is now the time for 5 year cd?

[RetiredAt55.5]

Cfg bank 5 yr is 4.5% apy, 3 yr is 4.6%

12 and 18 month are 4.75%

What's nice about them is their MM is also pretty good - 4.25%

Their website is pretty basic though.

 

[COcheesehead]

There are corporates with non callable 5 year features yielding 5.2%. I just bought some.

 

[jazz4cash]

There are corporates with non callable 5 year features yielding 5.2%. I just bought some.

I don’t know how you keep finding these. Not exactly a CD, though. It pays to ladder whatever you can find.

 

[COcheesehead]

I don’t know how you keep finding these. Not exactly a CD, though. It pays to ladder whatever you can find.

It was one discussed in the golden period thread. A rated. I am the ladder king. LOL.

 

[Eladio]

Discover bank has longer term CDs. 10 year at 4.4%.

https://www.discover.com/online-banking/cd-rates/

 

[bltkmt]

Discover bank has longer term CDs. 10 year at 4.4%.

https://www.discover.com/online-banking/cd-rates/

Their savings accounts pay 3.3%. Not worth it to me to tie up for 5 years for another 1.1%.

 

[COcheesehead]

You go long when you think rates will drop and the longer end has been dropping since Fall on recession fears. Short term rates like savings accounts have been going up, but will be the next to fall if rates drop later this year.

 

[Al18]

Discover is paying the same interest rate for 5, 7 and 10 years: 4.40% APY. Not worth it IMHO, especially considering early withdrawal penalties of 18 months interest for 5 years and 24 months for 7 and 10 year CD’s

 

[SunGuy]

No, just stick with stocks. Compounding is your friend.

 

[erkevin]

This is just a vent: my elderly MIL has some money in CDs. Three of which are at US Bank. I have been put in charge of her financials since she is nearly 92 and has significant dementia. In looking at the CDs, one of them rolled over/renewed in January of 2021 at an interest rate of .05%. Of course, I was aghast at that rate and contacted US Bank to determine early-closing penalties. They charge 3% of the principal and at .05%, that is 60 years worth of interest. They claim that .05% was competitive at the time of renewal (BS!). So it just came up for renewal again last weekend and you have 10 days to close it out from that date. I went to the website and it had renewed.....at 0.05% again! Obviously, we closed it out. Talk about banks taking advantage of people!

 

[Car-Guy]

^^^^^
That's legalized robbery. (I guess it's legal?)

One of the nice things around brokered CD's, they don't roll over.

 

[frank]

I always set my cd/s up so they automatically roll into a checking or savings account when they mature, that way I have the choice.

 

[wolf]

I always set my cd/s up so they automatically roll into a checking or savings account when they mature, that way I have the choice.

Me too. Should be "standard" practice when investing in CD's.

 

[jazz4cash]

I was aghast at that rate and contacted US Bank to determine early-closing penalties. They charge 3% of the principal and at .05%, that is 60 years worth of interest. They claim that .05% was competitive at the time of renewal (BS!).

Yeah, I think that rate is competitive with BofA and their ilk. The definition of usury, does not apply, but it should. Think of all the folks that rely on these banks but don’t have a family member to help them from being robbed legally.

 

[oiseux]

snip...
one of them rolled over/renewed in January of 2021 at an interest rate of .05%. Of course, I was aghast at that rate and contacted US Bank to determine early-closing penalties. They charge 3% of the principal and at .05%, that is 60 years worth of interest.
!

That is a horrific penalty and the whole practice seems exploitive. I've seen financial talking heads on trying to motivate the general public to move their CDs to better banks. I'll be first to admit that you get comfortable and can easily miss a renewal notice. I just swapped over a CD to 4.86% .

 

[Sunset]

This is just a vent: my elderly MIL has some money in CDs. Three of which are at US Bank. I have been put in charge of her financials since she is nearly 92 and has significant dementia. In looking at the CDs, one of them rolled over/renewed in January of 2021 at an interest rate of .05%. Of course, I was aghast at that rate and contacted US Bank to determine early-closing penalties. They charge 3% of the principal and at .05%, that is 60 years worth of interest. They claim that .05% was competitive at the time of renewal (BS!). So it just came up for renewal again last weekend and you have 10 days to close it out from that date. I went to the website and it had renewed.....at 0.05% again! Obviously, we closed it out. Talk about banks taking advantage of people!

Had same issue with my FIL. Bank was robbing him.

This is the first I've heard of a CD penalty being based on the principal and not simply a loss of 6 months interest. That is a nearly criminal penalty..

Thank you for naming the bank

I just had to check, and Fifth-Third bank does a % of the principal as the penalty, but it does limit it to a maximum of the interest earned. How nice of them...

 

[frank]

banks these days are kind of like the government, what they do for a living is sit around and try to figure how to separate a person from their money.

 

[jazz4cash]

Had same issue with my FIL. Bank was robbing him.



This is the first I've heard of a CD penalty being based on the principal and not simply a loss of 6 months interest. That is a nearly criminal penalty..



Thank you for naming the bank



I just had to check, and Fifth-Third bank does a % of the principal as the penalty, but it does limit it to a maximum of the interest earned. How nice of them...

I have seen penalties calculated as ‘x’ days of interest to include eating into principal, but never a flat percentage. You really need to pay attention to penalties, grace periods, auto renew, etc.

 

[mojavesue]

banks these days are kind of like the government, what they do for a living is sit around and try to figure how to separate a person from their money.

At least with the government you get a little something in return. Military, Medicare, SS, highway interstate system, etc. At least thats how I look at it when I am paying federal taxes.

 

[horrnsfan]

I have ten CD's which have varying terms. Seven will mature this year. If I could get 4.7% for a five year CD I would jump all over that. I am likely looking at 24-36 month CD's.

 

[frank]

bought a cd today at all in credit union in alabama. 5.05 apy jumbo 60 mos. I had to sign up with one of their drop down list folks to be eligible. I used ausa or association of the us army. basic membership was free for the first two years.

 

[Drake3287]

I have ten CD's which have varying terms. Seven will mature this year. If I could get 4.7% for a five year CD I would jump all over that. I am likely looking at 24-36 month CD's.

Sort of surprised that you haven't taken advantage of simply paying early withdrawal penalties, especially with the 11, 12 and 18 month 5% CD's out there.