CD advice

[almost there]

I have both brokered, and non brokered CD's. At this time, credit unions have the highest rates. Not sure if this is the norm? Or not...?

 

[Earl E Retyre]

Having gone the route of opening bank accounts for their CDs, I have found that I hate that option.

More paperwork, logins, and I have to be around when the CD closes, or they auto rollover.

Now, I just go with vanguard brokered CDs. So much simpler, and a higher rate.

I do wish though that they offered a /real/ secondary market with no spread. If you try to sell a CD on vaguard, you don't name your price, or use the current market price. They give you a below market price. Very deceptive. Only buy them if you're planning to hold to maturity.

I also have been moving from opening CDs at banks to brokered CDs for the same reason. Also, I have my IRA at Vanguard and recently decided it made more sense for me to buy the CDs in my IRA for tax purposes.

Regarding your comment about Vanguard setting the price when and if you want to sell … I am somewhat confused as to how it sets the price. While I am not planning on selling, when I look at my Cost Basis, it tells me:
- the 3.5% CDs I purchased 1 week ago for about $150k is now worth $580 more. So, theoretically, I could make a .38% gain in 1 week if I sold

-the 3.25% CD I purchased last June for $120k is now worth $729 less or a .61% loss in 6 mos if I sold

I cannot find any 3.5% 5 yr brokered CDs right now, so perhaps these values make sense due to the fluctuation in CD prices available? Just seems a bit extreme to me.

 

[Ready]

Brokered CDs act like bonds in that they are interest rate sensitive. They will go up in market value if interest rates go down, and they go down in value if rates go up. This is why I never buy them. If I want interest rate sensitivity I will just buy bonds. If I want guaranteed return with a fixed early termination penalty I go with bank CDs. As long as you hold brokered CDs to maturity you won't have to worry about this. Some brokered CDs are callable though, meaning the bank can terminate early if they feel they can lower their rates and still attract new money.

I do agree that opening new bank accounts to chase higher rates is a major pain though.

 

[Dtail]

Have brokered and bank CD's with the intention to only hold to maturity.

 

[jetpack]

I also have been moving from opening CDs at banks to brokered CDs for the same reason. Also, I have my IRA at Vanguard and recently decided it made more sense for me to buy the CDs in my IRA for tax purposes.

Regarding your comment about Vanguard setting the price when and if you want to sell … I am somewhat confused as to how it sets the price. While I am not planning on selling, when I look at my Cost Basis, it tells me:
- the 3.5% CDs I purchased 1 week ago for about $150k is now worth $580 more. So, theoretically, I could make a .38% gain in 1 week if I sold

-the 3.25% CD I purchased last June for $120k is now worth $729 less or a .61% loss in 6 mos if I sold

I cannot find any 3.5% 5 yr brokered CDs right now, so perhaps these values make sense due to the fluctuation in CD prices available? Just seems a bit extreme to me.

Have you tried to sell one? It does depend on if there are bids in for it... If there is none, vg will give you a lowball price for it. You're not going to get the price they list as the current market value.

Also, look at the BID / ASK spread. it's crazy. Why can't I sell the CD for what others are buying it at?

 

[Earl E Retyre]

Have you tried to sell one? It does depend on if there are bids in for it... If there is none, vg will give you a lowball price for it. You're not going to get the price they list as the current market value.

Also, look at the BID / ASK spread. it's crazy. Why can't I sell the CD for what others are buying it at?

No, I have not tried to sell one. My plan anyway is to hold until maturity. Thanks for this info - good to know.

I assume Fidelity is the same way but have not checked on it.

 

[audreyh1]

Have you tried to sell one? It does depend on if there are bids in for it... If there is none, vg will give you a lowball price for it. You're not going to get the price they list as the current market value.

Also, look at the BID / ASK spread. it's crazy. Why can't I sell the CD for what others are buying it at?

Spreads are a feature of markets. The less liquid the issue, the wider the spread. That's just the way it is. If an issue is very liquid (i.e there is a lot of continuous trading with numerous buyers and sellers as in for example, Treasuries) then the spreads tend to be small.

 

[audreyh1]

Brokered CDs act like bonds in that they are interest rate sensitive. They will go up in market value if interest rates go down, and they go down in value if rates go up. This is why I never buy them. If I want interest rate sensitivity I will just buy bonds. If I want guaranteed return with a fixed early termination penalty I go with bank CDs. As long as you hold brokered CDs to maturity you won't have to worry about this. Some brokered CDs are callable though, meaning the bank can terminate early if they feel they can lower their rates and still attract new money.

To me this just shows that CDs really are the same as a bond except there is no credit risk.

Personally I prefer the known early withdrawal penalty ahead of time so that I don't have to sell on a secondary market. But considering I rarely close CDs early, I probably wouldn't hesitate if I found a deal through the broker that soundly beat what I could get directly from one of my established banks or credit unions or via Treasuries. I keep looking.

 

[Sunset]

Having gone the route of opening bank accounts for their CDs, I have found that I hate that option.

More paperwork, logins, and I have to be around when the CD closes, or they auto rollover.

Now, I just go with vanguard brokered CDs. So much simpler, and a higher rate.

...

I have just bought some CD's at Ally, and as long as you have an Ally bank account (pays 2% currently), then it's easy as pie.

A few clicks, and it is all done. No paper involved, except they still mail you a letter to say it's all done (which is dumb to me).

You can when you set it up , decide if you want it to rollover, or deposit all back to your account.

I will check out Vanguard brokered CD's to see what they are like, I've never bought one of theirs before, but higher rates interest me

 

[calmloki]

Years ago we purchased a car using Columbia CU. No problems. As I recall their rate beat FirstTech CU.

I think the new CU charter law requires some qualifying conditions but, golly, a lot of folks have a relative or a business relationship in WA or NW Oregon (Portland MSA).

I've been trying to get a CD funded at Columbia CU for over a week. The people I've interacted with on the phone have been friendly and great to talk to - but I probably will pass on the CD. Just too hard to get it funded. Tried to ACH from our Discover savings account, which failed, and they would only accept a cashiers check thereafter. Set up a savings account at Columbia to ACH into and transfer into the CD - $500/day limit. Really? And the friendly people are under the impression a $500/day ACH limit is normal industry standard? Thought I'd ask how we could get our money out after the CD matured: a few weeks before it matured we send in a written paper request, the signature is verified, funds are mailed out. Some other option was offered that involved notaries and maybe an overnight notary, but it was just feeling like the universe was telling me to pass on this great offer.
Guess we'll be going with the shorter term (preferable to us) Navy Federal 3.25% CD.

We did fund easily a East Boston Savings Bank 2.5% savings account a while back and I'm chewing my nails - voice interactions make me feel like I'm talking to Icepick Eileen or Kneecap Nora. Will EBSB give up our funds when we are ready? Hope so

 

[pc95]

CD rates seemed to have peaked in mid-late November 2018. They are now retreating a bit. I picked up the Connexus 5-yr 3.94% CD (4.00% APY) in late November, but was thinking rates would edge up more into the new year.
It hasn't been happening, no thanks to media blowback to the FED. Was holding out hope that rates might get up 4.5 to 5.0%, but it doesn't seem likely.

 

[jazz4cash]

CD rates seemed to have peaked in mid-late November 2018. They are now retreating a bit. I picked up the Connexus 5-yr 3.94% CD (4.00% APY) in late November, but was thinking rates would edge up more into the new year.
It hasn't been happening, no thanks to media blowback to the FED. Was holding out hope that rates might get up 4.5 to 5.0%, but it doesn't seem likely.

I agree, but I thought we were a long, long way from 5% on a 5 yr CD.

I have some 5% 10 yr CD's I bought in 2011 and that rate was way above anything else available at the time....and it was a 10 yrs seemed like a lifetime.

 

[foxfirev5]

CD rates seemed to have peaked in mid-late November 2018. They are now retreating a bit. I picked up the Connexus 5-yr 3.94% CD (4.00% APY) in late November, but was thinking rates would edge up more into the new year.
It hasn't been happening, no thanks to media blowback to the FED. Was holding out hope that rates might get up 4.5 to 5.0%, but it doesn't seem likely.

Yeah, I went long term as much as I could with CD's in December. A big factor I'm researching lately is the savings glut of people with big savings waiting for higher CD rates. The big institutions don't play in this space and it was a nice ride while it lasted. Still there are nice premiums vs treasuries if that makes you feel better.

 

[jazz4cash]

Who are the big institutions? I think they are in the brokered CD space as they can’t be bothered with retail investors.

 

[foxfirev5]

Who are the big institutions? I think they are in the brokered CD space as they can’t be bothered with retail investors.

Think bigger. The big funds that have hundreds of billions invested. Look at the holdings and you'll not see CD's. Blackrock, Vanguard , Fidelity shall I go on?

 

[foxfirev5]

Think bigger. The big funds that have hundreds of billions invested. Look at the holdings and you'll not see CD's. Blackrock, Vanguard , Fidelity shall I go on?

Meanwhile the most you'll see for brokered CD's is maybe 95000 from Wells Fargo. A mere 95 million.

Anyway why would all these funds stick to treasuries when they could easily make another 100 basis points on CD's??

 

[jazz4cash]

Still confused. Are you saying the big institutions are not buyers? I think the ones you mentioned are all brokers for big institution issuers.

 

[Spock]

Meanwhile the most you'll see for brokered CD's is maybe 95000 from Wells Fargo. A mere 95 million.

Anyway why would all these funds stick to treasuries when they could easily make another 100 basis points on CD's??

I think its more spread out. Individual funds within an institution hold the bulk of CDs, not the institutions themselves.

 

[foxfirev5]

This is getting funny. All I really care about is on a given day that I get better deal on a treasury, mutual fund, ETF, or CD. I truly wish everybody would stay out of the CD space as it gives a simpleton like me an advantage.

 

[mn54]

I've been trying to get a CD funded at Columbia CU for over a week. The people I've interacted with on the phone have been friendly and great to talk to - but I probably will pass on the CD. Just too hard to get it funded. Tried to ACH from our Discover savings account, which failed, and they would only accept a cashiers check thereafter. Set up a savings account at Columbia to ACH into and transfer into the CD - $500/day limit. Really? And the friendly people are under the impression a $500/day ACH limit is normal industry standard? Thought I'd ask how we could get our money out after the CD matured: a few weeks before it matured we send in a written paper request, the signature is verified, funds are mailed out. Some other option was offered that involved notaries and maybe an overnight notary, but it was just feeling like the universe was telling me to pass on this great offer.
Guess we'll be going with the shorter term (preferable to us) Navy Federal 3.25% CD.

We did fund easily a East Boston Savings Bank 2.5% savings account a while back and I'm chewing my nails - voice interactions make me feel like I'm talking to Icepick Eileen or Kneecap Nora. Will EBSB give up our funds when we are ready? Hope so

why are you doing it over the phone? I opened the account and funded it directly from my fido account on line. Only took a few minutes.

 

[Helena]

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My local bank is now offering a five year CD at 3.75% and a five year variable CD where the rate will increase or decrease with the Fed Fund Rate [but never go below the initial 3.50%.]

https://www.fgb.net/our-cds-are-hard-to-top

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[Earl E Retyre]

.

My local bank is now offering a five year CD at 3.75% and a five year variable CD where the rate will increase or decrease with the Fed Fund Rate [but never go below the initial 3.50%.]

https://www.fgb.net/our-cds-are-hard-to-top

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Wow, that is an excellent rate right now. Have you banked with them and are happy?

I assume I could open up an account online. I can call next week and ask. There is a physical branch about 90 minutes from where I live but would rather not drive that far.

I am not sure which deal is better - the 3.75% locked in or the 3.5% variable.

 

[cbo111]

Navy Fed has a special 17-month 3.25 CD. Not sure there are any other short-term CD's currently at that rate. Max amount is $50K, which I jumped on quickly.

 

[Helena]

Wow, that is an excellent rate right now. Have you banked with them and are happy?

I assume I could open up an account online. I can call next week and ask. There is a physical branch about 90 minutes from where I live but would rather not drive that far.

I am not sure which deal is better - the 3.75% locked in or the 3.5% variable.

Those are the two CD specials they are running right now. I have several accounts with them. I've arranged for the interest on one of my five year CDs to go into my checking account every quarter. I get wonderful personal service at the Dallas County branch. You will need to contact them about on-line accessibility.

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[jazz4cash]

Oh darn. Those rates are limited to the 1st 20 mil deposited.