Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Re: PFCU CD Alert
Old 01-09-2005, 06:32 PM   #41
 
Posts: n/a
Re: PFCU CD Alert

At one time I had a ton of money borrowed on my credit cards at -0- % which was earning 3% FDIC insured.
As the teaser rates ran out, I paid off the cards.
Made a lot of money doing this, but eventually the -0-%
offers disappeared. Now, they are flowing in again and so
I am shopping extra hard for that extra .5 per cent.
Got to stay liquid though. No CDs.

JG
__________________
  Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: PFCU CD Alert
Old 01-10-2005, 07:27 AM   #42
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Re: PFCU CD Alert

Quote:
I feel the same way, so I have not committed to any CD more than 1 year in duration.
For what it's worth, all banks forecast interest rates and base their rates on what they think the future will hold. *I think it was during the Clinton years that short-term rates were higher than long-term rates at some banks.

If the bank is willing to lock in their interest expense at 5.25% for 5 year CDs, they are probably forecasting interest rates to go to 7% or higher in the next 5 years for similar instruments. *They will have a ton of cash at a 5.25% expense while other banks may have to dish out a higher expense.
Sometimes CD rates are motivated by something other than rate forecasts. Upon occasion, banks will jump on CD rates in order to get suffcient money locked in at fixed rates. They need to do some risk management so that they don't get killed if rates spike, and therefore they are willing to take some negative spread on some money if it helps them hedge against a potentially disastrous situation. If they go to the capital markets, they could probably buy a cap or other derivative to help them hedge, but it would cost them. So sometimes it is cheaper and easier (not to mention better for your retail franchise) to just boost CD rates for a specail like this one.
__________________

__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Re: PFCU CD Alert
Old 01-11-2005, 08:02 PM   #43
 
Posts: n/a
Re: PFCU CD Alert

This deal looks too good to pass up. Would I be making a mistake by investing more than $100K with them? Is the risk significant?

__________________
  Reply With Quote
Re: PFCU CD Alert
Old 01-11-2005, 08:26 PM   #44
Thinks s/he gets paid by the post
wabmester's Avatar
 
Join Date: Dec 2003
Posts: 4,459
Re: PFCU CD Alert

Quote:
Would I be making a mistake by investing more than $100K with them? *Is the risk significant?
Who can say? What's the probability of them going under in the next 5 years (or whatever your term is)? Given the high rates they pay out, and the low loan rates they take in, I'd say the risk is higher than with most CU's, but still small.
__________________
wabmester is offline   Reply With Quote
Re: PFCU CD Alert
Old 01-11-2005, 09:26 PM   #45
Thinks s/he gets paid by the post
 
Join Date: Mar 2004
Posts: 2,083
Re: PFCU CD Alert

I already have almost 97k in 5.25% CDs from last March. As much as I would love to, I just don't feel comfortable enough to expose myself beyond the insured 100k.
I am now going to open 7 year 5.5% IRA CDs from transfered funds. I will be able to withdraw part or all of the IRA CD in about 2 1/2 years when I reach 59 1/2 with no PFCU early penalty withdrawal.

I'll have nearly 200k of insured money in PFCU earning 5.5% for at least 2 1/2 years & 5.25% for 4 years.

MJ
__________________
I look to the present moment because that's where I live my life.
MJ is offline   Reply With Quote
Re: PFCU CD Alert
Old 01-12-2005, 05:52 AM   #46
 
Posts: n/a
Re: PFCU CD Alert

Hi MJ. I have gone over the 100K FDIC limit several
times. Not sure where my "chicken out" point is located.

I have only one CD right now (opened yesterday).
9 months @ 2.75%. All of my directly owned bonds
(which replaced my CDs)
are callable within 5 years, some have interest
escalators at some point. Current interest rates
range from 5% to 7.375%, with maturities out to 25
years. Ratings from AAA to BBB+.
I would not be so strong in this area if I was not close to SS and did not have some inflation protection elsewhere.

JG
__________________
  Reply With Quote
Re: PFCU CD Alert
Old 01-12-2005, 11:42 AM   #47
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Re: PFCU CD Alert

Quote:
This deal looks too good to pass up. *Would I be making a mistake by investing more than $100K with them? *Is the risk significant?
That is for you to determine. I took a close look at Pen Fed's financials and they look pretty solid to me. If they were public and reasonably valued, I would be very, very interested. However, you would really have to decide for yourself.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Re: PFCU CD Alert
Old 01-12-2005, 02:42 PM   #48
 
Posts: n/a
Re: PFCU CD Alert

I was attracted to the 5.25% rate from PFCU so I opened an account. But before I transferred money to fund the CD I checked with my own credit union (USA Federal Credit Union) and found that I could get a 5 year CD at 4.70% with a "step up" option. Per USA Federal Credit Union, "you can convert your certificate to a better rate should interest rates rise over the duration of the certificate. This step-up option is available to Regular, Jumbo, and IRA Share Certificates of 36 months or greater." I'm thinking that if interest rates are likely to climb, it might be better to accept the somewhat lower APR now if I can "bump" it up later at a higher rater. Any thoughts?
__________________
  Reply With Quote
Re: PFCU CD Alert
Old 01-12-2005, 02:55 PM   #49
 
Posts: n/a
Re: PFCU CD Alert

Quote:
I'm thinking that if interest rates are likely to climb, it might be better to accept the somewhat lower APR now if I can "bump" it up later at a higher rater. Any thoughts?
Yeah, this seems like a better deal. Myself, I'm leaning more towards a short/intermediate bond Index fund. I won't have to deal with Banks (which I hate! - This was reinforced this week with my bad experience with U.S. Bank and Pen Fed) and I'll be more liquid.
__________________
  Reply With Quote
Re: PFCU CD Alert
Old 01-12-2005, 07:03 PM   #50
Thinks s/he gets paid by the post
retire@40's Avatar
 
Join Date: Feb 2004
Posts: 2,670
Re: PFCU CD Alert

I just looked at the 2003 financial statements too and I'm impressed with their performance. *The next step would be to compare them to their peers to see how they compare. *It will be interesting to see how the 2004 financial look when they are done.
__________________
No man is free who is not master of himself. --- Epictetus
Enjoy Yourself (It's Later Than You Think). --- Guy Lombardo
retire@40 is offline   Reply With Quote
Re: PFCU CD Alert
Old 01-12-2005, 07:10 PM   #51
Thinks s/he gets paid by the post
Spanky's Avatar
 
Join Date: Dec 2004
Location: Minneapolis
Posts: 4,046
Re: PFCU CD Alert

I intend to stay with Vangaurd Intermediate Treasury Bond Fund instead of buying CDs.

Spanky
__________________
May we live in peace and harmony and be free from all human sufferings.
Spanky is offline   Reply With Quote
Re: PFCU CD Alert
Old 01-13-2005, 05:02 AM   #52
 
Posts: n/a
Re: PFCU CD Alert

Quote:
I intend to stay with Vangaurd Intermediate Treasury Bond Fund instead of buying CDs.

Spanky
That's the route I'm headed. I'm looking at the Intermediate Bond Index Fund which does hold a lot of Treasuries.
__________________
  Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Emergency Alert Services yakers Other topics 2 09-18-2006 09:11 PM
PFCU Alert MJ FIRE and Money 2 04-27-2006 05:57 PM
Best CD Rates, PFCU Just Changed Theirs!!! ShokWaveRider FIRE and Money 15 07-02-2005 03:24 PM
PFCU Update 04/01/05 MJ FIRE and Money 14 04-03-2005 03:16 PM
PFCU IRA  & Early Withdrawal Penalty MJ FIRE and Money 10 01-11-2005 04:29 PM

 

 
All times are GMT -6. The time now is 04:00 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.