What would you do?

[Drake3287]

Here's an interesting one. As a result of Chase Bank taking over First Republic Bank where I have one of my $100k CD's, I now have the option of withdrawing my money from this 4% CD without any penalties. It currently has 4 months until maturity.

I could easy take this money and open a 5.10%, 12 month CD at another local bank and make some easy money. Question is, what will rates be like in 4 months? I'm sort of betting on the Federal Reserve dropping rates in the coming months so it might make sense to move it now for this guaranteed 5.10% for 12 more months.

Any opinions or crystal balls out there?

 

[COcheesehead]

Ladder, ladder, ladder.

 

[luckydude]

Here's an interesting one. As a result of Chase Bank taking over First Republic Bank where I have one of my $100k CD's, I now have the option of withdrawing my money from this 4% CD without any penalties. It currently has 4 months until maturity.

I could easy take this money and open a 5.10%, 12 month CD at another local bank and make some easy money. Question is, what will rates be like in 4 months? I'm sort of betting on the Federal Reserve dropping rates in the coming months so it might make sense to move it now for this guaranteed 5.10% for 12 more months.

Any opinions or crystal balls out there?

Nobody can predict the future, and any opinion offered here is just a guess.

That said, if it were up to me, I would open the 5.1% 12-month CD. As the saying goes, a bird in hand is better than two in the bush.

And if you guess wrong and the rate goes up in 4 months by, say, 25 basis points, you would be out an extra $250. No offense, but that's peanuts in the grand scheme of things and not even worth a second thought.

 

[Car-Guy]

If you think rates are going to drop soon, take it and reinvest now at 5.1%.

 

[jazz4cash]

Ladder, ladder, ladder.

This

 

[DrRoy]

No promises, mind you, but I think it will be longer than 4 months before rates fall.

 

[Drake3287]

That said, if it were up to me, I would open the 5.1% 12-month CD. As the saying goes, a bird in hand is better than two in the bush.

That's exactly my thinking and with already having many larger CD's, I've certainly been laddering my accounts over the years. It's just that at some point it's hard to pass up a free opportunity to a guaranteed rate increase, almost like getting a free $1k for the trouble of closing/opening an account. Personally I'd be happy with all my CD's being locked in for 5% for 5 years but I know that's not going to happen.