Best CD, MM Rates & Bank Special Deals Thread 2022 - Please post updates here

[explanade]

If CD interest rates continue to rise throughout 2023 and into 2024, whatever your gains in higher CD rates would probably be offset by declines in equities.

Way more than offset, unless you're completely out of equities or at least anything that has tech holdings.

Someone made the point that we had like 40 years of ultra low interest rates since the '80s.

So people were driven to things like tech stocks since bank returns were nil, as were treasury instruments, for a long time.

In fact, after the Great Recession, some people were predicting the bond vigilantes would punish the govt. for the big stimulus bill and later QE.

Instead, around 2010, the greater fear was deflation, which central bankers feared more than inflation because there was no easy way to control plummeting prices.

 

[NomDeER]

On Powell's comments today, treasury yields mostly fell.

Given that, I remain concerned that we may have already seen the highest rates on the 5yr plus maturities.

If CD interest rates continue to rise throughout 2023 and into 2024, whatever your gains in higher CD rates would probably be offset by declines in equities.

Powell basically said that there still would be increases but that the increases would be more moderate than the recent ones and that the peak interest rate would have to be there for some time (but he didn't say how much time). Treasuries fell, but the stock market clearly liked this information. I would think that the expectation for higher interest rates is now baked into stock prices, so I'm not sure how much the actual increases next year will actually impact equities. But, the stock market has been quite volatile this year and probably still will be, so who knows. Because I've got much more in equities than in bonds/CDs/cash, decreasing interest rates obviously would be better for me, but I don't think that's going to happen soon.

Since Powell didn't say how long the interest rates would stay at the peak rate, it's hard to know what will happen with the longer CD rates. I'm wondering if the banks are really unsure as well. That may be why we're not seeing many non-callable brokered CDs beyond 3 years.

I may start looking at the bank CDs instead of brokered CDs and see if the deals are better there now for the 4-year plus CDs. I liked the brokered ones because I could use the income instead of selling equities but there's just not much to buy. And it wouldn't necessarily be bad to get compound interest if the total return was better.

 

[Freedom56]

Why not just listen to what the BOA CEO is thinking about the economy and interest rates?

 

[Montecfo]

Brian Moynihan: "mild recession"
Jamie Dimon: "economic hurricane"

 

[jazz4cash]

I wish this thread was limited to reporting deals. We have plenty of room for commentary elsewhere.

 

[ShokWaveRider]

I wish this thread was limited to reporting deals. We have plenty of room for commentary elsewhere.

+100

That is what it was originally designed to do.

 

[audreyh1]

I wish this thread was limited to reporting deals. We have plenty of room for commentary elsewhere.

+100

That is what it was originally designed to do.

There is a current thread for discussing the latest inflation readings, rates and the economy.
https://www.early-retirement.org/forums/f44/latest-inflation-numbers-and-discussion-114292.html

Maybe those posts could be moved there.

 

[Car-Guy]

After Jay Powells speech yesterday, the plot thickens, and so does the inverted CD yield curve... Seems clear to me. (Today anyway )


Just cut and pasted from Schwab available CD's today. (or at this minute)

1 Mo - 3 Mo - 6 Mo -9 Mo- 1 Yr -18 Mo 2 Yr - 3 Yr-- 4 Yr-- 5 Yr
3.866 4.267 4.653 4.728 4.800 4.850 4.900 4.500 4.100 4.000

 

[Montecfo]

CFG Bank HY MM now at 4% APY.

 

[Montecfo]

After Jay Powells speech yesterday, the plot thickens, and so does the inverted CD yield curve... Seems clear to me. (Today anyway )


Just cut and pasted from Schwab available CD's today. (or at this minute)

1 Mo - 3 Mo - 6 Mo -9 Mo- 1 Yr -18 Mo 2 Yr - 3 Yr-- 4 Yr-- 5 Yr
3.866 4.267 4.653 4.728 4.800 4.850 4.900 4.500 4.100 4.000

Ues, it inverted more.

My guess is same happens after meeting later this mo.

 

[NomDeER]

What are thoughts on buying CDs on the secondary market? What are the benefits? What are the drawbacks?

 

[pb4uski]

I prefer brokered CDs because they are more convenient one-stop shopping.

Also, brokered CD rates often are better then bank or credit union CD rates. For example, Navy Federal currently has a 4% 2-year CD, which sounds good at fisrst blush until you learn that there are 2-year brokered CDs available at 4.5% or 4.9% callable.

 

[Chuckanut]

After Jay Powells speech yesterday, the plot thickens, and so does the inverted CD yield curve... Seems clear to me. (Today anyway )


Just cut and pasted from Schwab available CD's today. (or at this minute)

1 Mo - 3 Mo - 6 Mo -9 Mo- 1 Yr -18 Mo 2 Yr - 3 Yr-- 4 Yr-- 5 Yr
3.866 4.267 4.653 4.728 4.800 4.850 4.900 4.500 4.100 4.000

Fyi, I just picked up a 3 year 4.4% CD [-]from[/-] at Fidelity. And a 4.85% 5 year callable CD [-]from[/-] at Fidelity. (different banks).

For what it is worth, while I think there is a good possibility of somewhat higher rates in the next few months, I also don't want to get too greedy. So, I am extending my ladders out past two years with these purchases. YMMV.

 

[24601NoMore]

Or we will enter a recession and the Fed will slash rates. Who knows.

5 year rates likely don't track that closely to Fed Funds rates, anyway.

2-year yields track (pretty closely) to FFR.

10 year yields track to / reflect economic outlook. (This is why the 2/10 inversion is such a big deal when it happens).

No-one (that I've heard from to this point) has been able to explain what impacts 5 year yields the most. But what I've observed to this point is that increases to FFR don't seem to move 5-year CD rates that much overall. More important is "Fed speak" as it tells lenders what the rates will be a few years out. FFRs appear to be secondary.

 

[erkevin]

What are thoughts on buying CDs on the secondary market? What are the benefits? What are the drawbacks?

One thing to consider when buying CDs on the secondary market at a discount; the coupon yield may be significantly less than the YTM. This is important particularly if you are counting the interest payouts as an income stream. Pay attention to both numbers so you can accurately determine the paid interest.

 

[John Galt III]

Some 5 year non callable CDs showed up today at Vanguard. Best one is 4.15 %. A few at
4.0 % and one at 3.9%. Blah. Will wait and hope for better 5 year rate.

 

[pletal]

Some 5 year non callable CDs showed up today at Vanguard. Best one is 4.15 %. A few at
4.0 % and one at 3.9%. Blah. Will wait and hope for better 5 year rate.

Picked up a 5 year at Bread Financial 4.75. Was really easy to do . And can take interest during term if need be

 

[JoeWras]

Most of your friends are sleeping and accepting sub 1% rates. Aren't you happy you are paying attention to this thread, the Golden Fixed Era thread, and the Treasuries thread?

WSJ free link: https://www.wsj.com/articles/the-42...8kdlilnu467&reflink=desktopwebshare_permalink

The $42 Billion Question: Why Aren’t Americans Ditching Big Banks?

Americans are missing out on billions of dollars in interest by keeping their savings at the biggest U.S. banks.
The Federal Reserve has raised interest rates to their highest level since early 2008, just before a near failure of the financial system plunged the American economy into recession. Yet the biggest commercial banks are still paying peanuts to savers.
...
Why haven’t savers moved more of their money? Opening a new bank account is time consuming, said Gary Zimmerman, CEO of MaxMyInterest, a company that specializes in moving customers’ deposits between the nation’s highest-yielding savings accounts. Some customers aren’t aware of how much money they could make by switching, he said, and others just don’t care.
“People don’t think critically about financial decisions,” Mr. Zimmerman said.

 

[disneysteve]

Most of your friends are sleeping and accepting sub 1% rates. Aren't you happy you are paying attention to this thread, the Golden Fixed Era thread, and the Treasuries thread?

For sure. Inertia is a powerful force that keeps people from doing even very simple things that would greatly benefit them. I've been guilty of it myself on various occasions.


There are still millions of people who have their savings at their local bank earning 0.01% interest while I'm off buying CDs for 4.95% or even just earning 3.0% at Ally. I sort of understand people not trusting/understanding online banks and thinking it must be too good to be true and there must be a catch. How could bank A be paying 300 times more interest than bank B? That just doesn't sound legit. They don't get that it isn't the higher-paying bank A that's doing something fishy; it's bank B that is ripping off their customers by paying virtually nothing.

 

[John Galt III]

For sure. Inertia is a powerful force that keeps people from doing even very simple things that would greatly benefit them. I've been guilty of it myself on various occasions.


There are still millions of people who have their savings at their local bank earning 0.01% interest while I'm off buying CDs for 4.95% or even just earning 3.0% at Ally. I sort of understand people not trusting/understanding online banks and thinking it must be too good to be true and there must be a catch. How could bank A be paying 300 times more interest than bank B? That just doesn't sound legit. They don't get that it isn't the higher-paying bank A that's doing something fishy; it's bank B that is ripping off their customers by paying virtually nothing.

I have been cluing my acquaintances (seniors) in to the decent interest rates in CDs these days, and they listen politely, but I think they just don't want the bother of changing anything in their portfolio. They have all the money they need, forever (knock on wood) and do not want to be bothered making these kinds of decisions. I think we are a rare breed of seniors who manage our own portfolios and dare to go bargain hunting now and then.

 

[Ready]

The best rate I could find at Vanguard for a minimum 3 year non-callable CD is 4.5%. I see a few banks offering around 4.6%. So it would seem that brokered CDs are not paying a premium over bank CDs unless you go with callable ones, but then there is no guarantee how long you will receive that interest rate. Am I missing something?

 

[Car-Guy]

The best rate I could find at Vanguard for a minimum 3 year non-callable CD is 4.5%. I see a few banks offering around 4.6%. So it would seem that brokered CDs are not paying a premium over bank CDs unless you go with callable ones, but then there is no guarantee how long you will receive that interest rate. Am I missing something?

I think that has been changing in recent months.... IIRC (maybe wrong) that just a few months ago, buying non callable brokered CD's were paying much better rates than buying directly from a bank. It seems that is not always the case now... However some smaller banks (like mine) are still stuck paying 1 to 2%, at best...

 

[swk7907]

How agressively do people around here move money from one account to another chasing yield (if you already have accounts open)?

I have brokerage accounts at Fidelity, Schwab and Vanguard. I own money market funds with cash at all three places. Vanguard had been lagging the last few weeks with Fidelity leading (two weeks ago it was like 3.66% vs. 3.55%). Last week Schwab's MM fund went up to about 3.80% and Vanguard was still only 3.61%. I was planning on moving money today but see that now it is Schwab/Vanguard/Fidelity with 7 day yields of 3.805/3.71/3.69%.

It is very easy to move money between the three accounts and funds can probably be in the new account earning interest in 1-3 days but I'm starting to think it isn't worth the effort if yields keep bouncing back and forth with one fund beating another one week to the next.

It certainly would be worth the effort to get 12 basis points to have my cash sitting at Schwab vs. Fidelity if that disparity stayed for a period of time. I just don't know if next week due to a few holdings maturing at Fidelity and then they will be the rate leader.

Do people ignore this noise or regularly move funds back and forth chasing the highest yield? Thanks!

 

[disneysteve]

The best rate I could find at Vanguard for a minimum 3 year non-callable CD is 4.5%. I see a few banks offering around 4.6%. So it would seem that brokered CDs are not paying a premium over bank CDs unless you go with callable ones, but then there is no guarantee how long you will receive that interest rate. Am I missing something?

I think the situation is ever-changing. Just a couple of weeks ago I got 3-yr non-callable CDs at Vanguard for 4.9 and 4.95% but rates have dropped since then.

 

[disneysteve]

I have been cluing my acquaintances (seniors) in to the decent interest rates in CDs these days, and they listen politely, but I think they just don't want the bother of changing anything in their portfolio. They have all the money they need, forever (knock on wood) and do not want to be bothered making these kinds of decisions. I think we are a rare breed of seniors who manage our own portfolios and dare to go bargain hunting now and then.

To be fair, until I learned about brokered CDs and T bills I wasn’t doing much. I had a couple of CDs at Ally but the rate was only a tad better than the money market. I couldn’t be bothered opening new accounts at multiple banks to chase rates. Once I learned I could do it all in one place with our Vanguard account, that was a total game changer for me.