Best CD, MM Rates & Bank Special Deals Thread 2020 - Please post updates here

[F.I.R.E User]

I guess I will stay on the VIO Bank bandwagon for now LOL.

 

[gcgang]

Ok all you CD ladderers.

I’ve used my IRA as fixed income, primarily 5 year laddering CDs. They are maturing and the rates my online broker offers range from 0.05% 0-1 year, up to 0.40% for 5 years.

Should I stick with the strategy, going 3-5 years to pick up a measly 35 basis points, or put in in insured 3month CD vs keep in brokerage cash, or totally abandon my strategy and take more risk?

I’m not interested in splitting the IRa into multiple accounts by transferring part of it to another custodian, especially if the yield pickup would only be a percent or so.

 

[Dtail]

Ok all you CD ladderers.

I’ve used my IRA as fixed income, primarily 5 year laddering CDs. They are maturing and the rates my online broker offers range from 0.05% 0-1 year, up to 0.40% for 5 years.

Should I stick with the strategy, going 3-5 years to pick up a measly 35 basis points, or put in in insured 3month CD vs keep in brokerage cash, or totally abandon my strategy and take more risk?

I’m not interested in splitting the IRa into multiple accounts by transferring part of it to another custodian, especially if the yield pickup would only be a percent or so.

For my parents, I substituted a MYGA for their one portion of the Cd ladder which came due this year. The main negative risk of more severe early withdrawal penalties and credit risk (AA) is minimal.

 

[RunningBum]

Ok all you CD ladderers.

I’ve used my IRA as fixed income, primarily 5 year laddering CDs. They are maturing and the rates my online broker offers range from 0.05% 0-1 year, up to 0.40% for 5 years.

Should I stick with the strategy, going 3-5 years to pick up a measly 35 basis points, or put in in insured 3month CD vs keep in brokerage cash, or totally abandon my strategy and take more risk?

I’m not interested in splitting the IRa into multiple accounts by transferring part of it to another custodian, especially if the yield pickup would only be a percent or so.

I can't see tying up any money in CDs at such low rates. What kind of rate can you get with a money market or savings account? How about a short term bond fund, or TIPs?

I guess CDs aren't that bad as long as you can get out of them if rates start to rise. Forfeiting some interest is trivial at these rates.

 

[gcgang]

For my parents, I substituted a MYGA for their one portion of the Cd ladder which came due this year. The main negative risk of more severe early withdrawal penalties and credit risk (AA) is minimal.

What is a MYGA?

 

[pb4uski]

Multi-Year Guaranteed Annuity.... similar to a CD but issued by an insurance company so no FDIC insurance and surrender charges rather than early withdrawal penalties.

 

[Dtail]

What is a MYGA?

It is a multi year guaranteed annuity. See the below link and we can discuss more.

https://www.blueprintincome.com/fix...Bh1TuwgFEAAYAiAAEgLrpfD_BwE&amBestRating=A%2B

 

[Gotadimple]

Hi-Yield Savings Accounts at Internet Banks offer higher rates than CDs at the same banks. B&M banks offer Money Market Accounts (which are NOT funds) at higher interest rates than their savings accounts - again CD rates are below the Money Market Account.

In some cases (YMMV), High Yield Savings Accounts are better than short-term bond funds. Both yields can change - so plan carefully.

 

[gcgang]

It is a multi year guaranteed annuity. See the below link and we can discuss more.

https://www.blueprintincome.com/fix...Bh1TuwgFEAAYAiAAEgLrpfD_BwE&amBestRating=A%2B

Nice link. Thanks, but no thanks. 1-2% more than nothing not worth the risk, illiquidity and hassle to me.

Just did a Roth conversion. I doubt I’ll ever touch that money, so maybe I’ll invest it like my 20 year old daughter, the eventual beneficiary, should.

As other CDs mature, maybe some less stock correlated stuff like gold, REITs, EM debt...nah, probably end up w short term CDs at 0.01%.

 

[pb4uski]

^^^ You might want to consider preferred stocks. See https://www.early-retirement.org/fo...ood-the-bad-and-the-in-between-77428-137.html

Over the past couple years I put together a small (~13% of my portfolio) mostly investment grade preferred stock portfolio that yields almost 6%... familiar names... Bank of America, Mellon Bank, Duke Energy, Hartford, J.P. Morgan Chase, MetLife, PG&E, Wells Fargo and some others.

 

[Chuckanut]

I checked out the MYGA site. Nothing available in my state. I even lowered quality to B+ and tried different terms. Nothing.

 

[jazz4cash]

I checked out the MYGA site. Nothing available in my state. I even lowered quality to B+ and tried different terms. Nothing.

Which site did you try? Hard to imagine you live in a state that does not offer these products. The sites I know of include Blueprint Income, immediateannuities.com, Stan The Annuity Man. Fidelity and Vanguard also offer MYGA products. Another one is Gainbridge (which is a direct distribution product from Guggenheim)

 

[cbo111]

Depressing Capital One rates

Wow, I just had a $60K CD mature that was earning 4%. I browsed the current rates and found their 5-year CD is now paying .4%!
These are truly "coffee can/under the mattress" equivalent rates. I noticed their MM rate is currently also .4%. I really don't feel comfortable moving it to equities. What to do?

 

[Dash man]

Wow, I just had a $60K CD mature that was earning 4%. I browsed the current rates and found their 5-year CD is now paying .4%!

These are truly "coffee can/under the mattress" equivalent rates. I noticed their MM rate is currently also .4%. I really don't feel comfortable moving it to equities. What to do?

Ally Bank and Synchrony Bank each have Savings accounts at 0.6%. That’s about the best you can do and be FDIC insured.

 

[RunningBum]

Wow, I just had a $60K CD mature that was earning 4%. I browsed the current rates and found their 5-year CD is now paying .4%!
These are truly "coffee can/under the mattress" equivalent rates. I noticed their MM rate is currently also .4%. I really don't feel comfortable moving it to equities. What to do?

Congratulate yourself for locking in that favorable rate for the last 5 years, then deal with the reality of lower rates today. Assuming your goal for cash was to reduce volatility and have cash available, I wouldn't take on more risk trying for a higher return. I also wouldn't lock into a low rate for a long time unless it's really cheap to break the commitment.

Maybe you can find a transfer bonus somewhere to help a little with your return.

 

[pb4uski]

Wow, I just had a $60K CD mature that was earning 4%. I browsed the current rates and found their 5-year CD is now paying .4%!
These are truly "coffee can/under the mattress" equivalent rates. I noticed their MM rate is currently also .4%. I really don't feel comfortable moving it to equities. What to do?

How much risk are you willing to take?

As someone mentioned, online savings accounts are now paying ~0.6%. They are 100% FDIC insured so not credit risk and no interest rate risk and outstanding liquidity. Bad thing is that they could go lower over time, even lower than that 0.4% CD.

If you qualify to join Navy Federal, their 12 month CD is ~0.8% and 5-year is ~1.2%... add another 0.05% for more than $100k. Or alternatively, they have 12-24 month add-on CDs that are 0.7% to 0.8%.

If you're willing to take some credit risk, you have things like Dominion Energy Reliabiity Investment account (1.5%-1.7% depending on your balance) or Toyota Motor Credit IncomeDriver Notes (2.0%)... these have some credit risk but no interest rate risk and good liquidity.

Next would be baby-bonds and preferred stocks. These are a little work to research, have some market risk and interest rate risk, but yield ~5-6% for low investment grade credits. My current favorite baby bond is AGO.PRB which is rated A by S&P and currently yields 6.4%. YMMV.

 

[Oilcan]

How about a Multi Year Guarantee Annuity? I've been looking for a place to replace some CD's that have matured and have found these to be a possible answer. Depending on the company, many are paying over 2%. Since I'm only in the research phase and have not purchased any, does anyone else have a view on these MYGA's, pro or con?

 

[pb4uski]

MYGAs were mentioned and commented on in another recent thread: https://www.early-retirement.org/forums/f28/ridiculous-cd-rates-where-now-105555.html

 

[Dtail]

MYGAs were mentioned and commented on in another recent thread: https://www.early-retirement.org/forums/f28/ridiculous-cd-rates-where-now-105555.html

Not to mention it is mentioned about 11 posts up in this thread.

 

[smihaila]

Ally Bank and Synchrony Bank each have Savings accounts at 0.6%. That’s about the best you can do and be FDIC insured.

And SFGIdirect.com at 0.67%. A credit union that I trust - FAST ACH transfers and the limit is a million. No teasing interest rates or other games. The only drawback is that you can link only one external account, and it's done via a Secure Messaging message plus some proof that you own that external account.

 

[Rosedala]

Wow, I just had a $60K CD mature that was earning 4%. I browsed the current rates and found their 5-year CD is now paying .4%!
These are truly "coffee can/under the mattress" equivalent rates. I noticed their MM rate is currently also .4%. I really don't feel comfortable moving it to equities. What to do?

There are CDs for around 1.30% to 1.76% for 5 yr. There's a probability that extremely low interest will prevail for a few more years. This from a very good and reliable site: depositaccoounts.com. I suggest you browse it by Nov. 2020 CDs and other accounts like MMs, checking, etc. They do the searching for you and even give all about the reliability of the bank or credit union. I too woke up from a 6% CD that matured a year ago, and another maturing in December 1... to this awful almost zero percent nightmare. Be sure to always read the comments by very savvy savers too. Good luck!

 

[Sunset]

Wow, I just had a $60K CD mature that was earning 4%. I browsed the current rates and found their 5-year CD is now paying .4%!
These are truly "coffee can/under the mattress" equivalent rates. I noticed their MM rate is currently also .4%. I really don't feel comfortable moving it to equities. What to do?

Consider an Ally 5 yr high rate CD: https://www.ally.com/bank/high-yield-cd/

Here is why I buy these instead of shorter term ones:
It pays 1% but if rates go up after 21 months, you can cash it, pay the penalty and still net more than the 2yr CD pays even if the 2 yr had no penalty.

Here are the effective rates including the penalty cost for the 5 yr CD :

1 Year0.58%
2 Years0.79%
3 Years0.86%
4 Years0.90%
5 Years1.00%

 

[pb4uski]

Agree... often even if you have a shorter time horizon you might be better off buying the longer CD and paying the early withdrawal penalty.

Let's say you have $100k and a 3-year time horizon. The 3-year Ally CD pays 0.75%, so your $100k would grow to $102,267 after 3 years. The 5-year CD would have grown to $103,030 and if you withdraw you would owe 150 days interest, so by my calculatons an early widrawal penalty of ~$425... so you would receive $102,604 after 3 years and be $337 ahead.

Plus, if it turns out that you don't need those funds after 3 years and 1% is still an attractive interest rate then you can just stay in.

You got to do the math.

 

[jazz4cash]

If you qualify to join Navy Federal, their 12 month CD is ~0.8% and 5-year is ~1.2%... add another 0.05% for more than $100k. Or alternatively, they have 12-24 month add-on CDs that are 0.7% to 0.8%.

.

Hmmm...You made me look but I don't see any add-on CDs at NFCU right now.

As far as what to do, I think many of us are putting year-end CD specials from the likes of Penfed and NFCU on our Xmas list this year. My 5% Penfed CDs mature in Jan.

 

[Lakedog]

My local credit union (MAX) pays 0.8% on their performance money market for balances over $100k -- surprised they have not dropped it even more considering what most others are paying currently.