Chasing CD rates

[Drake3287]

Probably an old question around here. At what percentage rate (or dollar amount) do most people feel it's worth it to close-out a CD account and reopen it at another higher paying bank or S&L? Both at brick and mortar and online banks.

With rates changing almost daily right now I'm sure many are in this same situation. I currently have 2 larger CD's ($100k) getting ready to renewal and you guessed it, one bank almost across the street offers 1/4% more. So, $250. a year. Is it worth the hassle of jumping through all those hoops for $250.? Obviously $250. for an hour's work is a pretty good deal.

I just hate going through the process plus I need to bring along my spouse to co-sign obviously. Just too bad that these banks won't compete with each other better at times. Only once have I had a bank offer a 1/4% not to move.

 

[Car-Guy]

Have you thought about asking your current bank to match their rate? It is a jumbo CD after all and it's only a 1/4 point. And they may be planning to bump their rates soon anyway.

 

[Al18]

I have a lot o CD’s and have never closed out a CD early because the interest rate changed. That’s a sign of poor planning. With the ease of buying brokered CD’s at Fidelity, I also rarely buy CD’s at local banks. I like the fact brokered CD’s deposit the interest in my cash account regularly, because I don’t need for the CD to mature to spend the interest.

 

[nwsteve]

Here is a tool for help with the math for breaking a CD
https://www.depositaccounts.com/TOOLS/BREAK-CD-CALCULATOR.ASPX
We had several CDs at Ally B which were carrying interest rates under .75 with less than a year left but only two months of penalty--At current rates, it was a clear winner to break them all.

 

[calmloki]

Thanks for posting the tool URL again - we have CDs from 3-3.5% with 6 and 12 month penalties, and depending on maturity date, interest rate, and penalty it MAY be worth breaking some. Tool makes the decision easy (we may need to see 4.75% to make it worthwhile on our lowest rate highest penalty CDs).

 

[jazz4cash]

$250 would be worth it to me but I’d ask for a concession first if it’s a taxable account. If it’s IRA funds It would take much more incentive. I have had problems moving IRA funds about 30% of the time and it’s a pain even when it is performed correctly.

 

[Drake3287]

Here is a tool for help with the math for breaking a CD
https://www.depositaccounts.com/TOOLS/BREAK-CD-CALCULATOR.ASPX

Thanks, I have that. These are simply accounts that are about to renew. Realistically, with rates going up as fast as they are, I'll probably be paying these plenty fees for several CD's in the coming months, especially if the projected 1% increase happens later this month.

 

[jazz4cash]

With rates going up, maybe there’s no hurry to commit. Check the bank policy. Many will auto renew but give 10 days or so to cancel. Banks would love to auto renew you knowing that rates are rising.

 

[pletal]

Probably an old question around here. At what percentage rate (or dollar amount) do most people feel it's worth it to close-out a CD account and reopen it at another higher paying bank or S&L? Both at brick and mortar and online banks.

With rates changing almost daily right now I'm sure many are in this same situation. I currently have 2 larger CD's ($100k) getting ready to renewal and you guessed it, one bank almost across the street offers 1/4% more. So, $250. a year. Is it worth the hassle of jumping through all those hoops for $250.? Obviously $250. for an hour's work is a pretty good deal.

I just hate going through the process plus I need to bring along my spouse to co-sign obviously. Just too bad that these banks won't compete with each other better at times. Only once have I had a bank offer a 1/4% not to move.

Sometimes I will pull interest out of a CD (if allowed) and use that money towards new CD'S or MYGA's. The process of closing CD's is time consuming but if the rates hit 4.8 to over 5 I'm taking a day off!

 

[John Galt III]

$250 would be worth it to me but I’d ask for a concession first if it’s a taxable account. If it’s IRA funds It would take much more incentive. I have had problems moving IRA funds about 30% of the time and it’s a pain even when it is performed correctly.

I happily took a penalty a few years ago, to move my CD money to PenFed 3.5% 5 year. I have a sizable amount of Roth IRA CD's at the old place that I don't deem worthy of transferring, due to the hassle factor that you mention, jazz4cash, lol. Hoping to get higher rates as they 'autorenew' one by one, stress free.

 

[audreyh1]

Here is a tool for help with the math for breaking a CD
https://www.depositaccounts.com/TOOLS/BREAK-CD-CALCULATOR.ASPX
We had several CDs at Ally B which were carrying interest rates under .75 with less than a year left but only two months of penalty--At current rates, it was a clear winner to break them all.

Yeah, that’s a great tool.

 

[Toast]

@NWSteve

Great calculator! Thank you for sharing the link.

 

[Jerry1]

Maybe not the most financially sound advice, but I would not bother for $250 on $100K. I would ask the current to match or give me some concession, but even with that, I wouldn't spend much time with it.

 

[target2019]

Here is a tool for help with the math for breaking a CD
https://www.depositaccounts.com/TOOLS/BREAK-CD-CALCULATOR.ASPX
We had several CDs at Ally B which were carrying interest rates under .75 with less than a year left but only two months of penalty--At current rates, it was a clear winner to break them all.

Thanks. I was looking for that on the weekend.

 

[ShokWaveRider]

Lock and leave for us, not worth chasing unless very low. But we do not lock into low CDs. ~4.0% is the average of our current 2 CD stash. All insured up to $1m by NCUA. OK till 2024. We do not even take interest ....... yet.