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IRA CDs, Move or stay put?
Old 05-14-2006, 12:19 PM   #1
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IRA CDs, Move or stay put?

I've got these two annoying IRA CDs that I opened in the late 90s with a local bank in SoCal. They came up to maturity in April '06, and I accidentally let them renew without thinking about it much.

They're only about $2500 each, and they're only getting 2.45%, plus an annual fee of $25. They'll cost me $65 each to terminate early an move the funds elsewhere.

So my question is, do IRA CDs typically pay a lower rate than any other CDs? I have several other CDs (not IRAs) paying just under 5% right now, but when I check prices for IRA CDs, I see rates around what I am getting, 2.45%. What am I missing?
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Re: IRA CDs, Move or stay put?
Old 05-14-2006, 12:45 PM   #2
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Re: IRA CDs, Move or stay put?

Quote:
Originally Posted by ash
So my question is, do IRA CDs typically pay a lower rate than any other CDs? I have several other CDs (not IRAs) paying just under 5% right now, but when I check prices for IRA CDs, I see rates around what I am getting, 2.45%. What am I missing?
This is a marketing gimmic I have noticed recently at banks, credit unions and S&L's.* They post a set of current rates.* They also have "specials" advertised to attract business.* They often differentiate between the regular posted rates and the "special" rates by having small variations in maturity lengths, like 13 months instead of a year.

If you just let your CD roll over, of course they give you the much lower posted rate.* New money or rollover money from customers who are paying attention gets the "special" rate.*

Irks me because I have several CD's coming due during the time of year I'm generally traveling.* I'd like to let them just roll over but I'll have to find a way to contact the bank during the 10 day grace period to make sure I get the very competitive "special" rate.

Ash, consider moving your IRA's to a brokerage house instead of a bank. You can probably get lower or zero annual fees and will have more investment options, including CD's.
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Re: IRA CDs, Move or stay put?
Old 05-14-2006, 12:51 PM   #3
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Re: IRA CDs, Move or stay put?

ash,

You may want to check out Pentagon Federal Credit UNion* www.penfed.org.

Here are their current IRA CD rates:

IRA Certificate Rates
Term Rate APY
1-Year 4.80% 4.92%
2-Year 4.89% 5.01%
3-Year 5.83% 6.00%
4-Year 5.83% 6.00%
5-Year 5.83% 6.00%
7-Year 5.78% 5.95%

Anyone can join . If you don't have a military connection, check their website. For a one-time fee of $20 or so you can join the Military Family Org., or something like that, and that qualifies you to be a PenFed member for life.

omni

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Re: IRA CDs, Move or stay put?
Old 05-14-2006, 02:33 PM   #4
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Re: IRA CDs, Move or stay put?

I'll throw in a plug for a good CD broker I know (and which someone I know has an account with, and has been pleased with them).

www.fisn.com

The best rates are for callable CDs...usually with terms of up to 20 years, and usually callable after 6 months.

The fixed-term, non-callable CDs aren't as good as PenFed.com. However, if you're willing to try the callable route, it's a way to get some extra yield. Plus, if they do get called...you can always simply do another callable CD with a greater-than-prevailing market rate.

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Re: IRA CDs, Move or stay put?
Old 05-14-2006, 10:10 PM   #5
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Re: IRA CDs, Move or stay put?

Quote:
Originally Posted by omni550
ash,

You may want to check out Pentagon Federal Credit UNion www.penfed.org.

Here are their current IRA CD rates:

IRA Certificate Rates
Term Rate APY
1-Year 4.80% 4.92%
2-Year 4.89% 5.01%
3-Year 5.83% 6.00%
4-Year 5.83% 6.00%
5-Year 5.83% 6.00%
7-Year 5.78% 5.95%

Anyone can join . If you don't have a military connection, check their website. For a one-time fee of $20 or so you can join the Military Family Org., or something like that, and that qualifies you to be a PenFed member for life.

omni

Another feature from PFCU for their IRA CDs, they let you close your IRA CD early after your reach 59 1/2 with no early withdrawal penalty.
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