Odd CD durations

[EarlyandLate]

Does anyone know why the highest yielding CDs have weird durations like 7 or 13 months instead of the usual 6,12,24,etc months? A credit union where I have an account has these odd duration CDs that have nearly twice the yield of the normal CDs.

 

[Car-Guy]

Never noticed the higher rates but I have several with odd durations.

 

[Al18]

I can only speculate the bank/credit union has otherwise good financial ratings EXCEPT the Deposit Growth category, which is one of the four categories the FDIC looks at when determining bank health. My guess the bank/credit union wants to attract new money for the short term, but not continue paying high interest rates when the Fed drops their interest rate. You can check on the financial health of your bank/credit union by entering the name of the institution in the top, right corner of this page at https://www.depositaccounts.com/

 

[GrayHare]

^ I don't see why a 7 month duration would accomplish that but not a 6 month.

 

[Al18]

Maybe the 7 month was just a lure to get your money. The 7 month might renew into a 12 month CD

 

[GrayHare]

Of course, so might a 6 month. I'd speculate that unusual durations do not mesh with annual spend cycles such that the depositor is more likely to leave the money at the bank rather than withdraw it for spending.

 

[audreyh1]

Does anyone know why the highest yielding CDs have weird durations like 7 or 13 months instead of the usual 6,12,24,etc months? A credit union where I have an account has these odd duration CDs that have nearly twice the yield of the normal CDs.

Generally limited time offer “specials” have odd durations probably to distinguish them from the regular CDs. They also generally rollover into regular duration CDs. Because they are there generally to attract new money the special rates are higher.

 

[jazz4cash]

Generally limited time offer “specials” have odd durations probably to distinguish them from the regular CDs. They also generally rollover into regular duration CDs. Because they are there generally to attract new money the special rates are higher.

+1. NASA always had higher rate specials for 13 and 49 months. I think Navy Federal has used 17 and 37 months. I assume they want members to actively choose the specials and not have to pay premium rates on CDs auto-renewing for the conventional terms.