Best CD, MM Rates & Bank Special Deals Thread 2022 - Please post updates here

[Another Reader]

My online savings account with Bask Bank is now up to 4% from 3.85%.

My email said 4.03 percent. Wonder what will happen when Treasury yields start to drop.

 

[audreyh1]

My email said 4.03 percent. Wonder what will happen when Treasury yields start to drop.

Cash rates at banks are sensitive to the Fed Funds rate which drives the shortest end. I don’t think they will be dropping until the Fed drops their funds rate which I don’t expect to happen for a long while.

 

[Another Reader]

Cash rates at banks are sensitive to the Fed Funds rate which drives the shortest end. I don’t think they will be dropping until the Fed drops their funds rate which I don’t expect to happen for a long while.

Cash rates at some banks are sensitive to the Fed Funds rate...not seeing that with the big banks, so for some there are other factors. The little guys have limited sources of capital, which is why they have to be more competitive on deposit rates.

 

[audreyh1]

Cash rates at some banks are sensitive to the Fed Funds rate...not seeing that with the big banks, so for some there are other factors. The little guys have limited sources of capital, which is why they have to be more competitive on deposit rates.

Of course not. The big retail banks count on their loyal customers who leave their cash there in spite of teeny rates. Online high yield savings accounts compete with each other for deposits and pay much higher interest and have been increasing as the Fed fund rates increase.

 

[John Galt III]

I'm beginning to think that the 5-year, 5% uncallable CD has sailed; we missed the boat.

I know this was discussed a lot already. But the conventional wisdom is that most of the callable 5 year CDs will indeed be called ? And some people were arguing in favor of buying the callable CDs anyway?

Tempted to buy a callable 5 year CD at 4.85% I see on Vanguard.

 

[Chuckanut]

I know this was discussed a lot already. But the conventional wisdom is that most of the callable 5 year CDs will indeed be called ? And some people were arguing in favor of buying the callable CDs anyway?

Tempted to buy a callable 5 year CD at 4.85% I see on Vanguard.

Are you being amply rewarded for buying the callable CD instead of the non-callable CD? I would need to see at least 0.5% more to tempt me. At 1% more I would probably jump at it. Even then I might consider splitting the funds and buying one callable and one non-callable CD. YMMV.

 

[NomDeER]

Are you being amply rewarded for buying the callable CD instead of the non-callable CD? I would need to see at least 0.5% more to tempt me. At 1% more I would probably jump at it. Even then I might consider splitting the funds and buying one callable and one non-callable CD. YMMV.

I think mileage will vary. Some people are just looking for the best income for the next year or two. Some maybe don't want to commit their cash for very long. Others want to be sure that that it isn't callable because there probably won't be great fixed income investment options if it is called and they don't plan to invest the money elsewhere or use it for living expenses.

Part of what makes it hard for me to make a decision is that I don't have a good understanding of how much rates have to decrease for a bank to call a CD. Does anyone have any insight into that?

Vanguard's rates for non-callable five-year CDs are at 4%, which is actually lower than my bank. If I'm going to get something that is callable, I think I want to get more than 4.85% right now. That's because, if it's called, there's probably not going to be great options and there are callable options with better yields. The increased yield from something that is callable has to be worth that for me. Most of the CDs and bonds I've bought this year are not callable. The few that are callable are not CDs. I've bought either an agency bond or an A-rated corporate bond. There probably are people who think that I'm being too conservative and there probably are some people who think I'm not being conservative enough.

 

[John Galt III]

NomDeEr wrote : "Part of what makes it hard for me to make a decision is that I don't have a good understanding of how much rates have to decrease for a bank to call a CD. Does anyone have any insight into that? " That's my concern too. If I buy the callable 5 year CD at 4.85% and they call it in 12 months, what rate can I get on another callable ( or non callable ) 5 year CD? 4.5% ? 4.0 % ? 3.0 % ? I haven't found any numbers out there about that situation. Would I then wish I had gotten the non callable 5 year CD at 4.0 ? Maybe get one of each, ha ha. Not by design, but by impulse, I have been buying up a herd of CDs at 2 year, 3 year, 4 year, 5 year, and even 6 year terms. All non callable, so far.

 

[John Galt III]

I'm beginning to think that the 5-year, 5% uncallable CD has sailed; we missed the boat.

I think there is still hope. I was despairing that 5 year CD rates had topped out a while ago, but then they went up some more!

 

[aja8888]

Originally Posted by erkevin View Post
I'm beginning to think that the 5-year, 5% uncallable CD has sailed; we missed the boat.

The FED has said there are more rate hikes to come.

 

[Sunset]

The FED has said there are more rate hikes to come.

My thought is in 3 more Fed rate hikes, the Fed rate will be 1% higher than it is now.... that has to have a positive effect on at least the short term rates. So higher rates are coming.

 

[audreyh1]

My thought is in 3 more Fed rate hikes, the Fed rate will be 1% higher than it is now.... that has to have a positive effect on at least the short term rates. So higher rates are coming.

But at which durations? This may be confined to the very short end while intermediate and long rates hold steady or continue to drop.

 

[jldavid47]

But at which durations? This may be confined to the very short end while intermediate and long rates hold steady or continue to drop.

At some point something will have to give. Either long-term rates will move up or short-term rates will move down. The current inversion will not last forever.

IMO, what the Fed does with their tapering program is more important for longer-term rates than the funds rate. If they stay the course on QT, longer-term rates will almost certainly rise.

 

[gravy train]

Capital 1. Raised 5 year cd. 4.25 to 4.40

 

[John Galt III]

Capital 1. Raised 5 year cd. 4.25 to 4.40

Woohoo ! Yayess ! Yayess !

 

[njhowie]

Picked up 14-month 5.53% in secondary market this morning.

 

[John Galt III]

I'm looking at a callable CD online. I went into the buy screens, and it has the following :

Callable Yes
Call timing 03/27/2023 at 100 on 15 days notice
Call type Discrete
Full or partial call —
Redemption details —
Conditional call —
Make whole call No
Call notice 15 Days

--------------------------------------------------------------------

My question is about the 'make whole call No'

Does that mean if I invest $5,000 I may not get the $5,000 back ? ie, I will not be 'made whole' and maybe I will get a 'market price' back, which may be different from $5,000? I know I get to keep the already earned interest, but what about the principal?

Edit to add : did some more research and looks like 'make whole' means the CD issuer would have to pay off my $5,000 investment plus all interest I * would have earned * if the CD were not called in early. I do not expect to get the future interest anyway, so maybe the 'make whole call = No' is just fine.

So a 'make whole call No' feature is pretty standard in a callable CD ?

 

[braumeister]

FWIW, I was talking with my Fidelity guy this morning and he said their money market, FZDXX, should be around 4.25% next week. It's about 3.8% now, so that's interesting.

 

[njhowie]

Does that mean if I invest $5,000 I may not get the $5,000 back ? ie, I will not be 'made whole' and maybe I will get a 'market price' back, which may be different from $5,000? I know I get to keep the already earned interest, but what about the principal?

Edit to add : did some more research and looks like 'make whole' means the CD issuer would have to pay off my $5,000 investment plus all interest I * would have earned * if the CD were not called in early. I do not expect to get the future interest anyway, so maybe the 'make whole call = No' is just fine.

So a 'make whole call No' feature is pretty standard in a callable CD ?

Make whole call may apply to bonds, not applicable for CDs. Maybe it can be applicable for CDs, but I've never seen one. With CDs, if they call, it is going to be at 100.0 always. If you bought $5000 of CDs, you get your $5000 back and any accrued interest up until the call date. No need to make it any more complicated.

 

[audreyh1]

FWIW, I was talking with my Fidelity guy this morning and he said their money market, FZDXX, should be around 4.25% next week. It's about 3.8% now, so that's interesting.

I assume he was anticipating the Fed rate hike.

 

[PatrickA5]

I assume he was anticipating the Fed rate hike.

Most of my non-retirement money is in FZDXX. My guess is it ends up around 5% early next year. How long it stays there is anybody's guess.

 

[Ready]

I’m waiting for Vanguard to approve my link to Utah First Credit Union so that I can open up my 5% 22 month CD, but now I’m wondering if it makes sense to hold off for a better rate. I’m not thrilled with Vanguard at the moment. They won’t let me send money to a bank account until almost two weeks after I add it to my account. Pretty ridiculous.

 

[njhowie]

I’m waiting for Vanguard to approve my link to Utah First Credit Union so that I can open up my 5% 22 month CD, but now I’m wondering if it makes sense to hold off for a better rate. I’m not thrilled with Vanguard at the moment. They won’t let me send money to a bank account until almost two weeks after I add it to my account. Pretty ridiculous.

So buy some now, and if it goes higher buy some more. Folks really need to stop playing for the last tenth of a percent. Come on, where have rates been the past 10 years? Now you're pussyfooting because 5% isn't good enough? It's laughable if you think about it.

 

[braumeister]

Most of my non-retirement money is in FZDXX. My guess is it ends up around 5% early next year. How long it stays there is anybody's guess.

Probably not very long IMHO.
This is the time, starting a month or two ago, to be locking in the best 3-5 year rates you can find.

Of course, people here have been saying that for a while now, so nothing new.

 

[audreyh1]

Most of my non-retirement money is in FZDXX. My guess is it ends up around 5% early next year. How long it stays there is anybody's guess.

Listening to Powell’s speech today, he seems to think yeah get to over 5% first half next year and stay there for a long time due to the very tight labor market. He talks like the 5% fed rate could last into the following year. They revise this outlook every Fed meeting. Next meeting is in February.

Probably not very long IMHO.
This is the time, starting a month or two ago, to be locking in the best 3-5 year rates you can find.

Of course, people here have been saying that for a while now, so nothing new.

So the outlook above would be for a MM fund like FZDXX, not for 3-5 year bonds which respond more to economic outlook.