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CD Interest Payments
Old 01-23-2019, 02:13 PM   #1
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CD Interest Payments

I thought of this yesterday after walking out of my bank while reinvesting a CD. It used to be (year's ago) that banks and S&L gave you the option of having the monthly interest paid out by check or possibly into a second account such as a checking.

Do banks still offer paying monthly interest in cash (check, etc) each month or is it only available by reinvesting now? Been years since I've had them cut me a monthly check.
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Old 01-23-2019, 02:33 PM   #2
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Penn Federal is sending a monthly check. Just opened 5 year cd at 3.5
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Old 01-23-2019, 03:18 PM   #3
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Originally Posted by Drake3287 View Post
I thought of this yesterday after walking out of my bank while reinvesting a CD. It used to be (year's ago) that banks and S&L gave you the option of having the monthly interest paid out by check or possibly into a second account such as a checking.

Do banks still offer paying monthly interest in cash (check, etc) each month or is it only available by reinvesting now? Been years since I've had them cut me a monthly check.
Most banks and credit unions I deal with give you the option of receiving the interest monthly/quarterly instead of reinvesting it in the CD.
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Old 01-23-2019, 03:31 PM   #4
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I have CDs with three online banks and four local banks and they electronically send the interest to an account of my choice each month without fee.
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Old 01-23-2019, 04:23 PM   #5
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It depends on the bank/credit union CD terms.
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Old 01-23-2019, 04:58 PM   #6
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Penn Federal is sending a monthly check. Just opened 5 year cd at 3.5
Unless you have a special circumstance, the rate is down to 3.35%APY since the 18th.
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Old 01-23-2019, 08:20 PM   #7
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In the case of brokered CDs, I think you cannot reinvest the interest in the CD.
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Old 01-23-2019, 09:20 PM   #8
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Brokered cd interest cannot be reinvested. Also, to get the actual APY% advertised (as opposed to the APR), you must reinvest - as I believe that the advertised yield is only obtained by compound interest.
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Old 01-23-2019, 09:34 PM   #9
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Brokered cd interest cannot be reinvested. Also, to get the actual APY% advertised (as opposed to the APR), you must reinvest - as I believe that the advertised yield is only obtained by compound interest.
Good point about not getting the full advertised CD rate if you don’t reinvest the interest payments back into the CD.
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Old 01-23-2019, 10:28 PM   #10
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Thanks for the responses, it looks like I'll have to look into getting the interest payment directly. Having a few high balance CD's I don't really need to be investing anymore cash.

Time to take the money and enjoy it.
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Old 01-23-2019, 11:41 PM   #11
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Brokered cd interest cannot be reinvested. Also, to get the actual APY% advertised (as opposed to the APR), you must reinvest - as I believe that the advertised yield is only obtained by compound interest.

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Good point about not getting the full advertised CD rate if you don’t reinvest the interest payments back into the CD.

This is BS. Brokered CDs give the promised yield. They never advertise APY. The assumption is that the purchaser is sophisticated enough to understand the difference.


In a rising rate environment, this is to the purchasers advantage. We've been in such an environment for over a year. We may still be. It's too early to tell.
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Old 01-24-2019, 05:40 AM   #12
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My brokered CD’s with Fidelity are reinvested.
Just opened one with Ally and they asked me which I prefer.
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Old 01-24-2019, 08:14 AM   #13
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This is BS. Brokered CDs give the promised yield. They never advertise APY. The assumption is that the purchaser is sophisticated enough to understand the difference.
I was talking about CDs advertised by a bank/credit union. Drake’s question directly asked about that case.
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Old 01-24-2019, 08:29 AM   #14
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My brokered CD’s with Fidelity are reinvested.
Just opened one with Ally and they asked me which I prefer.
Are these Fidelity CD's reinvested into the CD or elsewhere? Which bank is actually issuing the CD?

I haven't actually bought any brokered CDs and Im trying to learn as much as I can about them including pros and cons of monthly vs. semi-annual interest payments.
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Old 01-24-2019, 08:35 AM   #15
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Brokered CDs do not automatically reinvest interest payments back into the same CD.

Fidelity will automatically reinvest the entire CD once it matures if you sign up for their autoroll program.
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Old 01-24-2019, 10:07 AM   #16
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So you choose an account to accumulate the interest payments until maturity?
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Old 01-24-2019, 10:14 AM   #17
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I was talking about CDs advertised by a bank/credit union. Drake’s question directly asked about that case.
Correct. In my case all CD's or MM are with a B&M bank or online bank. It's funny, years ago I remember banks always asking me how I wished the interest to be paid. At some point it just started to automatically be reinvested.

Just this week when I reinvested a large CD the bank never mentioned interest payments like they use to.
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Old 01-24-2019, 10:25 AM   #18
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So you choose an account to accumulate the interest payments until maturity?
With brokered CDs at Schwab or Fidelity, my interest payments are deposited in the default cash component (Schwab) or core fund (Fidelity) of the brokerage account.
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Old 01-24-2019, 10:35 AM   #19
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With brokered CDs at Schwab or Fidelity, my interest payments are deposited in the default cash component (Schwab) or core fund (Fidelity) of the brokerage account.
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Old 01-24-2019, 10:44 AM   #20
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So you choose an account to accumulate the interest payments until maturity?
Yes, at PenFed and Ally I believe they let you choose any local checking or savings account plus any external account you have linked.

Some institutions will also mail you a check, I think maybe Ally and PenFed also give this option. I shudder at the thought of receiving checks in the mail, so I never considered this option.
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