composite rate of 2.83%. This rate will remain in effect for six months until October 1, 2019. The I Bond inflation component that the Treasury announces in May will take effect for your I Bond (purchased this month) in October. That will remain in effect for six months. Since we know the May I Bond inflation component, we can compute the I Bond return for the next year for I Bonds purchased in April.
https://www.depositaccounts.com/blog/inflation-treasury-series-i-savings-bonds/

So if you purchased this month, you would get 2.83% for six months, followed by 1.90% for six months, and keep the 0.5% fixed rate until maturity.

We won’t know until May 1 what the new fixed rate will be.

I’m “upgrading” (i.e. replacing) some IBonds I bought 5 years ago with an only 0.2% fixed rate.

There have been periods where IBonds yielded quite a bit more than cash or short-term CDs, other periods where they have fallen behind. So you never know long-term. You don’t have to pay taxes on the interest earned until you redeem the IBonds or they mature, so you get tax deferred compounding of the interest.

To purchase IBonds you create an account at treasurydirect.gov and link it to a bank account.

 

[Golden sunsets]

Yesterday March CPU announcement, so inflation component is known for next six months for iBonds.

Depositaccounts.com article spells it out:

So if you purchased this month, you would get 2.83% for six months, followed by 1.90% for six months, and keep the 0.5% fixed rate until maturity.

We won’t know until May 1 what the new fixed rate will be.

I’m “upgrading” (i.e. replacing) some IBonds I bought 5 years ago with an only 0.2% fixed rate.

There have been periods where IBonds yielded quite a bit more than cash or short-term CDs, other periods where they have fallen behind. So you never know long-term. You don’t have to pay taxes on the interest earned until you redeem the IBonds or they mature, so you get tax deferred compounding of the interest.

To purchase IBonds you create an account at treasurydirect.gov and link it to a bank account.

Have you been paying taxes on the interest annually or will you be hit with a big tax bill when you liquidate your older bonds?

 

[Dave J]

As a heads up for anyone buying I-Bonds, which I own, think thru your decision on paying taxes annually or at maturity/redemption. You might bump yourself up to a much higher bracket with limited methods of managing your tax bill if you have to pay taxes on all the interest at maturity. All taxable interest is reported at maturity(30 years) or when cashed in. I bought some in 2001 and deferred interest. Upon doing some heavy duty tax forecasting a couple years ago, I was looking at a big, unnecessary bump in the future. I learned either here or on FatWallet.com that you could change from deferring to paying annually , one time I believe, and then continuing annually in the future. Due to the bracket changes last year, I wanted to lock in a lower rate on this interest. Last year I reported interest of I-Bonds in my name, and this year we are reporting interest on SO I-bonds. You can imagine 17-18 years interest is more than the original cost of the bonds. BUT, no large, unmanageable tax bill in 2031. Hope I make it there to celebrate. And thank you to whoever posted a post like this 2-3 years ago to help me learn about this.

 

[copyright1997reloaded]

One more question on iBond purchases via Treasury Direct. I have an account there that I haven't used for a while. I just set up a new financial institution link and am thinking of purchasing some iBonds this month to capture the 0.50% fixed component.

I know doing the purchase as late as possible in the month is a good strategy (as it captures the interest for the month), especially since the money is coming from a money market fund yielding 2.50%. Treasury Direct allows a date to be specified on the transaction. Given I haven't used this financial institution as a source for Treasury Direct (before), I would like to allow some time to allow for any issue that might arise. Does a date of the 25th seem reasonable - that should give me enough time (business days) if there was an ACH issue?

 

[Dave J]

One more question on iBond purchases via Treasury Direct. Does a date of the 25th seem reasonable - that should give me enough time (business days) if there was an ACH issue?

Yes, from what I have bought in the past this should work, if your bank account is verified.

 

[njhowie]

I know doing the purchase as late as possible in the month is a good strategy (as it captures the interest for the month), especially since the money is coming from a money market fund yielding 2.50%. Treasury Direct allows a date to be specified on the transaction. Given I haven't used this financial institution as a source for Treasury Direct (before), I would like to allow some time to allow for any issue that might arise. Does a date of the 25th seem reasonable - that should give me enough time (business days) if there was an ACH issue?

Why don't you do a small portion of what you're considering purchasing right now (maybe 1 bond worth) to get the link all set up, then do the rest later in the month as you contemplate?

If you're considering purchasing on the order of $10,000, for example, you're sacrificing less than $10 from your 2.5% money market account by moving the money now versus 2 weeks from now.

 

[copyright1997reloaded]

Why don't you do a small portion of what you're considering purchasing right now (maybe 1 bond worth) to get the link all set up, then do the rest later in the month as you contemplate?

If you're considering purchasing on the order of $10,000, for example, you're sacrificing less than $10 from your 2.5% money market account by moving the money now versus 2 weeks from now.

$10 is $10. I'm cheap that way. That's why I am a participant on this forum.

But you are right, and I was considering doing a test buy, which would be the smart thing to do.

 

[audreyh1]

Have you been paying taxes on the interest annually or will you be hit with a big tax bill when you liquidate your older bonds?

I will be hit with the tax bill when I liquidate. But I can stagger the redemption over multiple years for tax purposes as long as I do it before the bond matures. Or I can take the hit all at once.

This doesn’t concern me.

 

[dvalley]

So many years ago I looked into I-Bonds but never really found the appeal, however, based on audrey's post it seems like it might be a good buy this month. Currently I have my 'liquid savings' in a MM account earning approx 2.5% waiting for a good buying opportunity if the stock market dips. I think I can part with $10k and put it into the I-Bonds to buy it as a gift for college education for my kid (in about 6yrs). It says no taxes if you use it for higher education. Does that sound like a good decision? Also, must I use my kid's SS# to purchase and whatever SS# you purchase it with is the only person who can cash them?

EDIT: Found this from the depositaccounts article:

Below is an estimated annualized return for I Bond redemption from April 1, 2020 to July 1, 2020. It is assumed you will buy the I Bond on April 30, 2019 which gives you almost an extra month of interest. This effectively reduces the 3-month penalty to 2 months.

2.06% - redeem on 4/1/20, 6mo of 2.83%, 3mo of 1.90%, and 3mo of 0% (penalty)
2.05% - redeem on 5/1/20, 6mo of 2.83%, 4mo of 1.90%, and 3mo of 0% (penalty)
2.04% - redeem on 6/1/20, 6mo of 2.83%, 5mo of 1.90%, and 3mo of 0% (penalty)
2.03% - redeem on 7/1/20, 6mo of 2.83%, 6mo of 1.90%, and 3mo of 0% (penalty)

So sounds like the one yr return from the MM rate is better than the I-Bond's? Am I missing something?

 

[copyright1997reloaded]

So many years ago I looked into I-Bonds but never really found the appeal, however, based on audrey's post it seems like it might be a good buy this month. Currently I have my 'liquid savings' in a MM account earning approx 2.5% waiting for a good buying opportunity if the stock market dips. I think I can part with $10k and put it into the I-Bonds to buy it as a gift for college education for my kid (in about 6yrs). It says no taxes if you use it for higher education. Does that sound like a good decision? Also, must I use my kid's SS# to purchase and whatever SS# you purchase it with is the only person who can cash them?

EDIT: Found this from the depositaccounts article:


So sounds like the one yr return from the MM rate is better than the I-Bond's? Am I missing something?

1) No state taxes on savings bond interest.
2) iBond interest is tax-deferred for up to 30 years
2) one year does not a lifetime make. The iBond will return 0.50% real over the life of the investment. (Well, somewhat of a lie in that federal taxes still need to be paid.)

A long long time ago there was a period where TIPS and iBonds had a near 4% REAL (plus inflation) return. I was smart enough to buy some of these, but not smart enough to buy a sh*t load of them.

 

[audreyh1]

EDIT: Found this from the depositaccounts article:


So sounds like the one yr return from the MM rate is better than the I-Bond's? Am I missing something?

The thing is, you know what a money market fund is paying NOW. You don’t know what it will be paying 6 months from now, or 1 year from now, or 5 years from now.

You know that the current iBond will be paying 0.5% above inflation every six months for the next 30 years. It will pay 2.83% for the next six months, then 1.90% for the following six months. This ~2.36% average over 12 months does beat a lot of MM funds today.

I have never redeemed before 5 years so I’ve never paid the 3 month penalty.

It’s just a diversification play. I own some IBonds as well as MM funds, short-term CDs, and intermediate CDs and sometimes treasuries. My initial IBond purchase from 2003 is paying 1.1% plus inflation so currently paying 3.32%. I’m definitely holding onto that one until 2033.

There have been periods where IBonds paid more than money markets and short-term CDs.

I am just buying more to replace older IBonds that are paying a lower fixed rate (0.2%), currently 2.52%. When the rate on those older ones drop I may redeem them and redeploy into short-term CDs.

If it’s not a clear win for you I would recommend not to buy IBonds.

 

[Love This Community]

we just did a 3% one-year CD with UBS

Hi Bighitter. I tried finding cd rates on ubs website but no luck. I am interested in opening a cd at this rate. Thanks for any information you can provide as to where I can find this rate. Thank you!

 

[Love This Community]

I just called their 1-800 number and looks like I need to go through my financial advisor ( I don’t have one) to get this promotional rate.

 

[MJ]

Hi Bighitter. I tried finding cd rates on ubs website but no luck. I am interested in opening a cd at this rate. Thanks for any information you can provide as to where I can find this rate. Thank you!

There you go.
https://www.ubs.com/magazines/wma/insights/en/investing/2019/make-short-term-cash-work-harder.html

 

[Big_Hitter]

I just called their 1-800 number and looks like I need to go through my financial advisor ( I don’t have one) to get this promotional rate.

correct

 

[Big_Hitter]

There you go.
https://www.ubs.com/magazines/wma/insights/en/investing/2019/make-short-term-cash-work-harder.html

yep