Ridiculous CD rates - where now

[target2019]

This doesn't help those with the short term problem, but it provides a long-term nostalgic view for those say 65 and older. We experienced almost 20% interest rate when we started careers. Now we hear about -0- or even negative interest rates I'm pretty much numb about what comes next. But we do have decisions coming up.

 

[mz44]

I have CDs spaced out over the next few years, but with the rates so low where else can you put safe money and get a descent return ?


Thinking about some short term bond funds ?

[emoji8][emoji10][emoji9]

 

[njhowie]

This doesn't help those with the short term problem, but it provides a long-term nostalgic view for those say 65 and older. We experienced almost 20% interest rate when we started careers. Now we hear about -0- or even negative interest rates I'm pretty much numb about what comes next. But we do have decisions coming up.

I personally believe the Fed is lost, they are shooting in the dark and are gambling with our country's financial well-being. The central banks can do whatever they like in the short term, but in the longer term economic and market fundamentals and dynamics will overpower any policy approach they may choose. In short, they are playing with fire, and (we) will very likely get burned.

 

[Cayman]

I personally believe the Fed is lost, they are shooting in the dark and are gambling with our country's financial well-being. The central banks can do whatever they like in the short term, but in the longer term economic and market fundamentals and dynamics will overpower any policy approach they may choose. In short, they are playing with fire, and (we) will very likely get burned.

Agreed. Chaos reigns.This household of savers has decided to wait it out, we don't see much room for creative strategy in this environment. Sitting on many years of cash, equities are at 36% AA. So we're going to wait it out, maybe pick up a few houses next year. Eyeing a big fat Jewelry splurge. Uncharacteristic for me but I'm tired of saving...gonna blow a tiny bit while I feel like it. Plus it's a hard asset, or at least that sounds like a good rationale.


Note- OP, 5 year CDs can be had above 1.25% and the $ amount you'd pay for early withdrawal penalty may be appealing to you, depending on your circumstances.

 

[jazz4cash]

I have a couple of the PenFed 5% CDs from almost 10 years ago. Mine mature in Jan 2021. Sorry to see these come to the end!

Yes....I'm savoring those certificates!
I even went back and perused some of the threads where they were discussed. You started one of the first threads and I wrote the last post. There was quite a bit of drama surrounding the way they were offered. They tried to use the promo to encourage renewal of maturing CDs. Is it too much to hope for Penfed to offer a promotion to keep many of us from taking our money and running? Or, maybe Penfed is savoring the date they no longer have to pay 5%! Apparently it was a $240M offering.

https://www.early-retirement.org/forums/f28/penfed-cd-reservation-offer-51751.html

 

[RenoJay]

The system is broken and the Federal Reserve is the root cause.

Amen.

 

[RenoJay]

Yes, IMO it’s all about protecting the credit markets (cheap credit!) which protects the stock market.

I think protecting the stock market is a side effect of Fed policy and that the goal is simply suppressed interest rates because otherwise America’s mountain of debt would be unserviceable.

 

[RunningBum]

This doesn't help those with the short term problem, but it provides a long-term nostalgic view for those say 65 and older. We experienced almost 20% interest rate when we started careers. Now we hear about -0- or even negative interest rates I'm pretty much numb about what comes next. But we do have decisions coming up.

I don't remember it nostalgically. Along with high savings rates came high mortgage and car loan rates, as well as double digit inflation.

 

[Sunset]

I don't remember it nostalgically. Along with high savings rates came high mortgage and car loan rates, as well as double digit inflation.

No kidding.
My first mortgage was around 14% and that was 2% less than the going bank rates since it was a "in the family" deal

 

[target2019]

This doesn't help those with the short term problem, but it provides a long-term nostalgic view for those say 65 and older. We experienced almost 20% interest rate when we started careers. Now we hear about -0- or even negative interest rates I'm pretty much numb about what comes next. But we do have decisions coming up.

I don't remember it nostalgically. Along with high savings rates came high mortgage and car loan rates, as well as double digit inflation.

And we all survived...

When I said "long-term nostalgic view" I was speaking of the entire period - 1955 through 2020. There are many periods in that time to consider.

 

[LRDave]

No kidding.
My first mortgage was around 14% and that was 2% less than the going bank rates since it was a "in the family" deal

Our $39K 2BD/1BA first home had a 15.5% FHA loan in the summer of '82.

I don't remember 80s/90s bank CDs and Savings Bonds as the "good ol' days". I remember it as: losing to inflation every single day. Only in hindsight do these look good to me.

 

[Chuckanut]

No kidding.
My first mortgage was around 14% and that was 2% less than the going bank rates since it was a "in the family" deal

My mortgage back then was 12 3/4 % !!!

I was overjoyed when I managed to refinance at under 10%. No more double digit mortgage rates. Eventually I refinanced a second time at a variable rate of 1.6% over the One Year T-Bill rate. That was very nice.

 

[MJ]

I'm really glad I invested $500 in GTE 5 year add-on 3% certificate last Aug 2019. As some of my certificates have been and will be maturing, I'll add it to the existing certificate.If I need any money that has been sitting in the GTE certificate for a year or more, I'll be able to withdraw it with only a 6 month interest penalty so the money still earned 1.5% or more.

 

[pb4uski]

^^^ You make me sad. I wish that I had thought to do that for me and DW.

 

[John Galt III]

Yes....I'm savoring those certificates!
I even went back and perused some of the threads where they were discussed. You started one of the first threads and I wrote the last post. There was quite a bit of drama surrounding the way they were offered. They tried to use the promo to encourage renewal of maturing CDs. Is it too much to hope for Penfed to offer a promotion to keep many of us from taking our money and running? Or, maybe Penfed is savoring the date they no longer have to pay 5%! Apparently it was a $240M offering.

https://www.early-retirement.org/forums/f28/penfed-cd-reservation-offer-51751.html

I added $100K to my PenFed 5 year cd's in 2019, so I have 3.5 % until 2024. Woohoo !

 

[MJ]

^^^ You make me sad. I wish that I had thought to do that for me and DW.

I almost hesitated because the rates were still at 3.5 to 3.7% but like I said I looked at it as a conservative small "investment" for myself and my wife. I'll be able to put in up to 500K with POD.
I hope GTE continues to do well for at least the next 4 years while we take advantage of their promo. They'll be paying out an extra (ouch) 2%+ on all that added money. GTE's current 5 year certificate is at .40%.

 

[bobbee25]

Pen Fed was great years ago but has fallen to the bottom on CD rates. I had a 5 year cd ladder and have been withdrawing each year. This year will be the final good bye.

 

[Dtail]

I almost hesitated because the rates were still at 3.5 to 3.7% but like I said I looked at it as a conservative small "investment" for myself and my wife. I'll be able to put in up to 500K with POD.
I hope GTE continues to do well for at least the next 4 years while we take advantage of their promo. They'll be paying out an extra (ouch) 2%+ on all that added money. GTE's current 5 year certificate is at .40%.

Did the same in the IRA and Taxable space. I would load even more in there past the NCUA limit, but don't know what the financial effect will be on GTE with all these 3%+ payments.

 

[OAG]

Yes....I'm savoring those certificates!
I even went back and perused some of the threads where they were discussed. You started one of the first threads and I wrote the last post. There was quite a bit of drama surrounding the way they were offered. They tried to use the promo to encourage renewal of maturing CDs. Is it too much to hope for Penfed to offer a promotion to keep many of us from taking our money and running? Or, maybe Penfed is savoring the date they no longer have to pay 5%! Apparently it was a $240M offering.

https://www.early-retirement.org/forums/f28/penfed-cd-reservation-offer-51751.html

I have over $200K some of which is in 5% (plus almost 10 years of accrued interest) all set to move to NFCU automatically by a PENFED option at maturity. Will let you know if PENFED offers me a deal to leave that $200K there at PENFED. Frankly, doubt it but who knows as I think they will see very few rollovers at the current CD rates at PENFED. Better, but not by much, at NFCU.

 

[34rlsa]

I have over $200K some of which is in 5% (plus almost 10 years of accrued interest) all set to move to NFCU automatically by a PENFED option at maturity. Will let you know if PENFED offers me a deal to leave that $200K there at PENFED. Frankly, doubt it but who knows as I think they will see very few rollovers at the current CD rates at PENFED. Better, but not by much, at NFCU.

Would you mind providing some details regarding how you set up the auto transfer to NFCU?

Also are your funds in a IRA CD account or regular CD account?

 

[audreyh1]

You can set up a transfer to an external account when a CD matures.

 

[Montecfo]

Well with the Fed promising near-zero short-term rates till end of 2023, my 3.35% CDs with Signal Federal from last year are looking good, even though they reneged on my ability to add to them at anytime.

Wish I had done more. Meantime I think I'll be primarily in short-term bond funds with my expiring CDs-wheee they were before rates rose.

 

[retired1]

No idea of current rates, but you could look into SPDAs (Single Premium Deferred Annuity.) Years ago, I beat current CD rates with a SPDA. The SPDA had a short term (3 years.) IIRC, I beat CDs by 1%. Penalties for early withdrawal were fairly severe as I recall, so caution advised. Just a thought so YMMV.

I recently opened a DYIA at 3.45% for 5 yrs. Taxes on the interest is deferred and after 5 years you can cash out just like CD.

 

[pb4uski]

What is a DYIA? What company was it with? 3.45% for 5 years sounds pretty good.

 

[jazz4cash]

You can set up a transfer to an external account when a CD matures.

I don’t have that option since my CD is IRA. I guess because additional paperwork is required for an IRA transfer. Anyway I would prefer to wait and see what new rates will be. Don’t forget, these promo rates were a follow up to a promo three years before and it was structured as an incentive to keep funds from transferring out of PFCU. Maybe they’ll do it again but not likely.