One month CD 4.95%, feedback please

[Sojourner]

I'm thinking of putting $30k or so of idle cash in my elderly DF's brokerage account into this CD. I would go longer (say, 3-6 months) but don't want to in this particular case. Here are the details.

Is this a good/reasonable choice for a one-month allocation of funds? Any concerns with this particular CD or bank? This will be my first brokered CD purchase and I just want to be sure it's a reasonable choice. Thanks!

 

[Car-Guy]

It's FDIC insured and you'll be well below the limits. Good for ~$125 in your scenario. Of course that's before any applicable tax.

When I buy a brokered CD, I don't particularly care about the bank/CD if it's FDIC insured and non callable.

 

[Al18]

Deposit accounts.com gives this bank an A+ rating and it’s non-callable - so no issues. That said, it’s not worth the trouble for a 1 month CD for $123.75 in interest. If you don’t want to lock the money up, I would deposit the money in an online savings account such as Discover currently paying 3.75% interest

 

[Sojourner]

Deposit accounts.com gives this bank an A+ rating and it’s non-callable - so no issues. That said, it’s not worth the trouble for a 1 month CD for $123.75 in interest. If you don’t want to lock the money up, I would deposit the money in an online savings account such as Discover currently paying 3.75% interest

I would do exactly this (bolded above) under different circumstances, but in this particular case moving the money to a new online savings account is not an option. Buying this CD, however, would be as easy as one click of a button, so I'm not sure what "trouble" you're referring to. I know it's not much money, but it's better than $0 which is what it's earning now!

 

[Al18]

Trouble meaning you’ll have to buy another 1 month CD in a month…

 

[SecondCor521]

When I was looking at brokered CDs a month or two ago for an elderly relative, one issue came up that was a consideration for me not buying them: the conditional death put.

At least several CDs offer this feature, which seems to be that if the CD holder dies during the period, the bank will buy it back at par. I think they also pay interest through date of death as well, but am less sure about that. There is apparently paperwork to deal with if this happens.

Just the hassle of paperwork if my relative died during the CD term was enough to make me decide it wasn't worth it. There would be a lot of other paperwork as well, and the CDs would just add on top of that.

But in our case the alternative was a Vanguard MM fund paying a couple of percentage points, and the amount involved was an amount I thought we were willing to forgo to have simplicity.

You'll have to decide for yourself what the chances are of your DF passing in the next month, and whether any potential hassle is worth it.