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Good sources for CDs?
Old 12-14-2015, 11:52 AM   #1
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Good sources for CDs?

Hi..does anyone have good sources for CDs? I'm looking to get at least 2.5% and none of the banks listed at BankRate.com are there yet - highest is 2.25% for a 5-year jumbo.

I'm hoping that when the Fed raises rates this week (which seems to be a virtual certainty) that rates will get up to at least 2.5% on 5-year jumbos. (What do you all think? Is that possible or even likely if they raise rates a quarter point?)

I'd love to learn more about buying CDs from a broker. I did some searches on ScottTrade and see a bunch of CDs being offered in the secondary markets, but NO IDEA what to evaluate or how to determine if any of them are good. Many had "coupons" > 2.5% but Yield to Worst or Yield to Maturity of less than that, which I didn't follow as I would assume the "coupon" rate would always be what you'd receive in interest payments unless you were to sell prior to maturity.

If anyone knows any good FAQs or other info I can read on how to evaluate secondary market CDs, I'd definitely appreciate any / all leads..

Thanks!

- RS
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Old 12-14-2015, 12:05 PM   #2
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Be sure to check out what CD rates credit unions are offering.
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Old 12-14-2015, 12:23 PM   #3
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I learned a bit about brokered CD's here on the forum and became much more comfortable after going through the Brokered CD Tutorial on Fido's website. I have not purchased any and they seem to be similar to what's available from GE Capital Bank, Ally, Sychrony and several others.(e.g. >2% @ 5 yrs.)

Navy Federal Credit has a deal right now and Penfed sometimes offers deals around year end.

NFCU 20 and 30 Month CDs
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Old 12-14-2015, 12:41 PM   #4
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I just read that brokered CDs "cannot be redeemed with the issuer". Is that just PRIOR to maturity?

I'd assume that you can always redeem a brokered CD with the issuer at maturity?
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Old 12-14-2015, 12:52 PM   #5
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I just re-read the brokered CD info on Fido website and it implies that issuers may not want to deal with individuals hence the strategy to employ brokers. I would say the answer to your question may depend on the specific issuer/broker/instrument.


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Old 12-14-2015, 12:58 PM   #6
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TD Ameritrade sent me an offer that is good until 12/15/15. Fixed Rate Primary CD offering. The issuer is Goldman Sachs Bank NY. Non callable 2.5%, maturity 6/20/2022. Non Callable, FDIC insured. Also mentions a Survivor's Option. Here's the phone 800-934-4445 for the Fixed Income Specialist. Hope this helps.
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Old 12-14-2015, 01:13 PM   #7
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I am using target maturity corporate bond funds as a CD substitute since I intend to hold to maturity/terminal distribution.

BSCK - Exchange Traded Funds | Guggenheim Investments - Investment Management for Financial Professionals currently yielding 2.50% based on trading price

https://www.ishares.com/us/products/...orate-term-etf currently yielding 2.45% based on trading price

Similar to a brokered CD but with no FDIC insurance so some credit risk but diversified. I like them because I can keep my accounts consolidated at Vanguard and not have numerous bank accounts with CDs.
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Old 12-14-2015, 01:22 PM   #8
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Quote:
Originally Posted by RetireSoon View Post
I just read that brokered CDs "cannot be redeemed with the issuer". Is that just PRIOR to maturity?

I'd assume that you can always redeem a brokered CD with the issuer at maturity?
Brokered CDs can be sold but on the secondary market, you may get more or less than what you invested. You don't really deal with the issuer, it's similar to buying a stock or bond. When it matures you get the money back. You will get a disclosure agreement from the broker. Here's a link to Schwabs disclosure

CD Disclosure
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