USAA Bank Increases 7-Year CD Rates - Best 7-Year CD Rates in the Nation
You can now get very close to a 4.00% CD at USAA Bank. It recently increased the rate of its 7-year CDs, and the Super Jumbo now has a 3.96% APY. This requires a $175K deposit. Below is the full list of rates for the different minimum deposits:
APYs of USAA Bank's 7-year CD and IRA CD as of 8/06/2010
- 3.96% min $175,000
- 3.70% min $95,000
- 3.60% min $1,000
Note, after 7-years with a 3.96% APY, $175K will grow to $229.7K which is under the standard FDIC deposit insurance limit. That's one of the very few advantages of a low interest rate.
For more info on USAA Bank and these CDs, please refer to this recent blog post. Note, the early withdrawal penalty of the 7-year CD is 365 days interest on the amount withdrawn. Also note that the USAA Bank's disclosure states that "Any withdrawals before the maturity date require Bank’s consent." I looked into the possibility of a bank refusing an early withdrawal in this post.
PenFed's 7-year CD rate is close to these rates. I reviewed PenFed's long-term CDs and looked at the effect of the early withdrawal penalties in this post. As I described in the PenFed post, you might do better in a long-term CD that's closed early compared to a short-term CD. The best example of this is Ally Bank's 5-year CD which only has a 60-day early withdrawal penalty (see my Ally Bank CD review).
Thanks to the reader who emailed me news of this rate change.
Anonymouslast rose of summer (anonymous) - #1, Friday, August 6, 2010 - 10:06 AM
7 years for those rates will take my chances with banks in georgia florida and robbie blag
Anonymous - #2, Friday, August 6, 2010 - 10:30 AM
$175,000 is alot of money
Anonymouschimay palmer (anonymous) - #3, Friday, August 6, 2010 - 4:14 PM
when will the banks that went belly up be posted?
glen to glen (anonymous) - #4, Friday, August 6, 2010 - 6:05 PM
ravenswood bank illinois down for the count
LIGHTRIDER (anonymous) - #5, Friday, August 6, 2010 - 7:35 PM
TO MUCH $$$ FOR TOO LITLE RETURN. KEEP IT!
Dan B (anonymous) - #6, Friday, August 6, 2010 - 7:53 PM
I understand the sentiment but frankly 4% is either an acceptaable return or isn't an acceptable return...........regardless of whether one thinks 175k is a lot of money or not.
the pipes are calling (anonymous) - #7, Friday, August 6, 2010 - 8:12 PM
where is the genius that talks about 5 percent bonds and mutual funds sounds like a good deal compared to this 7 years rates are going to stay this low for that long ? the mattress is also starting to look like a good deal
Anonymous - #8, Saturday, August 7, 2010 - 11:03 AM
Come on mr. 5% bonds genius come and save us all we are so patiently waiting
Bozo (anonymous) - #9, Saturday, August 7, 2010 - 7:06 PM
If you are retired and are using the standard 4% SWR, then any return reasonably close to 4% means you can minimize capital withdrawals. The 4% SWR usually assumes you increase your withdrawal each year by the amount of inflation. With inflation at or near zero, what the 7-year throws off permits a deferral of capital reduction until inflation recurs. Then, you can nibble at other investments. I think these long-term USAA super-jumbos are excellent vehicles for a CD ladder. Obviously, you should be diversified, and well-laddered in your CDs and bonds, but I find this product to be a nice, secure anchor.
Just my $.02.
Bozo
Anonymous11.92 percent (anonymous) - #10, Sunday, August 8, 2010 - 10:46 AM
hay maybe bozo can save us he has 2 cents roddie blago
Anonymousroddie blago (anonymous) - #11, Sunday, August 8, 2010 - 10:48 AM
i agree with 8 this person is probably on welfare no bonds pay 5 percent the matress is where my $$ goes
MR 5% BONDS GENIUS (anonymous) - #12, Sunday, August 8, 2010 - 4:54 PM
WHERE ARE YOU 8 I POSTED THE BONDS BUT THEY WERE REMOVED CALL SMITH BARNETY THEY WILL HELP PWM HURRY UP B 4 THIS IS REMOVED HAPPY INVESTING
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