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Old 01-17-2011, 11:59 AM   #21
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Originally Posted by obgyn65 View Post
I buy all my CDs with Edward Jones. I am pleased with their services but their CD rates are not great.
Are you pleased with their expenses?

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Old 01-17-2011, 12:46 PM   #22
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Originally Posted by jayc View Post
I also have CD's at Schwab. When I asked a broker/rep about the market price of these CD's listed on my monthly statement, they would never commit that I could actually ever get that price. i.e 10K face value CD with a market price of 10,600. Is it also plus accrued interest minus the specific penalty at that bank.

Has anyone here ever sold a CD at Schwab in the secondary market?
That's true jayc. The price is calculated by the usual bond price formula and varies with interest rates. Whether you can actually get that estimated price, just like selling a bond, depends on whether the market will actually pay it when you put it up for sale.

The Schwab reps were correct to not commit that you could actually get the value calculated on your statement. Until someone actually gives you that amount for it, it's all an estimate. But I'd think it would be close. Right now, while CD's you've held for a while typically have much higher interest rates than new issues, it's a nice advantage to have brokered CD's and collect capital gains when selling instead of penalities. Of course, if interest rates were up vs the rates in place when you bought the CD's you'd take a loss unless you held to maturity.

It seems very much like these brokered CD's are similar to insured bonds. I like brokered CD's if I think interest rates are headed down and bank/CU issued CD's if I think rates are headed up. 2 - 3 years ago I was going with brokered CD's. Right now we're buying them at our CU and keeping maturities short.

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Old 01-17-2011, 03:53 PM   #23
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The word that comes to mind is "pathetic"!

Until the Fed is done manipulating rates... this is it. It sounds like they intend to continue the manipulation till summer. But it could end sooner!

New Fed members could end quantitative easing | Marketplace From American Public Media
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Old 01-17-2011, 04:05 PM   #24
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We read an article that suggested you are better off getting longer term CD's when the interest rates are low and then redeeming them when interest rates go up than getting shorter term CD's or waiting until the interest rate rise. The new interest would pay the 6 month penalty that most banks/CUs impose for early withdrawal. With the rates as low as they are now for a 5 year CD it won't take much of an increase to make it worth cashing in and getting a new CD with the better rate.

It sounds like it would be harder to take this approach with brokerage CD's.

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