CD advice

[pb4uski]

Quote:

Originally Posted by John Galt III I was on the Vanguard website today around 3 PM and saw a 5 year new CD at 3.4 %, I think. But they are hiding the early termination info somewhere.

There is no early termination info on brokered CDs.... the only way to terminate early is to sell them on the open market.... depending on how interest rates have changed since you bought them you may end up selling at a gain or at a loss that may be more or less than what a termination penalty with a bank CD would have been.

[foxfirev5]

Last month I bought all the 7-10 year CD's I could in the 3.6 -3.65% range. However now my 5 year rung on my ladder is a little light. I'm hoping the rates will creep back up by the time my next slug matures in June. In any event the CD's still are maintaining a decent spread over treasuries.

Regarding the recent lack of brokered CD's, this has been happening in late December into January at least the last few years. I've tried to move my purchases up to early December by borrowing from my withdrawal stash. Also I'm spreading them out over the year by purchasing on the secondary market to match other points on the calendar. However like the new issues, the secondary market is pretty well dried up.

[mn54]

[QUOTE=Earl E Retyre;2169538]hmmm … their website says:
Eligibility

• Live or work in Washington State the Oregon community of Clackamas, Marion, Multnomah or Washington Counties.
• Have a family member who lives or works in Washington State the Oregon community of Clackamas, Marion, Multnomah or Washington Counties.
• Businesses who have a company located in or have more than half of its owners or employees live or work in Washington State, or the Oregon community of Clackamas, Marion, Multnomah or Washington Counties.

So, I do not think anyone can join.[/QUOTE

I said i have a family member who lives in washington.

[audreyh1]

Quote:

Originally Posted by John Galt III I was on the Vanguard website today around 3 PM and saw a 5 year new CD at 3.4 %, I think. But they are hiding the early termination info somewhere.

You won’t find any early termination options on a CD you buy through a brokerage. You have to sell the CD on the secondary market.

[John Galt III]

Quote:

Originally Posted by audreyh1 You won’t find any early termination options on a CD you buy through a brokerage. You have to sell the CD on the secondary market.

Ah, there's my problem. The Vanguard website page with the CD info didn't state that they were 'brokered', or I just missed it!

[audreyh1]

Quote:

Originally Posted by John Galt III Ah, there's my problem. The Vanguard website page with the CD info didn't state that they were 'brokered', or I just missed it!

By definition as you are buying through a brokerage. You can buy new issue CDs through some brokerages with no fees. But you are restricted to selling them (secondary market) if you can’t wait for them to mature.

[OldShooter]

10 basis points is $10/year pretax on $10,000. Just sayin'

[wolf]

Quote:

Originally Posted by Earl E Retyre OK, thanks for the link. After perusing the options, I decided to open CDs with Penfed. Ironically, I just transferred money out of Penfed into Vangaurd. But now that good rates are no longer available there, I am going to transfer back to Penfed. While the early withdrawal penalty is not the best, at least it is a known bank that I have been doing business with the past 5 years. Now I need to wait several days for the money to transfer back and hope the rates stay the same.

Penfed lost my CD business, when they made their EWP outrageous

However, if I were to open long term CD. I would have multiple small CD's.
Just in case I had to close early. ie. Instead of one 100K CD. Have 5, 20K
CD's.

[jazz4cash]

Quote:

Originally Posted by wolf Penfed lost my CD business, when they made their EWP outrageous However, if I were to open long term CD. I would have multiple small CD's. Just in case I had to close early. ie. Instead of one 100K CD. Have 5, 20K CD's.

Before splitting your CD purchase into several smaller pieces, check to see if partial withdrawals are permitted and verify that the penalty will only apply to the amount withdrawn early. In that case there is no reason to break the investment into smaller pieces. This is the policy at PenFed.

[John Galt III]

Quote:

Originally Posted by jazz4cash Before splitting your CD purchase into several smaller pieces, check to see if partial withdrawals are permitted and verify that the penalty will only apply to the amount withdrawn early. In that case there is no reason to break the investment into smaller pieces. This is the policy at PenFed.

Arrgggghhh! I just opened 11 cds at Penfed, and told the rep I was doing so, instead of one big cd, so I could minimize the penalty if I ever wanted to withdraw some of the total dollars invested. The rep said nothing about the 'only get penalized on the withdrawn amount' policy, and spent ten minutes setting up all eleven cds. I did not ask him specifically about partial withdrawals.

[almost there]

Agree with smaller CD's. No real % advantage with jumbos these days. Most places anyway...

[jazz4cash]

Quote:

Originally Posted by John Galt III Arrgggghhh! I just opened 11 cds at Penfed, and told the rep I was doing so, instead of one big cd, so I could minimize the penalty if I ever wanted to withdraw some of the total dollars invested. The rep said nothing about the 'only get penalized on the withdrawn amount' policy, and spent ten minutes setting up all eleven cds. I did not ask him specifically about partial withdrawals.

I was going to say give them a call to see if you could consolidate the CDs you just opened, but it's probably not worth it. I just looked at the disclosures for IRA and taxable CD's on their website and it is quite vague. That's not unusual. Their policy has changed several times over the years but the IRA withdrawal policies are not too bad at all. There is a lot of griping here about their withdrawal policies without specifying taxable vs. IRA. Due to vague wording in the CD disclosures at some of these credit unions, I have actually requested a statement in writing to confirm the withdrawal policy and filed the statement in case I need it.

Edit: I took a closer look at the Penfed CD disclosure document and partial withdrawals are NOT permitted from taxable CDs. I found the info in a section called "transaction limitations" and not in the "early withdrawal" section as I expected. OTOH, I think IRA CDs permit partial withdrawals penalty free if you are >59.5.

[John Galt III]

Quote:

Originally Posted by jazz4cash I was going to say give them a call to see if you could consolidate the CDs you just opened, but it's probably not worth it. I just looked at the disclosures for IRA and taxable CD's on their website and it is quite vague. That's not unusual. Their policy has changed several times over the years but the IRA withdrawal policies are not too bad at all. There is a lot of griping here about their withdrawal policies without specifying taxable vs. IRA. Due to vague wording in the CD disclosures at some of these credit unions, I have actually requested a statement in writing to confirm the withdrawal policy and filed the statement in case I need it. Edit: I took a closer look at the Penfed CD disclosure document and partial withdrawals are NOT permitted from taxable CDs. I found the info in a section called "transaction limitations" and not in the "early withdrawal" section as I expected. OTOH, I think IRA CDs permit partial withdrawals penalty free if you are >59.5.

Jazz4cash, Thanks for the update. I agree, too much vague wording out there.

[jazz4cash]

Too bad you missed the bottom

[wolf]

Quote:

Originally Posted by jazz4cash Before splitting your CD purchase into several smaller pieces, check to see if partial withdrawals are permitted and verify that the penalty will only apply to the amount withdrawn early. In that case there is no reason to break the investment into smaller pieces. This is the policy at PenFed.

Just read your "correction". If partial withdrawals were allowed on CD's,
then Penfed's EWP would be meaningless. ie. $100K 5yr CD. Interest rates go up. I partial withdrawal $ 99,000, and move my $ else where to get higher
paying CD. Leave $1K. in Penfed 5yr CD.

IRA CD's. Most allow partial withdrawals. RMD's etc. Just watch age requirements to avoid penalties.

[jazz4cash]

Quote:

Originally Posted by wolf Just read your "correction". If partial withdrawals were allowed on CD's, then Penfed's EWP would be meaningless. ie. $100K 5yr CD. Interest rates go up. I partial withdrawal $ 99,000, and move my $ else where to get higher paying CD. Leave $1K. in Penfed 5yr CD. IRA CD's. Most allow partial withdrawals. RMD's etc. Just watch age requirements to avoid penalties.

I may have made the whole thing more confusing with the original statement and correction.
I don’t follow your logic on the EWP being meaningless. Let’s say I have 100k CD and a 20k emergency arises. If partial withdrawals are permitted I could withdraw just enough to pay for the emergency and only pay a penalty on 20k. Checking the policy on partial withdrawals is just part of my routine before I invest. I was aware PenFed had raised EWP from when I originally checked their policy but didn’t realize partial withdrawals were not allowed.

[OAG]

Quote:

Originally Posted by John Galt III Arrgggghhh! I just opened 11 cds at Penfed, and told the rep I was doing so, instead of one big cd, so I could minimize the penalty if I ever wanted to withdraw some of the total dollars invested. The rep said nothing about the 'only get penalized on the withdrawn amount' policy, and spent ten minutes setting up all eleven cds. I did not ask him specifically about partial withdrawals.

That may be because they do not allow partial withdrawals of non IRA CD's.

[Brat]

Quote:

Originally Posted by Earl E Retyre hmmm … their website says: Eligibility Live or work in Washington State the Oregon community of Clackamas, Marion, Multnomah or Washington Counties. Have a family member who lives or works in Washington State the Oregon community of Clackamas, Marion, Multnomah or Washington Counties. Businesses who have a company located in or have more than half of its owners or employees live or work in Washington State, or the Oregon community of Clackamas, Marion, Multnomah or Washington Counties. So, I do not think anyone can join.

Years ago we purchased a car using Columbia CU. No problems. As I recall their rate beat FirstTech CU.

I think the new CU charter law requires some qualifying conditions but, golly, a lot of folks have a relative or a business relationship in WA or NW Oregon (Portland MSA).

[Brat]

Fidelity has an interesting CD ladder tool. I used it last week but didn't notice that the opening date of the CDs varied so it has taken longer than I expected to fund the CDs I selected. My solution to the off-ramp issue is to keep maturities short (which actually was where the best returns were found) and not select auto re-investment.

[brewer12345]

Staying short is a strategy I have been using. The other thing I have been doing is when one of my credit unions offers a CD with a decent rate that allows additional deposits in the future I open one with a small balance. That way if the option turns out to be attractive I have a marker down already if they decide to stop offering that particular product/rate. Navy has a couple of these types of CDs currently available.