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Ken Tumin founded the Bank Deals Blog in 2005 and has been passionately covering the best deposit deals ever since. He is frequently referenced by The New York Times, The Wall Street Journal, and other publications as a top expert, but he is first and foremost a fellow deal seeker and member of the wonderful community of savers that frequents DepositAccounts.

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Survey of the Best CD Rates for September 27, 2013

POSTED ON BY

We had another week of falling Treasury yields. Last week it was due to the Fed’s postponement of tapering. This week it was due to concerns over a potential government shutdown from the political standoff over the budget.

The recent falling Treasury yields haven’t had any significant effect on CD rates. Brokered CD rates often track Treasury yields closer than rates of CDs offered directly from banks. That wasn’t the case this week. The top 5-year, 7-year and 10-year rates of new-issued non-callable brokered CDs available at Fidelity went up by 5 basis points.

If you don’t like brokered CDs, you can get a 5-year CD rate at an all-access credit union that matches the best 5-year brokered CD. This week I added the online 5-year CD at American Heritage Federal Credit Union which has a 2.10% APY.

There’s also a good deal on short-term CDs. E-LOAN increased its 1-year CD yield to 1.10% and its 18-month CD yield to 1.12%. That 1-year CD yield is the highest for any internet bank. However, the best 1-year CD deal continues to be at CommunityWide Federal Credit Union. This special 1-year CD has a 2.00% APY. Maximum deposit is $100K, and it requires an active checking account with direct deposit.

Local CD Deals

The only rate hike for the local deals was at Bank of Utica. I added this bank’s 2.50% APY 5-year and 2.25% APY 4-year CD. These rates increased 10 basis points this week. Previously, I had excluded Bank of Utica since it’s not available to many people. Only those in the bank’s market area in the Utica City area of New York are eligible to open these CDs.

Rates went down at The MINT National Bank near Houston, at Wright-Patt Credit Union in Ohio and at Dollar Bank in Pittsburgh and Cleveland. I removed The MINT National Bank CDs from the tables since the rate cuts were so severe. Its 5-year CD yield fell from 2.10% to 1.50%.

Format Change

I have replaced the lists with tables. These tables will hopefully allow you to review the CD rates quicker. These tables hold the same information as the lists except there is one new piece of info. That’s the up or down arrow to indicate the change of CD rates from last week. Not all rate changes will be tagged with the up/down arrow. If the rate cut was too severe (like at The MINT National Bank), I’ll remove if from the table.

Long-Term CD Break Strategy

For the short-term CDs in my lists, you might notice CDs with the note "5-year CD closed after X years". These take into account the yield after the early withdrawal penalty is applied. Since Ally Bank's 5-year CD only has a 60-day interest penalty, it's still a good deal when closed early even with the recent rate cuts.

If you want to compare the effective yields of other CDs after the early withdrawal penalties, please refer to our CD early withdrawal penalty calculator.

The risks of planning for early withdrawals of long-term CDs were recently highlighted by the deposit agreement change at Ally. The risks have also been seen at credit unions which have raised the early withdrawal penalties on existing CDs. I have more details in this blog post.

Note About the CD Survey

As I described in my rate table overview, you can use our CD rate tables to find the best rates for both nationally available CDs and local CDs. This CD survey blog posts are intended to highlight nationwide CD deals that may not be apparent in the tables. For example, I'll include the post-penalty yields of a few long-term CDs.

The CD survey blog posts are also intended to highlight the local CD deals that are available in large metro areas. There are many high CD rates, but most of these are at small banks in rural areas or at small credit unions with very narrow fields of membership. In these local CD surveys, my focus is on local CD deals that are in big cities or that are available in large areas of a state.

Yields Accurate as of September 27, 2013

Under 1-Year CD Rates

InstitutionRatesNotes
EverBank1.10% checking/MMA intro 6-month rate ($100K/$50K max)account review
Ally Bank1.00% (1.50% 5-year CD closed after 6 months)see review & risks
Connexus Credit Union1.00% 6-month CDw/active chk
Doral Direct0.91% 9-month CDaccount review
Bank5 Connect0.90% 6-month CDNot available to MA & RI residents
CapitalSource Bank0.90% ($10K) 6-month CD special
Doral Direct0.87% 6-month CDaccount review
Ally Bank0.85% 11-month No-Penalty CDsee account review

Noteworth Local Deals

InstitutionRatesRegion
Suntide Credit Union1.50% 6-month CDCorpus Christi, TX metro
PacTrust Bank1.25% ($250K) 1.00% ($100K) Savings Account intro rate until 12/31/13account review (SoCal)
Gulf Coast Federal Credit Union1.10% 6-month CDCorpus Christi, TX metro
Oritani Bank1.02% checking intro rate until 1/2/14Northeast NJ
Doral Bank NY1.00% 6-month CDNYC

1-Year CD Rates

InstitutionRatesNotes
Communitywide Federal Credit Union2.00% ($100K max) 1-year special CD w/active chkaccount review
Ally Bank1.25% (1.50% 5-year CD closed after 1 year)see review & risks
E-LOAN1.10% ($10K) 1-year CD
Connexus Credit Union1.10% 1-year CDw/active chk
Nationwide Bank1.06% ($100K) 1.01% ($500) 1-year CD
GE Capital Bank1.05% 1-year CD
DollarSavingsDirect1.05% 1-year CD
GE Capital Retail Bank1.05% ($25K min) 1-year CDFormerly MetLife
CapitalSource Bank1.05% ($10K) 11-month CD
CIT Bank1.00% ($25K min)add-on & bump-up 1-year CD
Bank5 Connect1.00% 1-year CDNot available to MA & RI residents

Noteworthy Local Deals

InstitutionRatesRegion
Suntide Credit Union2.00% 1-year CDCorpus Christi, TX metro
Gulf Coast Federal Credit Union1.50% 12-month CDCorpus Christi, TX metro
LOMTO Federal Credit Union1.20% 1-year CDparts of New York City
Doral Bank NY1.20% 1-year CDNYC
HAB Bank1.15% 1-year CDSouthern California
Beal Bank1.11% 1-year CDSoutheast FL
HAB Bank1.10% 1-year CDNYC metro
General Electric Credit Union1.02% ($100K) 1-year CDCincinnati OH metro

18-month CD Rates

InstitutionRatesNotes
Ally Bank1.33% (1.50% 5-year CD closed after 18 monthssee review & risks
First Flight Federal Credit Union1.25% 15-month CD special
GE Capital Retail Bank1.15% 15-month CD specialFormerly MetLife
E-LOAN1.12% ($10K) 18-month CD
GE Capital Bank1.10% 18-month CD
Nationwide Bank1.09% ($100K) 1.04% ($500) 18-month CD
USAlliance Federal Credit Union1.06% 18-month CD
Bank5 Connect1.05% 18-month CDnot available to MA & RI residents
Colorado Federal Savings Bank1.05% 18-month CD
CapitalSource Bank1.05% ($10K) 18-month CD
GE Capital Retail Bank1.05% ($100K) 1.00% ($25K) 18-month CDFormerly MetLife
Doral Direct1.02% 18-month CD, one-time penalty-free early withdrawal optionaccount review

Noteworthy Local Deals

InstitutionRatesRegion
Gulf Coast Federal Credit Union1.65% 18-month CDCorpus Christi, TX metro
University of Iowa Community Credit Union1.25% 15-month CD specialmany Iowa counties
Montauk Credit Union1.25% 18-month CDNew York City
Doral Bank NY1.25% 18-month CDNYC

2-Year CD Rates

InstitutionRatesNotes
iGObanking.com1.54% (2.05% 5-year CD closed after 2 years)account review
First Flight Federal Credit Union1.50% 23-month and 24-month CD special
Ally Bank1.38% (1.50% 5-year CD closed after 2 yearssee review & risks
Connexus Credit Union1.30% 2-year CDw/active chk
Salem Five Direct1.25% ($10K) 2-year CD
Melrose Credit Union1.21% 2-year CD
CIT Bank1.20% ($25K min) add-on & bump-up 2-year CD
GE Capital Retail Bank1.20% ($100K) 1.15% ($25K) 2-year CDFormerly MetLife
Bank5 Connect1.15% add-on 2-year CDnot available to MA & RI residents
Northwest Federal Credit Union1.15% ($100K) 1.05% ($25K) 2-year CD+0.25% w/relationship

Noteworthy Local Deals

InstitutionRatesRegion
Suntide Credit Union2.35% 2-year CDCorpus Christi, TX metro
NavyArmy Community Credit Union1.95% ($100K) 1.85% ($1K) 2-year CDCorpus Christi, TX metro
Gulf Coast Federal Credit Union1.85% 2-year CDCorpus Christi, TX metro
Firelands Federal Credit Union1.75% 2-year CD specialparts of Ohio
Montauk Credit Union1.50% 2-year CDNew York City
Doral Bank NY1.45% 2-year CDNYC
LOMTO Federal Credit Union1.40% 2-year CDparts of New York City
BrightStar Credit Union1.25% 23-month CD (+0.25% w/chk relationship)parts of Southeast FL

3-Year CD Rates

InstitutionRatesNotes
Wilshire State Bank2.28% 3-year installment savings account w/auto xfers, $100K maxaccount review
Connexus Credit Union1.75% 3-year CD w/active chk
iGObanking.com1.71% (2.05% 5-year CD closed after 3 yearsaccount review
Salem Five Direct1.50% ($10K) 3-year CD
Melrose Credit Union1.46% 3-year CD
Intervest National Bank1.45% 3-year CD
Ally Bank1.42% (1.50% 5-year CD closed after 3 yearssee review & risks
Andrews Federal Credit Union1.41% 3-year CD
iGObanking.com1.40% 3-year CD
CIT Bank1.30% ($100K) 1.21% ($1K) 3-year CD
Northwest Federal Credit Union1.30% ($100K) 1.20% ($25K) 3-year CD+0.25% w/relationship
Bank5 Connect1.18% (average apy) limited no-penalty 3-year CDnot available to MA & RI residents

Noteworthy Local Deals

InstitutionRatesRegion
Firelands Federal Credit Union2.25% 3-year CD specialparts of Ohio
NavyArmy Community Credit Union2.05% ($100K) 2.00% ($1K) 30-month CDCorpus Christi, TX metro
Gulf Coast Federal Credit Union2.02% 3-year CDCorpus Christi, TX metro
Firelands Federal Credit Union2.00% 30-month CD specialparts of Ohio
Institution For Savings2.00% 30-month CDparts of MA
Montauk Credit Union1.75% 3-year CDNew York City
Doral Bank NY1.60% 3-year CDNYC
LOMTO Federal Credit Union1.55% 3-year CDparts of New York City
Home Loan Investment Bank1.50% 3-year CDresidents of RI, MA and CT
Department of Commerce FCU1.50% 3-year CDWashington DC

4-Year CD Rates

InstitutionRatesNotes
iGObanking.com1.79% (2.05% 5-year CD closed after 4 yearsaccount review
Andrews Federal Credit Union1.71% 4-year CD
Melrose Credit Union1.71% 4-year CD
Communitywide Federal Credit Union1.70% 4-year CDaccount review
iGObanking.com1.65% 4-year CD
Intervest National Bank1.65% 4-year CD
GE Capital Retail Bank1.65% ($100K) 1.40% ($2K) 4-year CDFormerly MetLife
Nationwide Bank1.63% ($100K) 1.58% ($500) 4-year CD
CIT Bank1.60% ($100K) 1.32% ($1K) 4-year CD
EverBank1.56% 4-year CD
Barclays1.55% 4-year CD
Alliant Credit Union1.55% 4-year CD
Ally Bank1.44% (1.50% 5-year CD closed after 4 yearssee review & risks
Ally Bank1.30% Raise-Your-Rate 4-year CD

Noteworthy Local Deals

InstitutionRatesRegion
Montauk Credit Union2.25% 4-year CDNew York City
Bank of Utica2.25% 4-year CDCentral New York
HarborOne Bank2.00% 4-year CDNew England
Institution For Savings2.00% 4-year CDparts of MA
HAPO Community Credit Union1.90% 4-year CDall of Washington State
Bayer Heritage Federal Credit Union1.89% 4-year CDparts of WV, OH & SC
MidFirst Direct1.75% 4-year CDAR, AZ, CA, FL, MO, NH, NV, NY, OK, TX, and WY
Department of Commerce FCU1.75% 4-year CDWashington DC
LOMTO Federal Credit Union1.75% 4-year CDparts of New York City
Police and Fire Federal Credit Union1.75% 4-year CDPennsylvania
Doral Bank NY1.65% 4-year CDNYC
Fifth Third Bank1.50% 4-year CD specialseveral eastern and midwestern states

5-Year CD Rates

InstitutionRatesNotes
Stanford Federal Credit Union2.22% ($100K) 5-year CD, requires chk w/ddaccount review
Fidelity New Issue Brokered CD2.10% 5-year non-callable CDissued by GE Capital Retail Bank and Bank of Baroda
American Heritage Federal Credit Union2.10% 5-year online CD
iGObanking.com2.05% 5-year CD
EverBank2.01% 5-year CD
Salem Five Direct2.00% ($10K) 5-year CD
State Farm Bank2.00% 5-year CD
State Bank of India - New York2.00% 5-year CD
Connexus Credit Union2.00% 5-year CD w/active chk
Communitywide Federal Credit Union2.00% 5-year CDaccount review
Nationwide Bank1.97% ($100K) 1.92% ($500) 5-year CD
Melrose Credit Union1.96% 5-year CD
GE Capital Retail Bank1.95% ($100K) 1.90% ($25K) 5-year CDFormerly MetLife
Intervest National Bank1.95% 5-year CD
Andrews Federal Credit Union1.91% 5-year CD
GE Capital Bank1.90% 5-year CD
Barclays1.90% 5-year CD
CIT Bank1.85% ($100K) 1.60% ($1K) 5-year CD
Ally Bank1.50% 5-year CD

Noteworthy Local Deals

InstitutionRatesNotes
Bank of Utica2.50% 5-year CDCentral New York
Montauk Credit Union2.50% 5-year CDNew York City
American Airlines Credit Union2.47% 5-yr/1.46% 2.5-yr CD ladderlimited membership
Progressive Credit Union2.32% 5-year CD (NYC with unique FOM)account review
MidFirst Direct2.25% 5-year CDAR, AZ, CA, FL, MO, NH, NV, NY, OK, TX, and WY
BBVA Compass2.25% (w/relationship checking) 2.00% (w/o relation) 5-year CDparts of AL, AZ, CA, CO, FL, NM and TX
Horizon Credit Union2.22% 5-year CDWA, parts of ID and MT
Bayer Heritage Federal Credit Union2.15% 5-year CDparts of WV, OH & SC
Department of Commerce FCU2.05% 5-year CDWashington DC
General Electric Credit Union2.03% 5-year CDCincinnati OH metro
Central Bank & Trust2.02% 5-year CDColorado Springs, CO
Wright-Patt Credit Union2.00% ($100K) 1.90% ($500) 5-year CDUS gov military and civilian personnel, Parts of OH
Consumers Credit Union2.00% 5-year CD, allows one no-penalty early withdrawal (parts of Michigan)
OmniAmerican Bank2.00% 5-year CDDallas/Forth Worth metro
Home Loan Investment Bank2.00% 5-year CDresidents of RI, MA and CT
HAPO Community Credit Union2.00% 5-year CDall of Washington State
Institution For Savings2.00% 5-year CDparts of MA
LOMTO Federal Credit Union2.00% 5-year CDparts of New York City
Police and Fire Federal Credit Union2.00% 5-year CDPennsylvania

Over 5-Year CD Rates

InstitutionRatesRegion
Fidelity New Issue Brokered CD3.30% 10-year non-callable CDissued by GE Capital Retail Bank
Fidelity New Issue Brokered CD2.70% 7-year non-callable CDissued by GE Capital Retail Bank
Apple Federal Credit Union2.50% 10-year CD
Apple Federal Credit Union2.10% 7-year CD
Intervest National Bank2.07% ($95K) 2.05% ($2.5K) 10-year CD
Northrop Grumman FCU1.91% ($40K) 1.75% ($2.5K) 7-year CD
Discover Bank1.90% 10-year CD
Discover Bank1.80% 7-year CD
Pentagon Federal Credit Union1.76% 7-year CD
Third Federal1.75% 6-year CD
Air Force FCU1.75% ($100K) 1.60% ($2.5K) 7-year CD

Noteworthy Local Deals

InstitutionRatesRegion
Hutchinson Credit Union3.15% ($250K) 3.10% ($100K) 3.05% ($25K) 10-year CDKansas
Frick Tri-County Federal Credit Union3.00% 10-year CDparts of Western PA
Dollar Bank2.75% 10-year CDPittsburgh and Cleveland
SACU2.75% ($90K) 2.70% ($10K) 10-year CDSan Antonio, TX
Montauk Credit Union2.75% 7-year CDNew York City
Franklin Federal Savings Bank2.73% 7-year CDRichmond, VA metro
Frick Tri-County Federal Credit Union2.50% 8-year CDparts of Western PA
MidFirst Bank2.70% 7-year CDAZ and OK
Wright-Patt Credit Union2.50% ($100K) 2.40% ($500) 6-year CDUS gov military and civilian personnel, Parts of OH
Hutchinson Credit Union2.50% ($250K) 2.40% ($100K) 2.30% ($25K) 6-year CDKansas
Franklin Federal Savings Bank2.42% 6-year CDRichmond, VA metro
First Republic Bank2.25% (w/chk) 2.00% (w/o chk) 6-year CDparts of CA, CT, FL, MA, NY & OR
Ridgewood Savings Bank2.25% 7-year IRA CDNYC metro
Security Service Federal Credit Union2.20% ($100K) 2.05% ($500) 7-year CDparts of Texas, lower rates in CO and UT
Randolph-Brooks Federal Credit Union2.17% 7-year CDSan Antonio & Austin, TX
SACU2.20% ($100K) 2.15% ($10K) 7-yearSan Antonio, TX
Columbia Bank2.15% 7-year CDNew Jersey
Gateway Metro Federal Credit Union2.05% 6-year CDSt. Louis metro
Dollar Bank1.80% 6-year CDPittsburgh and Cleveland
Columbia Bank2.00% 6-year CDNew Jersey
Randolph-Brooks Federal Credit Union1.92% 6-year CDSan Antonio & Austin, TX

Note: All rates listed above are Annual Percentage Yields (APY) which factor in compounding.

  Tags: CD rates

Related Posts

Comments
33 comments.
Comment #1 by cumulus posted on
cumulus
> I have replaced the lists with tables. . .
>
The best keeps getting better; thank you.

8
Comment #2 by Anonymous posted on
Anonymous
I was wondering if anyone has experience buying brokered CDs on the secondary market. It seems that some of these may be better deals than new issues. For example a CD that was newly issued a few weeks ago may now be available for purchase at at discount.

4
Comment #3 by Anonymous posted on
Anonymous
Rates have gone down lately, price of secondary cds will have risen not dropped. Price of bonds will go down when rates go up.

3
Comment #4 by Anonymous posted on
Anonymous
Are you trying to play the price of the cds or are you looking for a good rate? 

2
Comment #5 by Anonymous posted on
Anonymous
You buy a 10 year 3.25% cd and the 10 year bond is paying 3% at the time. The 10 year bond then drops to 2.5% so makes sense that new brokered cds for 10 years would pay about 2.75% ....somebody will now pay you more for your 3.25% cd to get that better rate but if you sell and make a profit then you have to figure out what to do with your money at lower rates and on top of that pay uncle sam some of the profit.

2
Comment #6 by Anonymous posted on
Anonymous
#5 Here's an example. Couple weeks ago I saw a new issue 10-year CD paying 3.25%. Can't remember exact figure now but when I looked again same CD was selling on the secondary market for over 1% less and a slightly higher yield. To me this looks like a better deal than having bought the CD newly issued.

3
Comment #7 by Anonymous posted on
Anonymous
Who can I buy the long term cd's from-Fidelity? Is a sale at a gain ordinary income(vs capital gain)?

1
Comment #8 by Anonymous posted on
Anonymous
On secondary issues, be sure to look at the ytm rate (yield to maturity) and if they are callable, look at ytw (yield to worst).  Also be aware of two other things:

(1) On the secondary market, you may have to pay accrued interest, but you will get the paid accrued interest back when it pays on its next interest payment date.  Just remember, if it is outside a tax deferred account, to deduct the accrued interest amount that you paid when filing your interest payments on your tax return.

(2) If the secondary cd is not in a tax defferred investment, then there could be some other tax issues to consider.  Suppose you pay a premium for a 4.00% coupon secondary cd, but the yield to maturity rate is 3.25%.  You will receive 4.00% rate and report income on that amount but you only get the 3.25% yield to maturity rate because of the higher premium.  In other words you will have more reportable income than what you would have compared to a new issue cd that paid 3.25% rate.  You may regain the taxes paid later though when the secondary cd matures and pays at par value and you report a capital loss (The difference between the premium paid amount minus the par value amount). 

3
Comment #11 by Anonymous posted on
Anonymous
#8 is correct, you have to pay attention to yield to maturity and if callable yield to call.

1
Comment #36 by lou posted on
lou
#8, it would be a mistake to wait until the maturity of the CD to report a capital loss when you could elect to amortize the premium and reduce the taxable interest by the amount of the amortization in each year you own the bond.

What I think most posters are overlooking is that brokerage CD's are illiquid instruments that rarely sell on the secondary market. So if you need to sell because of rising interest rates or market disruptions, it will be extremely to difficult to find a willing buyer at a reasonable price. In all likelihood, the spread between the ask and the bid will be very onerous, meaning you are likely to receive a much lower price than warranted by market yields.

3
Comment #37 by Anonymous posted on
Anonymous
#36  A bank issued CD can be illiquid if the bank does not allow an early withdrawl.  It depends on what the terms of the  depositagreement are.  Some allow the bank discreation.  Remember that the gov't and the FDIC can change the rules too.  And guess who owns Ally .. Mostly the gov't.

1
Comment #9 by Anonymous posted on
Anonymous
To help maintain my income level below the 400% of the federal poverty level to qualify for tax subsidies for the Obamacare health exchanges that begin in 2014, I think I would not want to buy a secondary cd as described in part 2 of #8's comment.

2
Comment #10 by Anonymous posted on
Anonymous
Don't forget.... you have to pay a commission on any secondary cds or bonds that you buy, no commission on new issues.

3
Comment #12 by Anonymous posted on
Anonymous
Say they have a new cd for 3.25% and the rates go up then you would buy that same cd on the secondary market at a lower price because rates are higher.You would pay less for that cd but you wouldn't get the higher rate, you would get the coupon rate but your ytm would be higher so the difference is actually made up in the end when you get par for the cd at maturity..... and you have to pay a commission. Now if rates went up, I would just look to buy a new issue cd and get the higher coupon rate with no commission because I am looking to live off the yield that I actually get not what the yield to maturity is.

1
Comment #13 by Anonymous posted on
Anonymous
Say they have a new cd for 3.25% and the rates go up then you would buy that same cd on the secondary market at a lower price because rates are higher.

----------

The reason the bond would cost less is because that cd at a 3.25% coupon rate is now worth less because you could buy a new one for say a 3.50% coupon rate. Would you rather have the new cd at a 3.50% coupon rate or pay less for the 3.25% coupon rate and get a higher ytm? I say it depends on whether you want to try and trade them for a profit or if you want the best yield (coupon rate) you can get.

3
Comment #14 by Anonymous posted on
Anonymous
If you bought a regular cd from a bank not a brokerage one and you got 1 for 3% and rates went to 4%, you might want to close it early and take the penaly(tax deductable) and buy a new cd and get the 4% income.

Same thing with the secondary, if you buy a new brokered cd and rates went up you might want to sell it so you can buy 1 with a higher coupon rate so you have more income to spend..... you take a loss.

Now if the 10 year bond was at 4% and you felt it was going to drop to 3% you could buy it and sell it for a profit if you turned out to be right and rates went down but then you have the money and are looking for something to buy when rates are lower therefore giving up your 4% cd.

1
Comment #15 by Anonymous posted on
Anonymous
#14  You have to be careful.  The bank may be able to refuse the early witdrawl depending on the wording in the deposit agreement.  Evem Ally has some vauge language that may allow them to disallow earlywithdrawls.  Item 33 on the agreement:



 



 



Please be aware that accounts or services can change over time. We reserve the right to delay,



 



discontinue or make changes to accounts or services, and to convert your existing accounts and



 



services into new accounts and services. You may not get advance notice of this. We may change



 



this Agreement, and we may add to or delete from this Agreement, and the updated agreement



 



will supersede all prior versions



 

.

5
Comment #16 by Anonymous posted on
Anonymous
I'm not sure my question's been answered so I looked up this example at Fidelity. CIT Bank issued a new noncallable 10-year CD yielding 3.25% on September 25th. Today, just 3 days later, the same CD is listed as available for purchase on the secondary market for an ask price of 99.156 rather than the 100.000 at issue, with a yield of 3.350. So the price is lower, the yield is higher, and no interest has been paid yet since its only been 3 days. I have seen other CDs with a much wider spread. But my question on this example is whether purchasing it new on the 25th or secondary on the 28th is a better deal. Does it make more sense to wait a few days after issue and see if the same CD is available at a discount?

2
Comment #17 by Anonymous posted on
Anonymous
#16, I think you have answered your own question.  You go for the rate that pays the highest yield to maturity.  That would be 3.35%.  However; I am not too sure that it is always the case that the secondary cd that is the same as the previous original issue cd pays a better rate.  I suppose that depends on the seller on what price he is willing to sell his cd?

1
Comment #19 by Anonymous posted on
Anonymous
#16...something strange about your example, rates have gone down since then not up... the price of the bond should have gone up not down....#16 is probably right. Is that 1 example or are there more?

Also, when figuring the price out take into consideration the commission you will pay on anything bought in secondary market.

Plus you are not getting a check for 3.35% interest on that bond... the yield is 3.25%, that is what you get the 3.35% is yield to maturity.

2
Comment #18 by Anonymous posted on
Anonymous
ALL BROKERED CD'S (ORIGINAL ISSUE AND SECONDARY) HAVE A COMMISSION THAT IS BUILT INTO THE PRICE THAT YOU PAY FOR THE CD. 

3
Comment #22 by Anonymous posted on
Anonymous
#18 again.

I need to clarify about what I said about commisions charged by brokerages.  It depend on the brokerage firm that you are using.  At Schwab, they do not charge a additional brokerage commision for original issues or secondary issues as long as the trade is done online.  They still have a built in commission in the price of the CD.

2
Comment #20 by Anonymous posted on
Anonymous
The commission is built into a new issue at par... that is the difference.

1
Comment #21 by Anonymous posted on
Anonymous
Depending on who you are dealing with the commission can be higher or lower.... I use vanguard, they are one of the cheaper ones. When you buy and sell on the secondary there is a commission on both ends ...at maturity there is no commission on a new isssue or a secondary issue if allowed to mature.

2
Comment #23 by Anonymous posted on
Anonymous
If you think rates are going up, you would be better off with a bank cd that you can close with a penalty, granted they allow you to. If you do a 10 year brokerage cd and rates were to really move up the amount your cd would go down in value might shock you, plus you have to look at that drop on your statement.... with a cd from a bank you don't see it and it doesn't aggravate you.

2
Comment #24 by Anonymous posted on
Anonymous
Scwab doesn't charge you anything? Maybe Vanguard doesn't build the commission charge into the cd becuase they charge but it is inexpensive.

1
Comment #25 by Anonymous posted on
Anonymous
U.S. government agency securities, corporate bonds, and certificates of deposit

 

  • Commission-free7 
  • Standard and Voyager Services:$2 per $1,000 face amount ($250 maximum)
  • Voyager Select and Flagship Services: $1 per $1,000 face amount ($250 maximum)
  • Selling CDs prior to maturity:Commission-free

2
Comment #26 by Anonymous posted on
Anonymous
Bond and CD prices are available at vanguard.com and are price indications only. Online prices for all secondary-market bonds and CDs are before commissions.

2
Comment #27 by Anonymous posted on
Anonymous
Vanguard Brokerage Services may act as an agent, executing your order at cost plus a commission, or as a principal, adding

markups to purchase prices or subtracting markdowns from sales prices. 6 When acting as a principal for a primary market issue,

Vanguard Brokerage generally receives a fee concession from the issuer.

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Comment #28 by Anonymous posted on
Anonymous
So on secondaries commission not built in so you would look at price on vaguard then add their commission, a $50K cd looks like it will cost you $100.00 to buy and nothing if you want to ever sell it. $50.00 if you have more than $500K invested with vanguard. New cd, the issuer pays the commission so does that means it's built in? Your guess is as good as mine.... they seem to be saying,no.

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Comment #29 by Anonymous posted on
Anonymous
When I buy an original issue or secondary cd from a brokerage firm,  all I am concerned about is that I get a better rate than is available anywhere else and do not pay any additional charges other than the known price for the cd.  As a result of my purchase, whatever the brokerage firm gets as a commission, I do not really care.

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Comment #30 by Anonymous posted on
Anonymous
Question re/brokerd CD and FDIC coverage.  Say I buy a Discover CD through Fidelity, and I already have CD's that I bought directly from Discover and have maxed out the FDIC coverage.  Does the brokered CD that I bought from Fidelity give me additional FDIC coverage?

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Comment #32 by paoli2 posted on
paoli2
#30   When I first started buying CDs from Fidelity I called the FDIC about this same question.  What I was told was if a bank fails and a person needs to be paid they check that person's name to see how many deposits he/she has with the failed bank and they put together ALL the deposits from all sources and see if they go over the insurance allowance.  For FDIC insurance purposes, how much you have with the failed bank is what you get paid on and if your CD with Fidelity puts you over the allowance, it will not be insured.  It is not up to the brokerage to know if you are over your insurance allowance with any bank CD they sell you.  It is up to you to keep track of this.   I keep a careful track of any CDs I purchase from our brokerages so I can make sure any other CDs or deposits I may have with that same bank are titled in a way I can get additional insurance and does not put me over the insurance allowance.  You do know that it makes a difference how you have the CD titled.  You can title them in various ways so that you can get additional insurance.  Just make sure if you are over the allowance, you do not have them all titled the same.

If I am not wrong, I think Ken has an article on DA about how to title accounts to get additional FDIC insurance.

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Comment #31 by Anonymous posted on
Anonymous
A lot of good info here today. Here is one more question. Vanguard lists a 30-year CD at 4.1%. Why would anyone buy a 30-year CD when it is almost 100% certain interest rates will be much higher during such a long period. And they are actually selling. Only 19 units left. My guess is if you are an older person, you will get the 4.1% when you need it, and once you go your heirs get their money at par due to the survivor option.

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Comment #33 by Anonymous posted on
Anonymous
When I recently purchased a CD from Vanguard it was part of the buying procerss that stated you should be aware that the brokerage is not responsible for ensuring you are not over any FDIC limits

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Comment #34 by Anonymous posted on
Anonymous
Ken, your posting is to pail to read, please darken the fonts. Thanks, your daily visitor.

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Comment #35 by Anonymous posted on
Anonymous
FYI  If you purchase a CD at a premium on the secondary market, the amount of the premium is not insured

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Comment #38 by Anonymous posted on
Anonymous
Lou,

Suppose you might be in a higher tax bracket at the time the cd matures.  In that case, would it might not be an advantage to take the capital loss at the time the cd matures in lieu of amortizing the premium paid?

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Comment #39 by lou posted on
lou
#38 - Theoretically, you could be right but I would think it would be difficult to project your tax rate 10 years from now. Also, you would need to estimate the time value of the tax savings you would lose from taking it in ten years as opposed to amortizing it.

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Comment #40 by Anonymous posted on
Anonymous
Lou,

 

On my tax year 2012 brokerage summary, it shows my premium amortization amount that I can file on a corporate bond that I paid a premium amount.  But it does not give be the amortization amount that I paid a premium for a secondary cd.  So does that maybe mean, that you can amortize on your taxes the premium paid on a corporate bond but not a cd?  If you can indeed amortize the premium on a cd, how do you come up with the amount to amortize if it is not provided on your brokerage statement?

 

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Comment #42 by lou posted on
lou
#40 - I'm sorry, I just realized that I didn't answer your question. I have not bought CDs on the secondary market so I'm not sure. But if you paid a premium for the CD, I don't see why you shouldn't be able to amortize it.

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Comment #41 by lou posted on
lou
Unfortunately, the brokerage company doesn't tell you the premium amortization. I use this calculator:   http://www.costbasistools.com/amortization/

It can be tricky to use. Let me know if you have any difficulty with it.

In case you want to manually figure it out, take a look at IRS Publication 550, Constant Yield Method.

http://www.irs.gov/publications/p550/ch03.html#en_US_2012_publink100010250

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Comment #43 by Anonymous posted on
Anonymous
Lou,

Thanks for the link on the calculator.  I called my brokerage and they told me that it was their policy not to provide premium amortization on certificate of deposits on the annual 1099 tax forms.  However; he did not know the reason why they did not provide this. 

I have the same thoughts as you on this.  If you pay a premium, you should be able to amortize it. 

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Comment #44 by Anonymous posted on
Anonymous
Can you use some colors with more contrast for the CD rate survey.  The light blue text is harder to see than you're old format.  Thanks.

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