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

[ShokWaveRider]

US T-bills?

From what I understand, T-Bills are taxable annually. Our only option seems to be MYGA's but we already have some of those.

Just need to muscle up and pay the taxes I suppose, + the premium for DW's ACA.

One disadvantage of taking SS this year I suppose. At least we will have plenty left over. I always knew this time would come. After 10 years of virtually free ACA for DW, we should not really complain.

 

[audreyh1]

From what I understand, T-Bills are taxable annually. Our only option seems to be MYGA's but we already have some of those.

Just need to muscle up and pay the taxes I suppose, + the premium for DW's ACA.

One disadvantage of taking SS this year I suppose. At least we will have plenty left over. I always knew this time would come. After 10 years of virtually free ACA for DW, we should not really complain.

For a 52 week T-bill bought today, thus maturing in 2024, interest would not be taxable in 2023.

Same with CDs maturing in 12 months or less paid at maturity. I’ve had several Ally 11 month no penalty CDs that didn’t mature until the following year, and no interest income until they matured. Longer CDs did give a Dec 31 payment of accumulated interest even though they didn’t mature until the following year and were also set to pay at maturity.

So 12 months is the magic number.

 

[pb4uski]

From what I understand, T-Bills are taxable annually. ...

I'm not so sure about that. Mine are all in tax-deferred accounts so not something that I deal with.

... Treasury bills. These bills generally have a 4-week, 8-week, 13-week, 26-week, or 52-week maturity period. They generally are issued at a discount in the amount of $100 and multiples of $100. The difference between the discounted price you pay for the bills and the face value you receive at maturity is interest income. Generally, you report this interest income when the bill is paid at maturity. If you paid a premium for a bill (more than face value), you generally report the premium as a section 171 deduction when the bill is paid at maturity. See Discount on Short-Term Obligations, later.

If you reinvest your Treasury bill at its maturity in a new Treasury bill, note, or bond, you will receive payment for the difference between the proceeds of the maturing bill (par amount less any tax withheld) and the purchase price of the new Treasury security. However, you must report the full amount of the interest income on each of your Treasury bills at the time it reaches maturity.

https://www.irs.gov/publications/p550#en_US_2021_publink10009955

 

[ShokWaveRider]

A 52 week T-bill bought today, thus maturing in 2024, would not be taxable in 2023.

This is what I was looking at.

"Interest earned on all U.S. Treasury securities, including Treasury bills (T-Bills), is exempt from taxation at the state and local level but is fully taxable at the federal level.

At the end of each tax year or early in the next (by Jan. 31), owners of Treasury bills should receive a Form 1099-INT from the Dept. of the Treasury. This form details how much interest was earned on government securities for the year—information that is also filed with the Internal Revenue Service (IRS)."

 

[audreyh1]

That simply says that you get a 1099-INT for every T-bill that matured in a given year. It doesn’t say when the interest was earned, or that it’s any different from when the T-bill matures.

I have a bunch of 26 week T-bills that straddled the calendar year and they did not show up in the 2022 interest amount. Nor did they pay anything prior to maturity. Only the one which matured in 2022 is on my 1099-INT from Fidelity.

I think your confusion is about what “earned” means. Generally it means what interest is paid in a given year with few exceptions and T-bills aren’t one of them.

 

[ShokWaveRider]

That simply says that you get a 1099-INT for every T-bill that matured in a given year. It doesn’t say when the interest was earned, or that it’s any different from when the T-bill matures.

I have a bunch of 26 week T-bills that straddled the calendar year and they did not show up in the 2022 interest amount. Nor did they pay anything prior to maturity.

Thanks, ACTUAL experience trumps the interweb.

 

[audreyh1]

Thanks, ACTUAL experience trumps the interweb.

I expanded on my post. I think you got confused over what earned actually means.

 

[ShokWaveRider]

I expanded on my post. I think you got confused over what earned actually means.

OK. I assume CDs that pay at maturity (Use a 2 year as an example) are not included and are charged as someone mentioned on "Phantom" interest.

I think it is supposed to be confusing.

 

[mojavesue]

We bought a couple of good multi year CDs back in November. One was a 3 year paying 4.9 non callable. That was from Capital One. I've been waiting for the 5 percenters but not sure that we will. It's looking like November was the best time to buy. Bought a 1 year paying 4.7 a couple of days ago from UBS bank that pays monthly which I like. We sold a condo last spring and was sitting on a chunk of cash. Nice to be getting paid for it now!

 

[audreyh1]

OK. I assume CDs that pay at maturity (Use a 2 year as an example) are not included and are charged as someone mentioned on "Phantom" interest.

I think it is supposed to be confusing.

My experience with longer than 12 month CDs that state they pay at maturity, do in fact pay accumulated interest for each year on Dec 31. Nothing phantom about it.

 

[mojavesue]

And looking at our MM VMFXX, its current 7 day yield is 4.46. Not a bad place to park cash.

 

[ShokWaveRider]

My experience with longer than 12 month CDs that state they pay at maturity, do also pay accumulated interest for each year on Dec 31. Nothing phantom about it.

It is not payable at maturity then, is it? Sorry, I simply do not understand.

Why, I purchased MANY CDs in Canada that said payable on maturity and that is exactly what they did. The tax was not due until maturity, whether it be 1, 2 or 5 year. I had a 5 year a few years ago, I was not sent a Canadian equivalent of a 1099 until I received the full payment, so I talk from experience.

 

[audreyh1]

It is not payable at maturity then, is it? Sorry, I simply do not understand.

Why, I purchased MANY CDs in Canada that said payable on maturity and that is exactly what they did. The tax was not due until maturity, whether it be 1, 2 or 5 year. I had a 5 year a few years ago, I was not sent a Canadian equivalent of a 1099 until I received the full payment, so I talk from experience.

It may be a US bank thing. I think US CDs do have to pay accumulated interest within a 12 month period, but it doesn’t have to correspond to the tax calendar year. So right, US CDs longer than 12 months aren’t going to pay all at maturity.

If you look at the new issues brokered CDs at Fidelity, all the 12 month CDs list pay at maturity, but once you go longer than 12 months, interest payments are semiannually, quarterly or monthly.

It may be a quirk of Ally CDs that they have longer CDs (usually “CD specials” - 13, 14, 15 month) listed as pay at maturity, but they do also have fine print stating that accumulated interest will be paid on Dec 31.

 

[Chuckanut]

Swvxx - 4.43%
Snaxx - 4.58%

Snoxx - 4.28%

 

[Gotadimple]

Effective 2/8, American Express Bank increases savings rate to 3.4%. 12 month CDs are now 4.50%, and 24 month 4.25% - everything else is at a lower rate.

- Rita

 

[audreyh1]

Effective 2/8, American Express Bank increases savings rate to 3.4%. 12 month CDs are now 4.50%, and 24 month 4.25% - everything else is at a lower rate.

- Rita

Whoop-de-do - Ally had increased to 3.4% a few weeks ago, meanwhile Synchony bank has been paying 3.75% for a while.

These high yield savings accounts take their time on the way up. But they do provide a haven when rates are dropping, easily out yielding treasuries and MM funds.

I do wonder how long it’s going to take for them to reach 4%.

 

[PatrickA5]

Whoop-de-do - Ally had increased to 3.4% a few weeks ago, meanwhile Synchony bank has been paying 3.75% for a while.

These high yield savings accounts take their time on the way up. But they do provide a haven when rates are dropping, easily out yielding treasuries and MM funds.

I do wonder how long it’s going to take for them to reach 4%.

This is one reason why I plan on leaving a couple of bucks in Ally just to keep the account open.

Once the Fed puts the brakes on and starts to lower rates, the MMF will drop fast. There's usually a lag period where bank CDs stay higher for a little while giving us some time to shift gears to CDs if necessary. Right now, I'm avoiding CD's but might look at them later. I think MMF (like FZDXX) have a good chance to hit around 5% if there are a couple more rate hikes.

 

[audreyh1]

Ally had a 4.6% 13 month CD special, plus 3.85% no penalty CD which is easy to upgrade as rates rise. So I parked some funds in each.

I keep funds in several high yield savings accounts and move the bulk around as warranted, but always leave some. The American Express Bank savings account is traditionally a workhorse for expenses during the year. If they lag I leave a little less there, but I don’t sweat it on funds I plan to spend in a few months.

 

[JohnnyBGoode]

Not sure if this is new news or not, but I see Capital One is now offering an 11-month CD at 5% APY. Over the last few weeks I loaded up on the 4.6% Ally 13-month Select CDs, so I'm not moving, but nice to see the 5% barrier breached for a simple online CD.

 

[explanade]

Who issues the 1099-INTs for brokerage CDs, the brokerage or the bank?

 

[Spock]

Who issues the 1099-INTs for brokerage CDs, the brokerage or the bank?

The brokerage.

 

[audreyh1]

Who issues the 1099-INTs for brokerage CDs, the brokerage or the bank?

I am pretty sure that is included in the 1099-INT from the brokerage, just as interest from treasuries are in the brokerage 1099-INT.

That’s part of the service the brokerage is providing to the banks for better CD rates. I suspect that the bank has no idea which individuals own their brokered CDs.

 

[sengsational]

Thanks, ACTUAL experience trumps the interweb.

One more data point...My kids were gifted long Treasury STRIPS when they were babies and I got a 1099-OID every year. But those are purchased at a discount, and mature at par with no coupons along the way.

 

[Al18]

Who issues the 1099-INTs for brokerage CDs, the brokerage or the bank?

For brokered CD’s at Fidelity, Fidelity issues the 1099-INT (actually it’s part of the consolidated 1099 statement).

 

[Dtail]

The brokerage.

Definitely the Brokerage.