Best CD, MM Rates & Bank Special Deals Thread 2023 - Please post updates here

[Spock]

I'm not willing to spend a lot of effort figuring out the relative health of banks when the CDs are being offered by brokerages and are FDIC insured. For FDIC insured banks, I'm confident that I'll get my money. (And, the benefit of a brokerage is that they take care of it for you if there is a problem. Vanguard has an alert on its bond screen informing people that Vanguard is currently working with the FDIC to get the funds for anybody who bought SVB CDs.)

People are joking about being altruistic by buying the highest yield CDs, but I really do think it's good to be buying from the banks that are not the biggest banks, which is the case for some of the higher yielding CDs. They need the deposits. Selling CDs is part of their business model and will help them maintain the assets they need to stay afloat. Panic or paranoia is the worst thing for these banks (and for the borrowers, depositors, and holders of bank bonds and equities and the bonds and equities of business using these regional banks).

But is your money REALLY at the "too big to fail" banks?

Bank of America, Citigroup,. JPMorgan Chase, Wells Fargo, Goldman Sachs, Morgan Stanley, BNY-Mellon, PNC Bank, State Street, Truist and U.S. Bank to make uninsured deposits totaling $30 billion into First Republic Bank

https://www.zerohedge.com/markets/first-republic-bank-shares-crash-exploring-strategic-options

 

[NomDeER]

But is your money REALLY at the "too big to fail" banks?

https://www.zerohedge.com/markets/first-republic-bank-shares-crash-exploring-strategic-options

Maybe I wasn't clear, but my point was that I buy CDs from banks of varying sizes, not just the biggest banks. I have bought a lot of CDs over the last year, many from banks I never heard of and don't fall into the "too big to fail" category. (Oddly, I would benefit in some ways if some of these banks failed now because I would get my money back now and would be able to invest that money at higher interest rates than I'm currently locked into for many of those CDs. Reinvestment risk probably is the biggest - though quite remote - risk for FDIC insured CDs, but not in this case.)

I think your point is that people who think that their money is at a too big to fail bank are mistaken because a bunch of banks have put money into First Republic to shore it up. (I think First Republic is a good example of the effect that panic can have on a bank.) But, I don't think that the fact that a bunch of big banks are helping out First Republic means that those big banks are vulnerable. Investing a few billion dollars by each of those huge bank is not going to make those banks likely to fail. Plus, banks take deposits and invest the money into all sorts of things. They don't just have massive mattresses where they keep the money.

 

[Freedom56]

Buying CDs from Discover and Capital One (two big credit card issuers and also big issuers of CDs) will help the largest swath of the population in this country. Your CD funds help people buy the latest gadget, book their Uber ride, eat out at nice restaurants, and buy apparel. As long as those people make their minimum monthly payment, the two credit card issuers are more than elated.

 

[GenXguy]

Yup, almost like it is an implicit contest among some posters. I locked in a 5 yr CD for my mom at 4.80%. Not fretting over missing 5%.
Will not subject myself to checking out rates all day along.

Yeah, I had to settle for a 4.9% 5 year but got a 5.05% 4 year and some other 5%+ for shorter 2 to 3 year. I'm ok with that.

 

[NomDeER]

Buying CDs from Discover and Capital One (two big credit card issuers and also big issuers of CDs) will help the largest swath of the population in this country. Your CD funds help people buy the latest gadget, book their Uber ride, eat out at nice restaurants, and buy apparel. As long as those people make their minimum monthly payment, the two credit card issuers are more than elated.

I can understand this argument. I can also understand the argument for supporting smaller regional banks that small businesses and homebuyers rely upon and may be hit hard by panicky customers withdrawing their deposits. I have CDs from Discover, but I also have CDs from smaller banks. With FDIC insurance, I don't feel compelled to choose only the big banks with name recognition.

 

[Car-Guy]

I "noticed" this morning that there are only about 1/2 as many brokered CD's available at Schwab and the rates for the best ones are down just a little (.05)... Maybe because of the weekend or maybe because a lot more folks bought CD's the past few days or maybe the banks are waiting to see what Powell does next week. Interesting.

 

[audreyh1]

I still see a large number of Charles Schwab Bank 5.35% 18 month CDs available at Fidelity. In fact the number was higher this morning compared to yesterday.

 

[PaunchyPirate]

I still see a large number of Charles Schwab Bank 5.35% 18 month CDs available at Fidelity. In fact the number was higher this morning compared to yesterday.

I just purchased one about 5 minutes ago. I've purchased CDs at my local bank before, but now that I've gotten comfortable buying T-Bills via my Schwab brokerage account, I decided to venture into CDs there too. 5.35% for 18 months, I can live with.

 

[Car-Guy]

I still see a large number of Charles Schwab Bank 5.35% 18 month CDs available at Fidelity. In fact the number was higher this morning compared to yesterday.

Yep, I see the Schwab CD's too (at Schwab ). It's the overall number of various bank offerings that is noticeably down this morning. However, still plenty out there.

 

[Freedom56]

The spreads in CD rates versus treasures is normally about 40 basis points higher. We currently have 100-140 basis point differences at the 2-5 years maturities (non-callable). This is due in large part to the pricing of CDs prior to treasury rates falling and CDs coming onto the market after. This is not too different from a few weeks ago when we had treasuries rates higher than many CD rates of the same duration. This is an abnormal situation that won't last. Either treasury rates move up or the more likely scenario with CD rates falling back when the current supply of CDs are exhausted.

 

[sengsational]

Non-callable CD picture today at Fidelity. 4 and 5 year 5% non-callable CDs are sold out. 1-3 years are still available at yields over 5%.

Today the 4 and 5 year inventory offered at Fidelity is down by half or more for the 3/23 dates, but they've added a bunch at 18 months.

 

[Jimonlimon]

Best CD, MM Rates & Bank Special Deals Thread 2023 - Please post updates here

I'm looking at a CD ladder to cover 2-5 years out and trying to decide whether to buy now or wait until after the next Fed Open Market Committee meeting next week.

For those who have tracked such things, do you think we will see a significant change in rates?

Current available rates through SCHWAB mostly at JPMorgan bank Utah are:
2 yr 5.25%
3 yr 5.00%
4 yr 4.95%
5 yr 4.90%

 

[pb4uski]

^^^ Who knows? But it seems to me that the differences that we are currently seeing between CD rates and similar maturity USTs and GSE bonds is the banks looking to attract deposits and a flight to quality of UST so I've been laoding up the truck on the 5%+ CDs to fill in gaps in my ladder. In fact, I've also been selling some lower yielding callable GSE bonds and replacing them with similar maturity 5%+ CDs.

 

[Chuckanut]

Best CD, MM Rates & Bank Special Deals Thread 2023 - Please post updates here

I'm looking at a CD ladder to cover 2-5 years out and trying to decide whether to buy now or wait until after the next Fed Open Market Committee meeting next week.

For those who have tracked such things, do you think we will see a significant change in rates?

Current available rates through SCHWAB mostly at JPMorgan bank Utah are:
2 yr 5.25%
3 yr 5.00%
4 yr 4.95%
5 yr 4.90%

The answer to your question is unknown and, IMO, not knowable.

Instead build a ladder that will allow you periodic opportunities to monitor and adjust your CD investments. Personally, I started with an 18 month ladder that had maturities every three months. Several have already matured and I have reinvested at today’s higher rates though I have yet to catch the highest ones. I have also extended my ladder out to 5 years though the four and five year steps are still rather weak as some are callable.

Keep in mind you can’t spend percentage points just the dollars you earn. Choose a method that gives the best chance of maximizing interest dollars [emoji385]

 

[mf15]

Amazing how fast CD's that pay monthly sell out on FIDO,just refresh the page
a few time over a half hour or less and gone.
Oldmike

 

[pb4uski]

^^^ Yeah, people like that montly income, but does it really matter if you have monthly income or 6 months of income in a MMF that gets replenished semi-annually?

 

[disneysteve]

^^^ Yeah, people like that montly income, but does it really matter if you have monthly income or 6 months of income in a MMF that gets replenished semi-annually?

It shouldn’t matter but it does. Most people can’t budget or save. If they have it, they spend it. Lump sums are bad for those folks. Heck, 70% of Americans live paycheck to paycheck so no surprise there.

 

[Sunset]

You can do a lot worse than 4.75% on an almost one year Cd with no early termination penalty. [emoji846]

Yep, I bought one, and consider it as simply cash.
Basically a saving account paying 4.75% is hard to find.

When I have a lot there, I just buy a number of different sizes, so I can cash out one without affecting the others.

 

[Gotadimple]

^^^^
Interesting, Schwab is offering 1yr American Express brokered CD's for 5.35%.

Yes and you will see that when brokers are willing to buy CDs in bulk, banks will offer a higher interest rate and brokers have the ability to handle the sales/redemption transactions better than bank systems. But most here have been buying their CD's directly with a bank.

I had a Texas bank advise me to check with my broker when I wanted to renew and existing CD - they said they often offer higher rates for a broker to do the transaction.

- Rita

 

[Car-Guy]

Yes and you will see that when brokers are willing to buy CDs in bulk, banks will offer a higher interest rate and brokers have the ability to handle the sales/redemption transactions better than bank systems. But most here have been buying their CD's directly with a bank.

I had a Texas bank advise me to check with my broker when I wanted to renew and existing CD - they said they often offer higher rates for a broker to do the transaction.

- Rita

Do you think that the (bold text above) is still true today? I would be very surprised. Back in the day when I messed with CD's I only bought directly from the banks. Now it's only through a broker.

 

[pb4uski]

It isn't true for me. In fact, I've never bought a CD from a bank. Back in 2019 when a number of credit unions were offering 3.0% to 3.5% specials I bought CDs from three different credit unions but that is the closest I've ever gotten buying a bank CD.

 

[JohnDoe]

I am probably about 2-4 years out from retirement but find it hard to pass up on a 5-10 year CD (or ladder) at 5% for a portion of my portfolio.

Heck, for my long term projections, I plug in a 7% return so actually locking in a guar 5% seems like a good idea.

I currently have about 25% sitting in SPAXX and have been slowing putting it back in the market but I am thinking some CDs wouldn't hurt. I am at a point where I don't really need to be aggressive at all.

Thoughts?

Also, how can you tell on Fidelity if a CD has a early W/D penalty?

Thanks.

 

[Spock]

I am probably about 2-4 years out from retirement but find it hard to pass up on a 5-10 year CD (or ladder) at 5% for a portion of my portfolio.

Heck, for my long term projections, I plug in a 7% return so actually locking in a guar 5% seems like a good idea.

I currently have about 25% sitting in SPAXX and have been slowing putting it back in the market but I am thinking some CDs wouldn't hurt. I am at a point where I don't really need to be aggressive at all.

Thoughts?

Also, how can you tell on Fidelity if a CD has a early W/D penalty?

Thanks.

Brokered CD's don't have an early withdrawal penalty. If selling it before maturity you ask for bids and sell to the highest bidder. Some times I get better than 3rd party price. Today I am getting offers significantly below 3rd party price.

 

[audreyh1]

I am probably about 2-4 years out from retirement but find it hard to pass up on a 5-10 year CD (or ladder) at 5% for a portion of my portfolio.

Heck, for my long term projections, I plug in a 7% return so actually locking in a guar 5% seems like a good idea.

I currently have about 25% sitting in SPAXX and have been slowing putting it back in the market but I am thinking some CDs wouldn't hurt. I am at a point where I don't really need to be aggressive at all.

Thoughts?

Also, how can you tell on Fidelity if a CD has a early W/D penalty?

Thanks.

Unlike banks, there are no early withdrawal penalties on CDs bought through a broker and no way to get an early withdrawal from the issuing bank. You have to sell your brokered CD through the secondary market if you want our early.

That is a benefit of buying directly from a bank along with allowing interest payments to stay in the CD.

 

[disneysteve]

But most here have been buying their CD's directly with a bank.

Only brokered CDs for me. I’ve worked over the past several years to consolidate our funds at Vanguard. The last thing I want is to start opening new accounts at various banks just to get CDs. I love that I can go to one screen and buy CDs (or Treasuries) all in one place now. Plus the rates are generally higher. When one matures from bank A, it’s a simple matter to buy a new one from bank B or C or D if they now have a better rate.