Is this rate as good as it looks?

[KB]

I found a CD rate with Heritage Community Credit Union, which looks pretty good to me.  It's a relatively new branch near me.   www.heritageccu.com.  NCUA insured.

The deal is:  7.00% APY, 7 month term, $7000 minimum deposit. 

My other CDs are at 5 or 5.5% APY, so even though this is a shorter term is ithe rate as good as it looks to me?   Any thoughts?

 

[brewer12345]

The credit union itself looks solid from a credit perspective, ignoring the NCUA insurance. Plenty of equity, good loan quality, makes a little money. Just a small company.

I didn't look at the CD offer, so take a close look at the fine print. If it checks out, looks like a deal.

 

[Nords]

The deal is:  7.00% APY, 7 month term, $7000 minimum deposit. 
My other CDs are at 5 or 5.5% APY, so even though this is a shorter term is ithe rate as good as it looks to me?   Any thoughts?

"Anyone who lives, works, worships or goes to school in Sacramento or Placer Counties is eligible to join!"

Offer expires 27 June (tomorrow) July (in one month).  Offer good only on new deposits.  180-day early withdrawal penalty.

 

[KB]

Hmmm, I thought it said July 27. I'll doublecheck. I meet the criteria by living in Sacramento County.

Thanks for the feedback. It's only a 7 month CD with a 6 month penalty for early withdrawal. Kinda funny. I have some spare cash that I won't need until next year, so I'm going to go ahead.

 

[Nords]

Hmmm, I thought it said July 27.

Wups, you're right. I misread.

 

[justin]

Offer good only on new deposits.

Teaser rate to get new accounts/depositors. Good for those shopping rates, but not so good if you want to keep your money in the same place. You make a couple of bucks for shopping banks.

 

[Cut-Throat]

If their rates are not very competitive after the 7 month CD expires, it may not be worth the hassle of switching banks. And that is what they are counting on.

 

[justin]

If their rates are not very competitive after the 7 month CD expires, it may not be worth the hassle of switching banks. And that is what they are counting on.

My thoughts too. If you're moving $7000 to a CD there, and you get 7% instead of 5% everywhere else, you're only making an extra $82. Of course if you add enough zeroes to the principal, it can become a significant amount of money.

 

[cute fuzzy bunny]

Theres probably also an 'auto reinvestment' of the cd that ends up getting a poor rate. Most of the cd's i've bought automatically reinvested in 'similar time period' cd's unless you told the bank not to do it well in advance.

 

[KB]

If the bank wasn't really close to my house, I wouldn't even think of it.  I don't mind having CDs in multiple locations as long as they are only a few miles from home.  It's in the same shopping location as Sam's club, so I'm there regularly anyway.

I usually go into the branch a week or two before a CD expires and set up the withdrawal.  I'll just put the money back into my MM when it expires. 

I have 20K in another CU that just opened in January.  Maybe they'll get into an interest battle....
Lots of growth in my town these days.