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Old 10-01-2007, 08:21 PM   #21
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i'd love to snag a 6.0 cd..that's awesome. my firecalc comes out right if i earn only 6.25% over 20 yrs....soo....this could get me darn close!! i think i'll wait til january and see what happends...hopefully 6.25 - i'd be all over it
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Old 10-01-2007, 09:07 PM   #22
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It is not reasonable to expect to earn 6.25% (risk free) over a 20 year horizon unless inflation kicks in in which case, your net real return is not any better.
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Old 10-01-2007, 09:32 PM   #23
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I say bring back the 15%+, thirty year T-bonds!!

Without the corresponding hyperinflation of course.

Subsequent Fed chairmen have not been fit to tie Paul Volker's shoelaces!!
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Old 10-02-2007, 05:37 PM   #24
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Hmm, I have some 4.99% lifetime balance transfer checks. Can I use one of those to buy a PenFed CD?

Also, what happens to my balance transfer fee with Chase Amazon? Does it sit there and fester at the cash advance rate until you pay the transfer balance off, or is the fee also at 4.99%?
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Old 10-02-2007, 05:58 PM   #25
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I say bring back the 15%+, thirty year T-bonds!!

Without the corresponding hyperinflation of course.

Subsequent Fed chairmen have not been fit to tie Paul Volker's shoelaces!!
Or Paul Volcker's either. [IMG]file:///C:/DOCUME%7E1/ONENAM%7E1/LOCALS%7E1/Temp/moz-screenshot.jpg[/IMG]
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Old 10-02-2007, 06:06 PM   #26
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Hmm, I have some 4.99% lifetime balance transfer checks. Can I use one of those to buy a PenFed CD?
I was just chortling over the fact that when clearing a check (or 'draft') is involved, usually we consumers end up on the wrong end of the 'float', but in this one instance, since Pen Fed is such an excellent institution, the moment I 'bought' the MMC (CD), they credited my account. Right then. That was the 27th and will be when the CD began earning interest. The ACH to actually take the money from my checking did not execute until 1 Oct., so I gained six days free interest on 10K at 6.0% (I think it's about ten bucks?)

Little things like this are what engender loyalty to an institution --so, in my case, they now have a growing chunk of my cash AA portion -- good for them and good for me, a true win-win!
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Old 10-02-2007, 09:22 PM   #27
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A couple of months ago, Penfed eliminated the provision that members over 59 1/2 years old could take distributions from their IRA certificates, without penalty. Certificates issued before the change are grandfatherd for one withdrawl/flip.

The "no penalty" provision made the Penfed CD's a no-lose deal. If rates stay the same or go down, congratulate yourself on being so brilliant. If rates go up, just flip the certificate into one at the new higher rate.

AFAIK, no other institution offers that provision at this time. Did I miss something?
...
Looking at the IRA page on their website, the fine print again (or still) says that you can take withdrawls without penalty, if you are over 59 1/2. Has anyone checked to see if that's really true, or did they forget to remove that wording a few months ago?
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Old 10-02-2007, 09:41 PM   #28
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Thanks all for posting your replies. After I posted my message, I decided to call them. It was around 9 pm pacific time. So I wasn't sure they would answer. But I got a live person on the phone! I guess when the majority of their members are in the service all over the world, they are accessible 24/7.
Quite nice. Any way she said inactive means no contact with the institution. she said a phone call or probably a click of the mouse is contact. So coupled with that & your responses I just finished joining and buying 3 certificates with different time frames. I wasn't intending to get 3 certificates but max was 25,000 each time. So I decided to go with the different time frames.
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Old 10-02-2007, 10:14 PM   #29
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Diversify by purchasing for different terms or at different times. My CD rates always go up shortly after I purchase, and go down just before maturity.
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Old 10-03-2007, 06:25 AM   #30
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Look closely at the on-line system. You can move interest from CD's monthly to another account - and you can switch back and forth. For instance I recently changed all PENFED CD's paying less than 6% to have the interest put in a PENFED MMA. Then sometime later this month I will purchase a new 6% CD for 7 years using that interest. When they drop the rate I will go back and change the interest option to pay back into the respective CD's. Building a CD ladder takes time but is worth the effort. You can spread the redemptions over a 7 year period (at PENFED) and coupled with a MMA can just wait for a good rate to purchase new CD's.
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Old 10-03-2007, 09:14 AM   #31
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Originally Posted by R Wood View Post
...
Building a CD ladder takes time but is worth the effort. You can spread the redemptions over a 7 year period (at PENFED) and coupled with a MMA can just wait for a good rate to purchase new CD's.
My understanding is that there are two advantages to laddering your CD's (or other similar investments):
1. You avoid locking in money at what may turn out to be a too-low rate,
and
2. You have CD's maturing at regular intervals to provide income, if needed.
If the "take it out any time when you're over 59 1/2" policy is still in effect at Penfed, that would seem to eliminate any advantage to laddering. You can roll the existing CD into a new one at any time if the rates go up, and you can take out money at any time if needed for expenses.
What did I miss?
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Old 10-03-2007, 10:02 AM   #32
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IMO you are a bit confused about the policy at PENFED (regarding a forfeiture of interest penalty) versus the IRA less than age 59.5 10% penalty for WITHDRAWALS of IRA funds. PENFED allows you to prematurely redeem IRA CD's and then immediately reinvest the funds in another IRA CD (at a higher rate) and reseting the timeframe. In the past it was not limited; now the new policy allows a single instance for each CD involved. If you withdraw funds below age 59.5 from an IRA CD and DO NOT reinvest the funds in another investment within 60 days the IRS penalty will generally apply (there are several exceptions to the general rule) AND PENFED may impose a forfeit of interest penalty.

My comment applied (at least I meant it to) to REGULAR non-IRA CD's at MATURITY. Of course you could also apply it to IRA CD's as you could put the funds in the PENFED IRA Share account to await a better rate; but the IRA share account interest rates are not very high; which sort of negates that tactic.

In any event it would be a good idea to discuss these and other policies with someone at PENFED as policies, like the weather, change over time.
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Old 10-03-2007, 10:40 AM   #33
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I understand the difference between IRA early withdrawal penalties as imposed by Penfed and by the IRS; I should have mentioned that because I'm over 59 1/2, only the Penfed penalty would apply to me.

In the past, Penfed seemed to allow an unlimited number of partial or total certificate withdrawals, with no Penfed penalty, for us old folk. A few months ago they changed that so new certificates had some Penfed penalty for any early withdrawal, old certificates were grandfathered for only one no-penalty withdrawal.

Now, the latest fine print on their IRA certificate page is back to the original wording- no penalty for early withdrawals if you're over 59 1/2. Or did they forget to remove it when they changed their policy a few months ago? So, I'm just wondering if anyone has taken the trouble to examine the pages of fine print in the actual certificate documents. A phone call might be useful, but it's the documents that govern the terms.
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Old 10-03-2007, 12:56 PM   #34
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Just a note in passing. I just called Pen Fed, the lady was very nice. I have money in my Vanguard account that I would like to transfer to Ped Fed and purchase a 3yr CD @ 6%.....

1. the lady basically says that I'm gambling that the rate holds for a while. She says it can take 3 weeks to complete this type of transaction an she has no idea when this rate will end. If the rate ends in 2 weeks, I'm out of luck.

2. Because I'm dealing with an IRA CD-type of certificate, I would be insured up to $250K, not $100K

anyone else had dealings between Vanguard and Pen Fed? e.g. how long did it take?
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Old 10-03-2007, 01:01 PM   #35
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You need to clarify "this type of transaction." If you simply do an EFT between Vanguard and PenFed, it only takes a few days and PenFed will credit you immediately.

But it sounds like you're basically opening a new IRA at PenFed and transferring assets from Vanguard. That could take considerably longer.

In any case, PenFed says this rate is good til Oct 31, and I don't think I've ever seen them retract such an offer early.
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Old 10-03-2007, 01:13 PM   #36
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that may be true, but the lady I just talked to would not commit to Oct 31st.
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Old 10-03-2007, 01:59 PM   #37
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I understand the difference between IRA early withdrawal penalties as imposed by Penfed and by the IRS; I should have mentioned that because I'm over 59 1/2, only the Penfed penalty would apply to me.

In the past, Penfed seemed to allow an unlimited number of partial or total certificate withdrawals, with no Penfed penalty, for us old folk. A few months ago they changed that so new certificates had some Penfed penalty for any early withdrawal, old certificates were grandfathered for only one no-penalty withdrawal.

Now, the latest fine print on their IRA certificate page is back to the original wording- no penalty for early withdrawals if you're over 59 1/2. Or did they forget to remove it when they changed their policy a few months ago? So, I'm just wondering if anyone has taken the trouble to examine the pages of fine print in the actual certificate documents. A phone call might be useful, but it's the documents that govern the terms.
You are correct regarding the wording. I am reading from the back of my latest certificate. Paragraph h sub 4 Exceptions sub c states, in part, "For IRA Certificates only: If the owner has reached 59 1/2 or". Seems the door is wide open to redeem IRA CD's early then get a new one at a higher rate. In the current interest rate environment it may be a mute point but who knows? The date of this form is 11/06 which predates the notice to the contrary so I guess the administration has not kept up with the policy change.
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Old 10-03-2007, 04:04 PM   #38
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I'm gambling that the rate holds for a while. ... she has no idea when this rate will end. If the rate ends in 2 weeks, I'm out of luck
Bankdeals.com also cautions that the rate may not hold for long: "these CD rates will likely not last the entire month as the rate table may lead you to believe."
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Old 10-03-2007, 10:48 PM   #39
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Just a note in passing. I just called Pen Fed, the lady was very nice. I have money in my Vanguard account that I would like to transfer to Ped Fed and purchase a 3yr CD @ 6%.....

1. the lady basically says that I'm gambling that the rate holds for a while. She says it can take 3 weeks to complete this type of transaction an she has no idea when this rate will end. If the rate ends in 2 weeks, I'm out of luck.

2. Because I'm dealing with an IRA CD-type of certificate, I would be insured up to $250K, not $100K

anyone else had dealings between Vanguard and Pen Fed? e.g. how long did it take?
I did something similar going from Fidelity to Penfed last jan. It was a bit lengthy and drawn out, but it was not more than ten days. The IRA provisions add complication. Penfed is very accommodating.........they basically let me "lock-in" the rate even before the xfer was completed. I think they just gave you the boiler plate over the phone. Just a few years ago, I did something similar and Vanguard mailed me a check (overnight for a fee) payable to the new IRA Custodian, but Fido wouldn't do it that way last Jan.
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Old 10-09-2007, 05:21 PM   #40
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note: the website no longer states the rates will continue through the end of the month, but does state "for a limited time only!"
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