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

[Free bird]

I thought so. Never hurts to ask for a little extra for the effort.

 

[explanade]

I've been going no more than a year the past few months, with the expectation that rates will go up over time, with the Fed signaling it would continue to raise rates.

Now that the Fed has indicated it may only do one more rate increase, what's the longest term people are going for?

Go for the highest rate you can now because the Fed won't raise rates for much longer and rates may actually decline in the latter half of this year?

 

[Earl E Retyre]

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

I think there are different approaches that people are taking. Contrary to many here, I have been trying to buy the longest term (eg, 5 years at 5%) with the assumption that rates will be back down to 3% within the next year or 2. For me, locking in a guaranteed 5% for 5 years is wonderful. I also have CDs maturing over the next year so if rates continue to rise to 6% or more then I will still be able to partake in those and it won’t bother me that I locked in “only 5%”. Time will tell …

 

[dmpi]

My thinking is the Fed pauses ONLY to give some breathing room for banks. Pausing will just drag this thing out longer. I think there's better than 50% chance that we are exactly in the same position a year from now. 5% rates, stubborn but stable inflation and shaky banks. Because of that I focus on where the highest yields are which are 1-2 years out.

 

[brucethebroker]

Well I see that they're rated B+ per ShokWaveRider's link.
That's better than any grade I ever got in school! [emoji41]

Guess you never took wood shop? Easy A.

 

[brucethebroker]

Thanks for the encouragement & information.
Ive always banked with a credit union & years past they have had great promotional rates on CD's but appears that is over....
The MM is only paying .10%, a joke......
I cant just have this money sit any longer.
Everything else is invested & this $50k is just sitting, Dont forsee needing it for an emergency so why not get it working for me....
Really not enough money to keep it in the "side lines / dry powder" waiting for something to happen.....

If you don't want to move to a brokerage MM, consider brokerage 30 day CD's. 5%+/- currently and FDIC insured. Do two 25k CD's in case you need to break one. Should be accessible enough and safe.

 

[Car-Guy]

I've been going no more than a year the past few months, with the expectation that rates will go up over time, with the Fed signaling it would continue to raise rates.

Now that the Fed has indicated it may only do one more rate increase, what's the longest term people are going for?

Go for the highest rate you can now because the Fed won't raise rates for much longer and rates may actually decline in the latter half of this year?

I don't put a lot of faith in what the Fed (or anyone in power) says anymore but rather what they do. (e.g. inflation is transitory) If you believe the data inflation is slowly coming down but still far from the 2%% target. Of course these rate increases take time to work through the systems so "maybe" we are starting to see the effects. IMO, banks will be quicker to lower rates than they have been to raise them. Add into the mixed high employment, bank failures, congressional inquiries, world events, "the unknown", etc, and things start to get a little more complicated. (Or in other words "it's a crap shoot".)

If I had to "guess" (and assuming no more surprises) I expect the Fed to take a pause in May. Worse case, another .25 increase and then a pause. As soon as the pause is taken, I expect rates to start dropping immediately. Maybe not a lot at first but when the first Fed rate cut hits, CD rates will drop faster than we saw them rise. (IMO)

Ok, enough of that "stuff". For me, I'm still planning on going "all in" on 12 to 18mo CD's in the next few weeks and I may even buy a few 2yr. But that's as far out as I'm going.

Why? Because the other side of the coin is things could get a lot worse and we may see much higher rates in another year or two. I still remember rates from the late 70's/early 80's.

 

[jazz4cash]

I think there are different approaches that people are taking. Contrary to many here, I have been trying to buy the longest term (eg, 5 years at 5%) with the assumption that rates will be back down to 3% within the next year or 2. For me, locking in a guaranteed 5% for 5 years is wonderful. I also have CDs maturing over the next year so if rates continue to rise to 6% or more then I will still be able to partake in those and it won’t bother me that I locked in “only 5%”. Time will tell …

+1

 

[copyright1997reloaded]

I've been going no more than a year the past few months, with the expectation that rates will go up over time, with the Fed signaling it would continue to raise rates.

Now that the Fed has indicated it may only do one more rate increase, what's the longest term people are going for?

Go for the highest rate you can now because the Fed won't raise rates for much longer and rates may actually decline in the latter half of this year?

Savings interest rates in:

Brazil 9.49%
Chile 8.99%
Argentina 71.6%
Columbia 8.5%

So why do I post these "meaningless" numbers (for us USA savers)? Because *eventually* excess monetary and fiscal policies lead to inflation and a debasement of the currency. The question of the day is whether the inflation we've just gone through (and the interest rates we are seeing) reflect enough medicine to offset the excess easy money of the last n years.

If I were a betting person (and I am, because Mr. Market forces it on me), do I think interest rates are likely to trend down *for awhile*? Yes, because we are quickly shifting from the "got to fight inflation by raising borrowing costs to dampen demand" to "oh sh*t, this airplane looks like it is headed into the side of the mountain, we need to prevent that by preventing a liquidity crisis" mode. Assuming the powers that be nudge people from fearing that the banking system might fail to "it's under control" then people will continue to lock in on CD deals, funds to regionals will stabilize and rates will fall.

I would say to keep an eye on the US $ index (DXY) to see if the currency starts to be under pressure. But this index is pretty much worthless as it is comparing the US $ to the Euro, Swiss franc, Japanese yen, Canadian dollar, British pound, and Swedish krona. (Most of these countries seem to have the same disease in terms of actions including too easy money.)

So my bet (as of this moment): Stable/down for a while, higher in the longer term. I have no crystal ball as to if/when that longer term arrives. 15 years? 15 months? Never? Who knows. (I have a bunch of money in fixed, weighted days to maturity is slightly under 1 year but has been increasing as I bought some 2-5 year CD's as an income hedge assuming my thinking above is hogwash. I also have 5-6% in precious metals in case the much-more-inflation-to-come scenario plays out...in which case 5% is not enough.)

 

[Dream Weaver]

Gotta love the 10yr CDs that are callable every 3 months. Banks are really sticking their necks out and taking on the risk.

 

[Car-Guy]

Gotta love the 10yr CDs that are callable every 3 months. Banks are really sticking their necks out and taking on the risk.

Almost a guarantee it will be called. Probably sooner than later.

 

[Chuckanut]

Gotta love the 10yr CDs that are callable every 3 months. Banks are really sticking their necks out and taking on the risk.

Like it or not, we have to factor in the call conditions on anything we invest in.

It used to be we had to worry about the return on our capital and the return of our capital. Now we have to add a new worry - the low interest rate driven premature return of our capital. We live in interesting times.

My ladder has a few callable CDs/bonds towards the high end. I consider those phantom rungs on the ladder. I have added solid rungs (not callable) in the past few weeks. If the phantom rungs get called I will consider them a nice return on a shorter term CD. If they don't get called, then we are in a very high inflation/interest-rate scenario, or I am a very lucky guy.

As crazy as this CD market is today, it is this kind of market distortion/inefficiency/silliness that can help us get the returns we need to fund our retirement years. Good luck to all.

 

[Slater]

Heres a question...
I have a Vanguard acct so that's the easiest route for me...
Appears the have a 5.25% 2 year cd from First bank & appears its callable from what im reading...
vs a 5% non callable?
How to proceed, this callable deal is new to me,
like I stated, last time I dealt with a cd was through my bank ages ago when they were-up...
Cuz it states callable, should I steer clear or not really an issue in this situation?
Also some of them say "conditional puts"

 

[Car-Guy]

Callable simply means the bank can "call in" the CD anytime they want. When they do your get you money back and any earned interest "to date". They are likely to "call" a CD when prevailing rates fall below what you are getting on your CD. Non Callable means you can keep the CD and it's original rate until maturity, regardless of what rates do.


For me, I don't deal in callables but, YMMV.

 

[Brook2]

My ladder has a few callable CDs/bonds towards the high end. I consider those phantom rungs on the ladder. I have added solid rungs (not callable) in the past few weeks. If the phantom rungs get called I will consider them a nice return on a shorter term CD. If they don't get called, then we are in a very high inflation/interest-rate scenario, or I am a very lucky guy.

.

I was thinking of getting callable CDs. I can't think of what the downside is, except I get my money back early.

 

[copyright1997reloaded]

I was thinking of getting callable CDs. I can't think of what the downside is, except I get my money back early.

If interest rates drop, you get called and have to reinvest at a lower rate.
If interest rates rise, you don't get called and have an investment with a yield lower than what the market is now at.

This is lose lose.

To make it worthwhile to give the BANK the option, you should be paid a premium. How much premium makes it worth while? Well, that is the question you should be asking yourself.

 

[mf15]

At FIDO you can check the first call date and subsequent dates usually monthly, I assume you can do this at other brokers as well.
Oldmike

 

[GenXguy]

I was thinking of getting callable CDs. I can't think of what the downside is, except I get my money back early.

I think that's been covered quite a bit here. Big downside if your 5% 5 year CD gets called in one year and have to reinvest at 3% for the other 4 years, just as an example. All the CDs I bought are non-callable.

 

[Chuckanut]

If interest rates drop, you get called and have to reinvest at a lower rate.
If interest rates rise, you don't get called and have an investment with a yield lower than what the market is now at.

This is lose lose.

To make it worthwhile to give the BANK the option, you should be paid a premium. How much premium makes it worth while? Well, that is the question you should be asking yourself.

+1

These callable i[-]nsecurities[/-] securities are the bank's way of transferring some of the interest rate risk to the CD or bond owner. IMO, you should be paid well to take on that additional risk. How well? In today's environment somewhere over 120 basis points is my target area. I also want to be compensated not only for some lost interest but also for the time and hassles of replacing a called security. YMMV.

 

[Free bird]

Have you ever seen a spread of 120 BP?

 

[njhowie]

I was thinking of getting callable CDs. I can't think of what the downside is, except I get my money back early.

There is no downside if it's providing what you are looking for. I see it similarly as you. I have some 10 and 15 year callables. The interest rates are significantly above what one and two year CDs were offering at the time of purchase. If they call, fine - I received that higher interest rate for the one or two years. If they don't call and pay longer, wonderful.

 

[Chuckanut]

Have you ever seen a spread of 120 BP?

Once. 5.1% on a callable 4 year CD and, IIRC, 3.8 on a non callable. Mostly I've seen under a 1% difference, but I confess to not looking very hard lately. Other things have taken priority. Time is precious.

 

[copyright1997reloaded]

There is no downside if it's providing what you are looking for. I see it similarly as you. I have some 10 and 15 year callables. The interest rates are significantly above what one and two year CDs were offering at the time of purchase. If they call, fine - I received that higher interest rate for the one or two years. If they don't call and pay longer, wonderful.

What was a 10 to 15 year callable CD yielding say late 2021?

 

[Free bird]

Okay thanks. Just another thing to be aware of. Appreciate your response.

 

[jazz4cash]

Callable simply means the bank can "call in" the CD anytime they want.

No, the CD will specify the dates and frequency that it can be called. Many will have a year or two before the first call date.