IRA CDs, Move or stay put?

[ash]

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?

 

[youbet]

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.

 

[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

 

[MooreBonds]

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.

 

[MJ]

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.