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Navy FCU 3YR or 5 YR ?
Old 08-14-2015, 10:35 AM   #1
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Navy FCU 3YR or 5 YR ?

Part of my funding for my initial RE years is a CD ladder. Mostly have been with PENFED, but on a tip from this board, I opened a 12 month 3% with Navy FCU. So time to open a new CD and also time to renew one just matured. Penfed is low, 5 year CD is 1.5% and Navy has 1.95% for 5 year.
My ladder is made up of all 5 year CDs but looking at Navy, I can get 3 year at 1.5% so I'm thinking that if I go with 3 year, I can renew at a higher rate, if rates rise in next year or 2.

Summary:
1 year .85%
2 year 1.25%
3 year 1.5%
5 year 1.95%
Don't need $$ for 6 or 7 years
Which is your choice ?
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Old 08-14-2015, 11:27 AM   #2
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If you need the money in 6 years or so, I would go with the 3 year and renew at 3....


The other question is how much are you investing... if it is small... then 45 bp is not a lot of money.... but if it is a chunk of change it really is...

Then, the 5 year might be better and live with the early penalty after 3 if you want out.... BTW, what would the rate be on a 5 if you took it out after 3 Might be better than the straight 3.... I did not do the math....
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Old 08-14-2015, 11:43 AM   #3
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Thanks Texas - I hadn't thought of option to break out early if rates go up. I'm doing $5-6K CDs, new one every 6 months. Hrmmm just did quick table in excel, looks like difference is little more than $100 after 5 years, so think I'll stick with the 3 yr and hope rates go up so renewal will be like 12%
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Old 08-14-2015, 01:46 PM   #4
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I'm going to be looking for a replacement for my NFCU 12 month CD that I started last September. Remember that 5% CD? That's going to be impossible to replace but it's only $5K.
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Old 08-14-2015, 02:02 PM   #5
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Originally Posted by RetireBy90 View Post
Thanks Texas - I hadn't thought of option to break out early if rates go up. I'm doing $5-6K CDs, new one every 6 months. Hrmmm just did quick table in excel, looks like difference is little more than $100 after 5 years, so think I'll stick with the 3 yr and hope rates go up so renewal will be like 12%

Just did a quick calc.... say you go three years... and I am doing simple interest here.... invest $1K....

If you invest at 3 years you get $45...

If you invest at 5 year and break at 3 year with 6 month penalty you get $48.75... without penalty you are at $58.50....

I would go the 5 and break if the rates go up enough to matter....
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Old 08-14-2015, 02:05 PM   #6
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+1 go with 1.95% and break it if you decide to.
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Old 08-14-2015, 03:29 PM   #7
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Per www.depositaccounts.com, Capital One 360 is offering 5 year CD's at 2.25 percent with no minimum. I would take that over NFCU's 1.95 percent.
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