End of Year CD Deals

[CaptTom]

I don't get the point of a no-penalty CD. What's the difference between that and a savings account?

 

[pb4uski]

With a savings account you can make additional deposits and withdrawals at will... not so with a CD... even a no-penalty CD.

 

[audreyh1]

I don't get the point of a no-penalty CD. What's the difference between that and a savings account?

You are usually offered a higher rate.
You lock in that rate for the term.

 

[CaptTom]

You are usually offered a higher rate.
You lock in that rate for the term.

Right, but what's in it for the bank?

I promise not to make any more deposits in this account, and I say that I *hope* to keep the money in there for xx months, but no penalty if I don't.

If rates go up, I just withdraw and re-deposit at the higher rate. If rates go down, I keep my money in the higher-rate account.

It's a lose-lose for the bank, right?

I'm not accustomed to seeing banks do things which benefit me, at their expense.

 

[Sunset]

Right, but what's in it for the bank?

I promise not to make any more deposits in this account, and I say that I *hope* to keep the money in there for xx months, but no penalty if I don't.

If rates go up, I just withdraw and re-deposit at the higher rate. If rates go down, I keep my money in the higher-rate account.

It's a lose-lose for the bank, right?

I'm not accustomed to seeing banks do things which benefit me, at their expense.

No, it's more like a win-win for the bank and customer.

Obviously banks don't think interest rates will zoom up, and they know most folks are lazy.
What this means is most folks will deposit the money, and even more folks than normal will deposit money as it is risk free. So the bank gets lots of cd money deposited which is more stable money.

Then most of the money will sit there for the full term and the bank gets to loan out this money at much higher rates.

 

[audreyh1]

Right, but what's in it for the bank?

I promise not to make any more deposits in this account, and I say that I *hope* to keep the money in there for xx months, but no penalty if I don't.

If rates go up, I just withdraw and re-deposit at the higher rate. If rates go down, I keep my money in the higher-rate account.

It's a lose-lose for the bank, right?

I'm not accustomed to seeing banks do things which benefit me, at their expense.

Banks are trying to attract more deposits. They are probably "banking" on those deposits being sticky.

 

[jazz4cash]

Right, but what's in it for the bank?



I promise not to make any more deposits in this account, and I say that I *hope* to keep the money in there for xx months, but no penalty if I don't.



If rates go up, I just withdraw and re-deposit at the higher rate. If rates go down, I keep my money in the higher-rate account.



It's a lose-lose for the bank, right?



I'm not accustomed to seeing banks do things which benefit me, at their expense.

I think it may attract a bit of money that's on the margin. I might deposit more in a no penalty CD if I know I can get it out in case of an emergency or higher rates. The bank gambles that most of these depositors at least have a desire to leave the funds in the account for the full term as opposed to a regular savings account that might get used as a piggy bank.

 

[brucethebroker]

My Dad just moved a big chunk to Chase for FDIC insurance coverage. What their savings and CD’s pay is still [-]criminal[/-] woefully uncompetitive.

We left Chase about 2 years ago, and also love Ally. Local Chase branches began browbeating people in line for tellers to use the in-lobby ATM's. If you declined, the "line manager" then began talking down to you like you could not understand computers and offered to walk you through it. Closing the drive through windows was the last straw. We complained-no one listened. I see where they have now re-opened drive through service. Too little-too late.

 

[audreyh1]

Chase rates are horrible, probably the lowest I've ever seen. I enjoyed their new account bonuses this year though. I opened accounts for the convenience of paying credit cards plus transferring funds to one sibling.

 

[mrfeh]

My current cutoff for CDs is 2.5%, for no more than 3 years. If I can't find such a deal, I'll use I Bonds or short term bond funds instead.

 

[jazz4cash]

My current cutoff for CDs is 2.5%, for no more than 3 years. If I can't find such a deal, I'll use I Bonds or short term bond funds instead.

I'll take some of those. Let us know if you find them. I'll getting 1.92 on the Penfed 3 yr currently and agree the I bond/ ST funds look better.

 

[audreyh1]

Hmmm - it's November. Usually deals show up by now.

 

[jazz4cash]

I went into Penfed today to drop off some paperwork. The 3yr IRA CD rate is a tad lower than I posted earlier....1.87 vs. 1.92 for taxable CD. I asked about end of year deals and they said if rates change it will be on the 1st of the month and members are notified at the same time as the CSRs. I don't think it's accurate that rates only change on the 1st.

 

[audreyh1]

Ally now offers a 12 month "high yield" CD for 1.65%. Minimum $25K deposit.

 

[Another Reader]

Ally now offers a 12 month "high yield" CD for 1.65%. Minimum $25K deposit.

Goldman Sachs and Capital One offer the same rate, with $500 and no minimum respectively, per www.depositaccounts.com.

 

[kaneohe]

.......................... The 3yr IRA CD rate is a tad lower than I posted earlier....1.87 vs. 1.92 for taxable CD. ...............

I was surprised by this too when IRA CD renewed. Rep explained that IRA CDs have a component of no-penalty liquidity (for RMDs for example) .......so just as savings account typically has lower rates vs longer term CDs , IRA CDs typically have lower rates than non-IRA CDs.

 

[audreyh1]

I got an email from Ally Bank that said I would get an additional 0.05% on my renewing CDs as a "loyalty bonus" which would bump the 11 month no penalty CD from 1.5% to 1.55%.

 

[jazz4cash]

I was surprised by this too when IRA CD renewed. Rep explained that IRA CDs have a component of no-penalty liquidity (for RMDs for example) .......so just as savings account typically has lower rates vs longer term CDs , IRA CDs typically have lower rates than non-IRA CDs.

Interesting. I am intrigued that you received this explanation (or any at all for that matter). It means I am being charged the RMD liquidity expense even though my CDs mature well before I reach RMD phase. Most of my other credit unions offer the same rate for taxable and IRA products, although the maturities available sometimes differ.

 

[ripper1]

Yes, please do! I just had a significant CD mature, and I just rolled it into my savings account since I didn't see anything worth putting it in. A nice 3% or so like the one from Pen Fed a few years ago would be sweet.

Yep, that was nice and have one more year to go on them. Nothing after 4 years still doesn't come close.

 

[audreyh1]

I just got notice from Synchrony of their "Cyber Week Special" deal of 1.75% for 13 months available through Dec 3. https://www.synchronybank.com/home/?UISCode=0000000

 

[Sunset]

I just got notice from Synchrony of their "Cyber Week Special" deal of 1.75% for 13 months available through Dec 3. https://www.synchronybank.com/home/?UISCode=0000000

Just be sure you don't ever need to cash it early as their penalties jump once over 12 months..
If you think you might cash it, then the 12 month cd at 1.65% is a safer and nearly the same value.


"
Penalty Amounts:

• Terms of 12 months or less: 90 days of simple interest at the current rate.
• Terms of more than 12 months but less than 48 months: 180 days of simple interest at the current rate.
• Terms of 48 months or more: 365 days of simple interest at the current rate.

"

 

[jazz4cash]

Last day for NASA FCU CD specials is tomorrow 11/30. It's 2.25 for 49 months/ 1.6 for 15.

 

[Scuba]

Fidelity has brokered CD's that pay 1.65% for 12 months, 1.95% for 2 years

 

[jazz4cash]

Fidelity has brokered CD's that pay 1.65% for 12 months, 1.95% for 2 years

Based on my experience of long delays to execute direct transfers between my CU's and Ally, vs. transfers from Fido, those brokered CD's are looking more attractive.

 

[jazz4cash]

Faked Out!

Last day for NASA FCU CD specials is tomorrow 11/30. It's 2.25 for 49 months/ 1.6 for 15.

I guess they decided to continue this offer after all.