I'm looking to park some cash that I might need in the next 2 yrs. Won't need it for sure for at least 18 months, but maybe after that.
I was looking at Ally CD rates. 1yr rate is 1.19, but 5yr rate is 2.36. All their CDs have a 60 day interest penalty if redeemed prior to maturity.
My question is why wouldn't I take out a 5yr and pay the penalty if I need the monies before maturity. 60 days interest on the 5 yr CD looks like about .39 % (2.36 / 6).
That indicates that if I redeemed the CD after the first 12mos, I'd still earn 1.97% (2.36 - .39) which is significantly better than the current 1yr rate.
What am I missing here??
Thanks
I was looking at Ally CD rates. 1yr rate is 1.19, but 5yr rate is 2.36. All their CDs have a 60 day interest penalty if redeemed prior to maturity.
My question is why wouldn't I take out a 5yr and pay the penalty if I need the monies before maturity. 60 days interest on the 5 yr CD looks like about .39 % (2.36 / 6).
That indicates that if I redeemed the CD after the first 12mos, I'd still earn 1.97% (2.36 - .39) which is significantly better than the current 1yr rate.
What am I missing here??
Thanks