Best CD, MM Rates & Bank Special Deals Thread 2023 - Please post updates here

[ShokWaveRider]

I have always been of the opinion that once one purchases a CD of any duration, that it should be held to maturity. If one remotely suspects the one will need the money, then purchase an appropriate duration, so if held to maturity it does not derail one's plans. JMHO

 

[Car-Guy]

^^^^^
Absoultly, but I read something the other day that made me realize I wasn't sure how selling a brokered CD before maturity really worked. Just rounding out my understanding here on some of the finer points.

 

[PatrickA5]

Has anyone actually sold a brokered CD? Is it a hassle?

At least with a regular bank CD, I know up front what the penalty will be if I redeem early.

 

[audreyh1]

Has anyone actually sold a brokered CD? Is it a hassle?

At least with a regular bank CD, I know up front what the penalty will be if I redeem early.

Right. With a bank CD you know the penalty going in, and some banks it’s quite mild. Brokered CDs - unknowable.

Also bank CDs you can reinvest the interest.

So there are trade-offs.

 

[audreyh1]

So if I were to buy a 5yr 250k CD on the secondary market, that was only 3 years into it's 5 yr term, that would say it had accrued $37,500 in interest and that I would have to pay the original owner $287k for the CD? Less whatever I'd discount the original CD. Correct?

Of course I'd get all that back plus 2 more years of interest when it matured. Correct?

FWIW that CD will have paid interest annually at a minimum. So it would only be the current period accrued interest you would owe.

I’ve never done it and don’t intend to try, so I can’t speak from personal experience.

 

[Car-Guy]

FWIW that CD will have paid interest annually at a minimum. So it would only be the current period accrued interest you would owe.

I’ve never done it and don’t intend to try, so I can’t speak from personal experience.

That's true. Most seem to pay out at least annually. So in my scenario above it would be 250k + 12.5k, worse case. Makes sense.

And I never done it either, and don't plan on it.

 

[audreyh1]

I believe CDs must pay out accrued interest at least once within a 12 month period.

 

[Car-Guy]

You are probably right there too. I know I've seen a lot of CD's saying they pay at maturity but those were all probably a year or less maturities. I almost always select CD's that pay monthly but that's another story.

EDIT: I just checked on Schwab's website and that "seems" to be correct. Currently all CD's with a maturity over one year make interest payments monthly or semi-annually.

 

[audreyh1]

I have had several Ally CDs over 12 months that pay at maturity, however they always pay YTD accrued interest on Dec 31, then the remainder when they mature the following year.

 

[Dtail]

Has anyone actually sold a brokered CD? Is it a hassle?

At least with a regular bank CD, I know up front what the penalty will be if I redeem early.

I sold a brokered CD awhile back. I am fairly sure it included the accrued interest up to date.
I sold it with Fidelity on the phone, so no issues. Hopefully my memory is correct.

 

[Car-Guy]

I didn't think much about it at the time, but I bought a 13 mo brokered CD a while back. It paid out the first interest payment at 12mos and then the final payment 1 mo later when it matured. Interesting.

 

[jldavid47]

Has anyone actually sold a brokered CD? Is it a hassle?

At least with a regular bank CD, I know up front what the penalty will be if I redeem early.

I have done it. It wasn't a hassle but I got whacked on the bid/ask spread which brought my effective return down. I did get paid the accrued interest as I should have. If you really want to do better than a money market but want to keep things as liquid as possible, use 6-month Treasury Bills. Locking in for longer is an illusion if you really need to sell because your effective rate will not be what you think it is.

 

[explanade]

Does anyone keep any funds in Schwab MM funds? They seem to have a lot which are yielding over 5%, at least in a 7-day yield rate.

https://www.schwab.com/money-market-funds

My main interest in Schwab would be to transfer funds to their Investor Checking account periodically for expenses, particularly international withdrawals from their ATMs, where they rebate all ATM fees.

But also I could be interested in storing cash to pay monthly bills as well, if I could easily transfer every month and make bill payments via ACH.

My credit union savings only pays 2.75%, very conservative but probably safe.

I have an eTrade account and already see that they have 1% fees on FX transactions and probably going to introduce a lot of other fees. Already they've been pushing private wealth management services after the takeover by Morgan Stanley.

 

[ShokWaveRider]

Yes, we do. SNAXX and SWVXX.

 

[Car-Guy]

^^^^


+1, me too. Well, actually, I've had both. Just SWVXX now, since I used eveything I had in SNAXX to buy a bunch of CD's.

 

[ShokWaveRider]

I've had both. Just SWVXX now, since I used everything I had in SNAXX to buy a bunch of CD's.

I kept a little in SNAXX as once you have it you can add to it without the limit. I never let it go to zero.

 

[Car-Guy]

That's what I understand, now, but at the time I pulled it all out and bought CD's and kept the surplus in SWVXX. Since I don't let SWVXX get over 250k, which would be the same for SNAXX if I had kept it active, the difference isn't much.

 

[cxr133]

What happened to my interest? i had a CD with Fidelity that Matured on 11/10. Fidelity auto rolled me into another CD (Honolulu bank of Hawaii) at a higher interest rate but i dont see where the interest i earned on the prior CD went ? its not in my cash balance. it was 18K for the previous CD and 18K for the newly purchased CD. and i no longer see the previous CD in my account so its not like only the interest remained on the old CD

 

[ShokWaveRider]

What happened to my interest? i had a CD with Fidelity that Matured on 11/10. Fidelity auto rolled me into another CD (Honolulu bank of Hawaii) at a higher interest rate but i dont see where the interest i earned on the prior CD went ? its not in my cash balance. it was 18K for the previous CD and 18K for the newly purchased CD. and i no longer see the previous CD in my account so its not like only the interest remained on the old CD

It usually takes a few days to be deposited.

 

[pb4uski]

I've got around $500K sitting in VUSXX (5.3% state tax free). I'd like to move some/all of that into something that is longer term, even if slightly less earnings. My dilemma is we "might" buy a new house in the next year or three. By "might", we're probably talking about less than 20% chance - since we're so picky. Other than maybe buying a house, we don't need the money to spend.

Question: What's the best savings vehicle that would allow us to capture the current rates long term (5yrs), but would be the easiest and cost the least to cash out (if needed). We don't want to put this money into stocks.

If it is only a 20% chance then I would go with a bond ladder but make sure that the amount that you might want to withdraw for a new house are in US Treasuries since there are robust markets for Treasuries. Brokered CDs are nice but a more thinly traded so harder to get out of.

 

[erkevin]

What happened to my interest? i had a CD with Fidelity that Matured on 11/10. Fidelity auto rolled me into another CD (Honolulu bank of Hawaii) at a higher interest rate but i dont see where the interest i earned on the prior CD went ? its not in my cash balance. it was 18K for the previous CD and 18K for the newly purchased CD. and i no longer see the previous CD in my account so its not like only the interest remained on the old CD

Holiday delay, I would guess (plus, banks love to float money so that they profit from it)

 

[Car-Guy]

What happened to my interest? i had a CD with Fidelity that Matured on 11/10. Fidelity auto rolled me into another CD (Honolulu bank of Hawaii) at a higher interest rate but i dont see where the interest i earned on the prior CD went ? its not in my cash balance. it was 18K for the previous CD and 18K for the newly purchased CD. and i no longer see the previous CD in my account so its not like only the interest remained on the old CD

It usually takes a few days to be deposited.

Happens all the time on brokered CD's. I've got a bunch of CD's at Schwab and I'd estimate maybe 30% of them pay their interest payments late. Usually just a day or so.

Maybe I should charge them a late fee.

 

[explanade]

Yes, we do. SNAXX and SWVXX.

^^^^


+1, me too. Well, actually, I've had both. Just SWVXX now, since I used eveything I had in SNAXX to buy a bunch of CD's.

Do you find it easy to move funds in and out, like ATM withdrawals to a Schwab checking account?

 

[Car-Guy]

Do you find it easy to move funds in and out, like ATM withdrawals to a Schwab checking account?

A few mouse clicks. Super easy...

Buy or sell before the market closes for the day and it's processed overnight and ready for you the next morning when the market opens.

 

[BrianB]

Wells Fargo just dropped a (very large) boatload of CD's into the market.

1 to 5 year terms, non-callable, monthly pay with 20000+ quantities of each.

Yields are .05% (5 bp) higher than comparable non-callables listed on Fidelity.

Does this mean that they are desperate for money to loan out at higher rates?

Or are they expecting they will have to offer even higher CD rates in the future?

BrianB