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Old 07-03-2022, 06:17 PM   #881
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I was going to buy a 26 week T bill this week at Vanguard but out of curiosity I looked at the CDs. I don't understand some things I saw.

The 1-3 month CDs are paying between 1.7% and 1.8%. That is more than the 3 month T bill (currently estimated at 1.65% on Tuesday 7/5). I looked at the 1.8% CD, it is from Wells Fargo Natl Assn. There was a lot of issues with Wells Fargo over the past year, is their CD best avoided? Also that CD says Conditional Puts Death of Holder FDIC #3511. What does Condition Puts mean?

All things being equal, which perhaps they aren't which is why I am asking, the CD even at 1.7% looks better than the T bill.

I also looked at the 4-6 month CDs, they are paying 1.7% to 2.15% but the 6 month T bill (currently estimated at 2.458% on Tuesday 7/5) is a much better rate. I guess you need to look at these and not assume just cuz the 3 month Cds have a better rate that the 6 month Cds will also vs the corresponding T bills.

I never would have considered a CD, Treasuries have been rising with better rates so I'm wondering if the CD (3 month) doesn't make more sense than the 3 month T bill. Is there a lag in getting the CD money at maturity vs the T bill. T bills get to the settlement fund in a couple of days but no idea if Cds are the same.

Mods - If this is too much and should be a new post, I can do that.
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Old 07-03-2022, 06:32 PM   #882
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I have a CD/T-bill ladder I recently built.

Some steps are built on Treasury bills and notes. Others are built on CD's. It all depended on which gave me the highest yield. At the time I built it for example, my 18 month CD was 3.05% vs about 2.9% for the Treasury note with 18 months left on it.

Since both are guaranteed by the Feds, and I don't have to pay state income tax on the interest, it's not a big deal.

What is a big deal is that inflation is still hammering these rates. Not much I can do about that at the moment other than to keep the powder dry and wait for preparation to meet opportunity. IOW, what we call 'luck'.
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Old 07-05-2022, 12:13 AM   #883
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Some steps are built on Treasury bills and notes. Others are built on CD's. It all depended on which gave me the highest yield. At the time I built it for example, my 18 month CD was 3.05% vs about 2.9% for the Treasury note with 18 months left on it.
Is there some difference as a result of compounding interest? I've been wondering how much more the treasury bills really pay compared to CDs or money market funds or savings accounts that have compound interest. I am not very experienced with these issues, so don't really know.
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Old 07-05-2022, 01:14 AM   #884
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Is there some difference as a result of compounding interest? I've been wondering how much more the treasury bills really pay compared to CDs or money market funds or savings accounts that have compound interest. I am not very experienced with these issues, so don't really know.
Easy way to check, add up all the coupons from the CD. T-Bill has a set value and returns to full face, so you know how much you will be getting between now and maturity. Compare the two amounts.
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Old 07-05-2022, 03:23 AM   #885
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Or if you like math: https://bogleheads.org/forum/viewtop...41068#p6741068
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Old 07-06-2022, 05:12 PM   #886
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Synchrony Bank HYS is paying 1.4%
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Old 07-06-2022, 08:48 PM   #887
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I also looked at the 4-6 month CDs, they are paying 1.7% to 2.15% but the 6 month T bill (currently estimated at 2.458% on Tuesday 7/5) is a much better rate. I guess you need to look at these and not assume just cuz the 3 month Cds have a better rate that the 6 month Cds will also vs the corresponding T bills
Do you really only need a 3 or 4 month CD? Capital One has a 2.50% CD for 18 months. Do the math and see if the early withdrawal penalty still makes it a wiser choice.
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Old 07-07-2022, 07:13 AM   #888
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Synchrony Bank HYS is paying 1.4%
Wow, alright!

I often use this savings to hold cash for my brokerage account.
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Old 07-07-2022, 07:18 AM   #889
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Yeah, Ally is really annoying now. Probably going to pull most of the remaining cash there and move it somewhere more responsive to rate increases. Several good choices!
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Old 07-07-2022, 08:57 AM   #890
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Synchrony Bank HYS is paying 1.4%
Thanks for this. I have both Synchrony and Ally bank savings accounts but have a lot more in Ally. They historically maintained the same rates. I am going to transfer all of my Ally to Synchrony since 1% vs 1.4% is a huge difference.
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Old 07-07-2022, 10:35 AM   #891
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Yeah, Ally is really annoying now. Probably going to pull most of the remaining cash there and move it somewhere more responsive to rate increases. Several good choices!

Agree, the 11 month NP CD is still at 1% same as the savings for over a week now.
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Old 07-07-2022, 10:56 AM   #892
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Fidelity is offering a 1 year 3.75% note that pays monthly rated A3/A

CITIGROUP GLOBAL MKTS HLDGS IN SER N
3.75000% 07/20/2023 MTN

CUSIP 17330PSX8
ISIN US17330PSX86
SEDOL --
Pay Frequency MONTHLY
Coupon 3.750
Maturity Date 07/20/2023
Moody's Rating A3
S&P Rating A
Issuer Events NO
Survivor Option NO
Bond Type Corporate Note
Sector FINANCE (NON-BANK)
Interest Accrual Date 07/20/2022
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Old 07-07-2022, 01:46 PM   #893
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Yeah, Ally is really annoying now. Probably going to pull most of the remaining cash there and move it somewhere more responsive to rate increases. Several good choices!
I sent them an email about their rates. They nicely blew me off!

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Old 07-07-2022, 01:48 PM   #894
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I sent them an email about their rates. They nicely blew me off!

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Time to move!
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Old 07-07-2022, 02:15 PM   #895
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Was going to mention how very good Ally has been for wire transfers and serving as a hub for moving money around. Still feel that way, especially compared to T-Mobile Money, which is just the weirdest bank/not bank going. BUT Tmobile had 1% interest, so we parked some cash with them. Now I plan to shift that Tmobile money to Synchrony Bank, 'cause 1.4% and I've heard of Synchrony as a real bank. Keeping Ally though. Much to be said for 24/7 access too.
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Old 07-07-2022, 02:33 PM   #896
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IIRC, Vanguard's Federal MM fund is now about 1.4%.
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Old 07-07-2022, 02:45 PM   #897
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I'm sticking with Ally because both my EFTPS and Treasury Direct accounts are linked to Ally.
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Old 07-07-2022, 02:55 PM   #898
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Ally just raised theirs to 1.15%.
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Old 07-07-2022, 03:16 PM   #899
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Ally just raised theirs to 1.15%.
I pulled all except a couple of thousand out of Ally this morning. This bit will probably go to Vanguard's Federal MM at 1.42 percent for now. It's also their settlement fund. Fido's premium MM is at 1.40 with $100k minimum with a sizeable portion in financial company paper.
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Old 07-07-2022, 04:13 PM   #900
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Still keeping some funds at Ally for emergency monies with ease of transfer, etc.
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