Dedicated to Deposits: Deals, Data, and Discussion

Survey of the Best CD Rates for February 14, 2014

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Treasury yields were up a little for the week, but the yields took a big dip on Friday due to the release of disappointing economic data. The weakness may be weather related, but as mentioned in this Reuters article, "a growing number [of analysts] have said it's probably more than weather-related."

I would like to think we’ll continue to see rising interest rates into 2014, but as we see in the economic news, it’s by no means a sure thing. So if you had recently decided against long-term CDs, you may want to reconsider. If we look just at CD rates, it does look like we’ll continue to see slowly rising rates as the year progresses. This week we again had some rate hikes.Three internet banks raised their long-term CD rates.

EverBank raised its 4- and 5-year CD rates. Its 5-year CD rate is now 2.13% APY which is near the leaders.

GE Capital Retail Bank (formerly MetLife Bank) also raised its 4- and 5-year CD rates, and its 5-year CD rate just tops EverBank with a 2.15% APY.

GE Capital Retail Bank’s sister bank, GE Capital Bank, raised its 5-year CD rate from 2.00% to 2.05% APY.

Banks weren’t the only ones to increase rates. Apple Federal Credit Union raised its 7-year and 10-year CD rates by 10 basis points. Its 10-year CD rate is now 2.60% APY.

Local CD Deals

Like the nationally available CDs, the few rate changes were rate hikes.

Wright-Patt Credit Union in Ohio raised its 6-year CD rate by 20 basis points. Its Jumbo 6-year CD now has a 2.48% APY.

I added to the list new 7-year and 10-year CDs at Doral Bank New York. The 7-year has a 2.30% APY and the 10-year has a 2.70% APY.

There were also some nice CD specials at three eastern institutions. I added CDs to the list from Roma Bank in New Jersey, Northwest Community Bank in Connecticut and ABNB Federal Credit Union in Virginia.

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.

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 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 February 14, 2014

Under 1-Year CD Rates

InstitutionRatesNotes
EverBank1.10% checking/MMA intro 6-month rate ($100K/$50K max)account review
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 Bank0.87% 11-month No-Penalty CDsee account review

Noteworth Local Deals

InstitutionRatesRegion
HomeBanc1.50% 3-month CDCentral and West Central FL
Gulf Coast Federal Credit Union1.10% 6-month CDCorpus Christi, TX metro
Roma Bank1.05% 6-month CDparts of New Jersey
Doral Bank NY1.00% 6-month CDNYC

1-Year CD Rates

InstitutionRatesNotes
Pentagon Federal Credit Union1.16% 1-year CDaccount review
Melrose Credit Union1.10% 1-year CD
AloStar Bank of Commerce1.10% 1-year CD
Connexus Credit Union1.10% 1-year CDw/active chk
CIT Bank1.05% ($25K min)add-on & bump-up 1-year CD
AmTrustDirect1.05% 1-year CD
DollarSavingsDirect1.05% 1-year CD
GE Capital Retail Bank1.05% ($25K min) 1-year CDFormerly MetLife
Ally Bank0.99% 1-year CD60-day early withdrawal penalty

Noteworthy Local Deals

InstitutionRatesRegion
Gulf Coast Federal Credit Union1.50% 12-month CDCorpus Christi, TX metro
MountainOne Bank1.30% ($130K max) 13-month CDParts of MA and VT
South Florida Federal Credit Union1.26% 1-year CDSouth Florida
LOMTO Federal Credit Union1.20% 1-year CDparts of New York City
Doral Bank NY1.20% 1-year CDNYC
United Legacy Bank1.15% 11-month CD specialCentral FL
HAB Bank1.15% 1-year CDSouthern California
Beal Bank1.11% 1-year CDSoutheast FL
HAB Bank1.10% 1-year CDNYC metro

18-month CD Rates

InstitutionRatesNotes
Xceed Financial Credit Union1.50% 17-month CD
Barclays1.43% (2.15% 5-year CD closed after 18 months)see review & risks
Ally Bank1.16% (1.60% 5-year CD closed after 18 months w/new ewp)see review & risks
AloStar Bank of Commerce1.15% 18-month CD
GE Capital Retail Bank1.15% 15-month CD specialFormerly MetLife

Noteworthy Local Deals

InstitutionRatesRegion
Gulf Coast Federal Credit Union1.65% 18-month CDCorpus Christi, TX metro
University of Iowa Community Credit Union1.45% ($250K) 1.35% ($100K) 1.25% ($1K) 18-month CD specialmany Iowa counties
Northwest Community Bank1.25% 18-month CDparts of Connecticut
Doral Bank NY1.25% 18-month CDNYC
NEFCU1.20% 20-month CDLong Island, NY
ABNB Federal Credit Union1.10% ($100K) 15-month CDNorfolk/Virginia Beach metro

2-Year CD Rates

InstitutionRatesNotes
Barclays1.61% (2.15% 5-year CD closed after 2 years)see review & risks
Northrop Grumman Federal Credit Union1.40% ($40K) 1.25% ($2.5K) 2-year CD
Melrose Credit Union1.36% 2-year CD
Ally Bank1.27% (1.60% 5-year CD closed after 2 years w/new ewp)see review & risks
Connexus Credit Union1.30% 2-year CDw/active chk
Pentagon Federal Credit Union1.26% 2-year CD
AloStar Bank of Commerce1.25% 2-year CD
Bank5 Connect1.25% add-on 2-year CDnot available to MA & RI residents
CIT Bank1.20% ($25K min) add-on & bump-up 2-year CD

Noteworthy Local Deals

InstitutionRatesRegion
Gulf Coast Federal Credit Union1.75% 2-year CDCorpus Christi, TX metro
NavyArmy Community Credit Union1.70% ($100K) 1.40% ($1K) 2-year CDCorpus Christi, TX metro
Doral Bank NY1.45% 2-year CDNYC
LOMTO Federal Credit Union1.45% 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
Barclays1.79% (2.15% 5-year CD closed after 3 years)see review & risks
Connexus Credit Union1.75% 3-year CD w/active chk
Melrose Credit Union1.61% 3-year CD
Northern Bank & Trust Company1.60% 3-year CD
Navy Federal Credit Union1.55% ($100K) 1.50% ($20K) 3-year CDlimited membership
Pentagon Federal Credit Union1.51% 3-year CD
Intervest National Bank1.45% 3-year CD
Bank5 Connect1.18% (average apy) limited no-penalty 3-year CDnot available to MA & RI residents

Noteworthy Local Deals

InstitutionRatesRegion
NavyArmy Community Credit Union2.05% ($100K) 1.75% ($1K) 3-year CDCorpus Christi, TX metro
Spokane Teachers Credit Union (STCU)2.02% ($25K) 30-month CDWA State & parts of ID
Gulf Coast Federal Credit Union2.02% 3-year CDCorpus Christi, TX metro
Jeanne D'Arc Credit Union1.65% 30-month CDparts of MA and NH
ABNB Federal Credit Union1.60% ($100K) 39-month CDNorfolk/Virginia Beach metro
LOMTO Federal Credit Union1.60% 3-year CDparts of New York City
Doral Bank NY1.60% 3-year CDNYC
Department of Commerce FCU1.55% 3-year CDWashington DC

4-Year CD Rates

InstitutionRatesNotes
Navy Federal Credit Union2.05% ($100K) 2.00% ($20K) 4-year CDlimited membership
NASA Federal Credit Union2.00% 49-month CD special
Barclays1.88% (2.15% 5-year CD closed after 4 years)see review & risks
Melrose Credit Union1.86% 4-year CD
GE Capital Retail Bank1.80% ($100K) 1.70% ($2K) 4-year CDFormerly MetLife
San Diego County Credit Union1.80% ($90K) 4-year CD
Pentagon Federal Credit Union1.76% 4-year CD
CIT Bank1.75% ($100K) 1.65% ($1K) 4-year CD
Nationwide Bank1.72% ($100K) 1.67% ($500) 4-year CD
Communitywide Federal Credit Union1.70% 4-year CDaccount review
Barclays1.65% 4-year CD
Intervest National Bank1.65% 4-year CD
EverBank1.63% 4-year CD
Ally Bank1.30% Raise-Your-Rate 4-year CD

Noteworthy Local Deals

InstitutionRatesRegion
Bank of Utica2.25% 4-year CDCentral New York
Institution For Savings2.00% 4-year CDparts of MA
Bayer Heritage Federal Credit Union1.89% 4-year CDparts of WV, OH & SC
Department of Commerce FCU1.80% 4-year CDWashington DC
MidFirst Direct1.75% 4-year CDAR, AZ, CA, FL, MO, NH, NV, NY, OK, TX, and WY
LOMTO Federal Credit Union1.75% 4-year CDparts of New York City
Police and Fire Federal Credit Union1.75% 4-year CDPennsylvania
HAPO Community Credit Union1.70% 4-year CDall of Washington State
Doral Bank NY1.65% 4-year CDNYC
Fifth Third Bank1.50% 4-year CD specialseveral eastern and midwestern states

5-Year CD Rates

InstitutionRatesNotes
Navy Federal Credit Union2.55% ($100K) 2.50% ($20K) 5-year CDlimited membership
Stanford Federal Credit Union2.27% ($100K) 5-year CD, requires chk w/ddaccount review
CIT Bank2.20% ($100K) 2.00% ($1K) 5-year CD
Barclays2.15% 5-year CD
iGObanking.com2.15% 5-year CD
GE Capital Retail Bank2.15% ($100K) 2.00% ($2K) 4-year CDFormerly MetLife
EverBank2.13% 5-year CD
Melrose Credit Union2.12% 5-year CD
GE Capital Bank2.05% 5-year CD
San Diego County Credit Union2.05% ($90K) 5-year CD
State Farm Bank2.05% 5-year CD, 2.10% IRA
State Bank of India - New York2.05% 5-year CD
Pentagon Federal Credit Union2.02% 5-year CD
Fidelity New Issue Brokered CD1.95% 5-year non-callable CDissued by GE Capital Retail Bank

Noteworthy Local Deals

InstitutionRatesNotes
ABNB Federal Credit Union2.60% ($100K) 63-month CDNorfolk/Virginia Beach metro
Bank of Utica2.50% 5-year CDCentral New York
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
Northwest Community Bank2.28% 5-year CDparts of Connecticut
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
Credit Union West2.20% (IRA $50K) 1.95% (non-IRA $50K) 5-year CDPhoenix metro
Bayer Heritage Federal Credit Union2.15% 5-year CDparts of WV, OH & SC
Dime Savings Bank2.10% 5-year CDNew York
Department of Commerce FCU2.10% 5-year CDWashington DC

Over 5-Year CD Rates

InstitutionRatesRegion
Fidelity New Issue Brokered CD3.30% 10-year non-callable CDissued by GE Capital Bank and others
Navy Federal Credit Union3.10% ($100K) 3.05% ($20K) 7-year CDlimited membership
Navy Federal Credit Union2.75% ($100K) 2.70% ($20K) 6-year CDlimited membership
Fidelity New Issue Brokered CD2.65% 7-year non-callable CDissued by CIT Bank and others
Apple Federal Credit Union2.60% 10-year CD
Pentagon Federal Credit Union2.27% 7-year CD
Apple Federal Credit Union2.20% 7-year CD
Intervest National Bank2.07% ($95K) 2.05% ($2.5K) 10-year CD
GE Capital Bank2.05% 6-year CD

Noteworthy Local Deals

InstitutionRatesRegion
Hutchinson Credit Union3.15% ($250K) 3.10% ($100K) 3.05% ($25K) 10-year CDKansas
PeoplesChoice Credit Union3.04% 10-year CDYork and Cumberland Counties of Maine
Frick Tri-County Federal Credit Union3.00% 10-year CDparts of Western PA
SACU2.80% ($90K) 2.75% ($10K) 10-year CDSan Antonio, TX
Dollar Bank2.75% 10-year CDPittsburgh and Cleveland
MidFirst Direct2.75% 7-year CDAR, AZ, CA, FL, MO, NH, NV, NY, OK, TX, and WY
Franklin Federal Savings Bank2.73% 7-year CDRichmond, VA metro
Doral Bank NY2.70% 10-year CDNYC
Frick Tri-County Federal Credit Union2.50% 8-year CDparts of Western PA
MidFirst Bank2.50% 7-year CDAZ and OK
Hutchinson Credit Union2.50% ($250K) 2.40% ($100K) 2.30% ($25K) 6-year CDKansas
Wright-Patt Credit Union2.48% ($100K) 2.38% ($500) 6-year CDUS gov military and civilian personnel, Parts of OH
Franklin Federal Savings Bank2.42% 6-year CDRichmond, VA metro
Doral Bank NY2.30% 7-year CDNYC
SACU2.30% ($100K) 2.25% ($10K) 7-yearSan Antonio, TX
Fifth Third Bank2.00% 6-year CD specialFlorida

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


  Tags: CD rates

Related Posts

Comments
69 Comments.
Comment #1 by jib2424 posted on
jib2424
Are you saying we should go long-term or that we shouldn't go long term?  It's not clear.  Thanks.  Keep up the good work.

1
Comment #3 by Ken Tumin posted on
Ken Tumin
There's no simple answer about going long term with CDs. I'm just saying that rates could stay low for longer than we now think.

9
Comment #2 by Anonymous posted on
Anonymous
Not much excitements about these rates. Maybe when the political environment change, we can see better rates.

7
Comment #4 by Anonymous posted on
Anonymous
You may be right. However, I believe these low rates, unfortunately, will out live all of us seniors. 

14
Comment #5 by Anonymous posted on
Anonymous
This is what debt-laden recoveries look like...and it's not confined to our shores. A few economists are predicting a global recession on the horizon, one that will be long and painful. By the time FED tapering ends (rates won't change much until it does), conditions may be ripe for starting the QE process all over. You can rob Peter or Paul but when you rob Peter, Paul AND Mary there's a price to pay and it never makes you smile.

For the sake of those who need an income stream, I hope I'm wrong. As retirees, we put a lot of cash in 10-year brokered CD's at 3.3% and I'm betting we won't regret it.

10
Comment #6 by Hoody posted on
Hoody
I hear that, I'm feeling a bit better doing that 3.1 at Navy for 7 yrs  

4
Comment #21 by Anonymous posted on
Anonymous
Look at the level of service in the reviews of Navy!

1
Comment #23 by Hoody posted on
Hoody
? well its a small branch I have here, I even found I know one of the service people on a personal basis, so far I haven't seen an problems, or any that can't be solved.  The people are all pretty friendly at this branch.

Besides once I set up my CD's they pretty much run on auto pilot, I just check my statement on line once a month to make sure the interest is posted to my mnymkt,  I have no other "business" to conduct after that.

1
Comment #7 by Anonymous posted on
Anonymous
Go as long as you can, the rates will stay depressed as long as there is deficits plaguing the government  or as long as the democrats are in control of raising the debt ceilings and running public programs that are draining the budget. Every point raised in the 10 year treasury will cost us 100 billions extra per year in interest alone.

7
Comment #8 by jib2424 posted on
jib2424
Ken,  I understand.  But what confuses me is that you say:" if we look just at CD rates, it does look like we should see slowly rising rates as the year progresses".  This would seem to be an argument for CD investors to wait until later in the year to invest in CDs.  Am I interpreting this correctly?

2
Comment #9 by Anonymous posted on
Anonymous
I just ladder my cds so I always have something coming out if rates move up.

6
Comment #10 by jib2424 posted on
jib2424
are you currently buying long term or short term CDs?

1
Comment #14 by Anonymous posted on
Anonymous
I can't answer for #9, but I also have a ladder portfolio of CDs using CDs with 5 year maturities.  I always have a 5 year CD maturing every year and renew them at the then current 5 year rate.  That's the nice part of taking the ladder approach to CD investing.  I did go out to seven years when PenFed was offering 6.25%.

Being retired, the stock market isn't for me.  I may miss out on some nice gains, but I like to sleep well at night.

5
Comment #19 by Anonymous posted on
Anonymous
Right now I have a 5 year ladder going...... if I find something decent like the penfed 3% I go 5 years but if there isn't I look at what there is available and make my choice then.

3
Comment #11 by Anonymous posted on
Anonymous
The following 30-year CD chart tells an interesting (no pun intended) tale.
http://www.bankrate.com/finance/cd-rates-history-0112.aspx

The 30-year trend line is down with a few interesting moguls along the way. Fun for skiers, perhaps, but not conducive to earning a lot of interest income. Graphs often speak volumes and, in this case, it's a long way back to a sustained 3%, much less the 5%-8% my parents enjoyed for many years.    

 

7
Comment #12 by Hoody posted on
Hoody
definatly a depressing sight, but it all depends on how patient you are, how young and how dedicated to saving you are,

I started out about the time the hill was at the top with very little, but just kept at it, yes I spent a lot less and lived a lot lower, but that was my choice, today I have money for CD's but the rates are low, on the other hand "I have money", and have gotten pretty used to staying low.

 So unless the whole system crashes, I should at least be able to continue to live as well as now till time ends for me, If the system crashes, well I won't be alone out in the street. but I may still make it since that's where I started.

5
Comment #13 by gregk posted on
gregk
In my situation, the rate scene impacts more how much my children will inherit rather than my own sustenance.  Even with 0% interest (given my lifestyle) I'd be almost certain to expire before my estate would.  The qualifier is some "system-crash" Hoody refers to, - hyper-inflation or pandemic bank-CU failures (and reneged deposit insurance commitments), - in which case (as Hoody observes) company in distress would not be lacking. 

3
Comment #16 by Anonymous posted on
Anonymous
Hoody, that scenario is very familiar, accept I started before the rate hill climb began, enjoyed participating at the top, and rode the steep dive down, and now hopefully leveling off without dropping any lower.

4
Comment #20 by Pablo Savin (anonymous) posted on
Pablo Savin
Hoody, great post. I've have been keeping at the savings game for a long time also, right at 31 years. Living below my means and saving 20 percent of my pay. Fooled with the market a little, but most in CD's. Might not be keeping up with inflation, but I never put too much thought into it. Gonna save for 3 more years , god willing, then start living on the interest.

7
Comment #22 by Hoody posted on
Hoody
I hear ya homes :)

4
Comment #15 by Anonymous posted on
Anonymous
The interest rates on all CDs are bellow the real inflation, therefore, after paying the tax and diminished value on the investment and the dollar losing value, I came with negative interest rates. According to my calculations, we have to earn 5.2% in today's environment to break even. But since the money are tagged to many factors, it is very difficult to plan for the future.
If the democrats continue to be in control, the dollar will continue to slide and lose value even if the stated inflation is low (not the real one), there will be very little to look for in the future.
When the debt ceiling rises, the dollar falls automatically on the global scale of currencies and everything will go up in price locally, so there is no incentive to keep the dollar on long run. Being trapped in no man's land, I will hold off investing in long term CDs until November to see the outcome of the election. If the republican gain the senate and keep the house it will be OK to go long on the CDs, in opposite if the democrats keep control, I will not make any investments in CDs for the reasons stated above,

2
Comment #17 by gregk posted on
gregk
Here we go again…

You're relentless, - but never actually make an argument with documented facts and the application of logic and reasoning, together with some accompanying recognition of the real complexity of things.

Every statement you make above is a questionable one for which you provide no grounding which we could use to have a discussion.

8
Comment #18 by Anonymous posted on
Anonymous
I disagree with your statement, #15 pointed out at the reality of things. It is not just the interest rates that counts, it is all those things mentioned in the findings. The US Dollar is a reserved currency and must be treated accordingly, you can not just print money and expect rise in your CD rates after the make believe inflation thrown at us by the FED and also the national debt is a real killer on the returns.

4
Comment #24 by Anonymous posted on
Anonymous
#15 how about some tangible facts? Just a rant about the dems, with no facts to support you.
zzz nite nite.

5
Comment #25 by jib2424 posted on
jib2424
anyone have any suggestions on whether there are any cds that should be bought now?

2
Comment #26 by Anonymous posted on
Anonymous
Not really

3
Comment #27 by jib2424 posted on
jib2424
I don't see anything worth buying now.  Am I missing anything?

1
Comment #28 by Anonymous posted on
Anonymous
What's your timeline, amount to invest and the percentage of your total assets the amount represents?

2
Comment #29 by Ratefinder (anonymous) posted on
Ratefinder
I have $250,000. I want to invest. I want to invest it all in risk free investments.  I have no particular timeline; I just want to get the best risk free rate of return possible.  Is there anything worth investing in now, or should I wait to see if something good comes up in the future?

1
Comment #30 by Anonymous posted on
Anonymous
Brokered FDIC insured CD's at 3.3%. Interest paid every six months and it's not compounded. You can take the interest as cash or reinvest as you please.



 

2
Comment #31 by Anonymous posted on
Anonymous
Thanks.  If you think of anything else, please let me know.

2
Comment #32 by Anonymous posted on
Anonymous
Can these cd's be cashed in early?

1
Comment #35 by Anonymous posted on
Anonymous
Brokered CD's (that you own) can be sold by your brokerage firm at a gain or loss depending on rate fluctuations. If you buy at 4% and a few years later decide to sell when rates are 3% you can probably sell with no loss of principal and a small gain. If rates decline or remain the same you will probably incur a loss on principal if you sell prior to maturity. Remember, most brokered CD's pay interest twice a year which is money in your pocket every 6 months.

I have a large sum invested in 10-year brokered CD's and I fully plan to keep it there until maturity. If I die before then my estate could cash in the CD's at face value without penalty...the so-called survivors option.

As in all things, brokered CD's are not for everyone. What I like is that every six months I can use the interest for cash needs, stock purchases, new CD's, or any combination of the above all from one account. The principal remains whole if held to maturity.

Ten years is a long time so caution is in order.

4
Comment #38 by jib2424 posted on
jib2424
Thanks very much for this information.  I have wondered about brokered CDs but never knew how they worked.  I like the idea of ten year brokered CD's at 3.30% but worry what would happen if rates were to rise during the ten year period.  Am I correct in understanding that, if rates rose, I could sell the brokered CDs and re-invest the funds in CDs paying the higher rates?  Thanks.

2
Comment #44 by Anonymous posted on
Anonymous
Assume you buy at 3% and rates rise to 5% in year four of a ten-year term. No one is going to pay you face value and earn 3% when they can pay face value for a new CD paying 5%. In this case you can probably find a buyer but at less than your original face value. If new issues are paying 5% to maturity your 3% CD could be priced to effectively pay the buyer 5% to maturity. A CD is a bond and secondary bonds should always list what is called Yield to Maturity (YTM) so the buyer can see what the effective rate is.

Simple Example
On day 1 you buy a 3%, ten-year $100,000 CD. Over ten years you will earn $30,000 and then get your 100,000 back. Total = $130,000.

On day 2 rates jump to 5%. A $100,000, 5% ten-year CD will earn $50,000 over ten years and be worth $150,000 at maturity.

On day 3 no one is going to pay you $100,000 for your CD paying 3% when they can buy one at 5%. So, what's your 3% CD worth at this moment in time? Well, a new one is worth 150K over ten years and yours is worth 130K or 20K less. If I pay you 80K for your CD, take the 30K in interest and the 100K face value at maturity I'll have a grand total of 130K for my investment of 80K. My gain is 50K or exactly what I would have earned had I purchased a 100K 5% CD.

Here's a calculator...make sure you include $ for dollar values.
http://www.investinganswers.com/calculators/yield/yield-maturity-ytm-calculator-2081    

4
Comment #46 by Anonymous posted on
Anonymous
Thanks very much fo this information, it is very helpful.  One additional question.  As an eample, I have some PenFed CDs paying 3%.  If next year I want to cash out and redeem my principle, I can do so, but I will have to pay a pre-payment penalty of several months interst.




In the case of brokered CDs, can I do the same thing?  That is, can I cash out and redeem my principle if I am willing to pay a pre-payment penalty of several months interest?  Thanks again for your help.

2
Comment #47 by Anonymous posted on
Anonymous
NO! You can sell your brokered cd on line but there is no exact monthly penalty like a cd you buy from a bank or a credit union.... what ever someone will pay you on the secondary market is what you will get and the amount sometimes could shock you.  hehehe

4
Comment #52 by Anonymous posted on
Anonymous
Thanks.  I might be better off to stick with non-bokered CDs

2
Comment #54 by Anonymous posted on
Anonymous
I have a brokered cd, if you can hold to maturity you will get all your money back if not don't do it especially since rates are so low now.

1
Comment #56 by jib2424 posted on
jib2424
I am just concerned that rates may rise and I might want to take advantage of the higher rates.  In order to do this, with a standard CD I can pay the penalty for early redemption, redeem the CD and go into the higher rate CD.  If I understand correctly, I wouldn't be able to do this with a brokered CD?

2
Comment #61 by Anonymous posted on
Anonymous
Wrong, you can sell your brokered cd anytime you want but there is no set loss amount like an early withdrawal penalty.

3
Comment #62 by lou posted on
lou
Assuming you can find a buyer at a reasonable price.

1
Comment #63 by Anonymous posted on
Anonymous
Depends on where rates are headed, with a brokered cd you can make a profit if rates were to go lower not so with a regular cd.

2
Comment #64 by lou posted on
lou
No one knows where rates are going, but one has to assume over the long term, higher is more likely than lower.

3
Comment #33 by QED posted on
QED
The size of your nest egg expressed in numerical dollars matters not at all.  Only thing that matters is the purchasing power of your nest egg.  

5
Comment #34 by gregk posted on
gregk
I'll take 250,000 numerical dollars over 10,000 any day.  The larger the nest-egg the greater its purchasing power, - invariably.  Yeah, size matters, he-he.

2
Comment #37 by QED posted on
QED
Size only matters when you're willing to ignore temporal considerations.  And it's really easy to be fooled.  I went through this myself . . . recently.  An on-line inflation adjustment website put my head right.  It was a much-needed, self-inflicted, dope slap.

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Comment #36 by Anonymous posted on
Anonymous
Absolutely true.

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Comment #39 by Anonymous posted on
Anonymous
While the size of ones' nest egg may help determine retirement comfort, the more important factor is the amount of "income" being generated by their nest egg.

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Comment #40 by paoli2 posted on
paoli2
If your nestegg is big enough, even 2% income can generate a sizable amount to survive on.  That is why I preach "oversave" so much.  Don't be concerned with how much to save.  Just save always as much as you possibly can.

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Comment #41 by Anonymous posted on
Anonymous
Not necessarily.  What really matters is that you do not deplete the principal before you die.  Nothing wrong with spending down the principal along with the generated income. However, I don't think a person could ever save too much, but a person can save too long into retirement and never get to enjoy what they worked so hard for earlier in life. 

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Comment #42 by Anonymous posted on
Anonymous
what is your opinion about brokered CDs?

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Comment #45 by Anonymous posted on
Anonymous
Having never invested in a brokered CD, I am neutral on them. 

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Comment #49 by Anonymous posted on
Anonymous
1- Be prepared to hold until maturity
2- They pay every 6 months 
3- Watch the commission you pay

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Comment #51 by Ratefinder (anonymous) posted on
Ratefinder
Thanks for this.  This is helpful.

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Comment #43 by Anonymous posted on
Anonymous
The so-called "nest egg" is often misleading. Your comment about income generation is the all-important number.
Retirees (folks no longer employed) traditionally depend on three sources of income: pension(s), social security and investments. Assume someone has 1M in after-tax cash, a 130K annual pension and receives an additional 30K from social security. If annual expenses are < 100K the pension alone will suffice. Social security payments can be added to cash and, coupled with a moderate 3% growth the original 1M cash pot grows by about 50K after one year. This retiree may never have to tap their "nest egg", depending on longevity, inflation and future expenses. I trust their inheritors will be grateful!

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Comment #48 by Anonymous posted on
Anonymous
How many people do you think get 130k pension?

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Comment #50 by Anonymous posted on
Anonymous
Top 1% and poster 43.

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Comment #55 by Roush posted on
Roush
Your analysis may be spot-on for a select few, but most of us here can only dream of the type of numbers that you speak of. Maybe you might want to scale it down a bit for the rest of us? Thanks.

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Comment #57 by Anonymous posted on
Anonymous
Yea, I suspect a bit of gloating in comment #43.  If most of us had that high of retirement income, I don't think we would be on this site trying to figure out how to squeeze another 1/2% or more interest out of our savings accounts.  

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Comment #58 by Hoody posted on
Hoody
smirks, I hear that lol

btw I see rates haven't changed at Navy this morning.

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Comment #60 by Anonymous posted on
Anonymous
No gloating...the principles apply to all income levels. One can only save/invest excess funds based on income and expenses. Savings accounts, by their very nature, are safe, low-earning accounts with very few options. PenFed paid 3% for two months and now Navy pays 3%...for awhile. Local banks don't come close to those rates which drives people to informational websites like this.

There was survey about how much money moved to PenFed during Dec/Jan. The individual numbers were surprising...
http://www.depositaccounts.com/blog/2014/01/depositaccounts-100-million-decemberand-25-million-in-pe...

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Comment #59 by Anonymous posted on
Anonymous
29 mentioned an investment number of $250,000. I agree, however, that many never see the numbers I posted, however, the principles are applicable to any amount.

Brokered CD's are effectively bonds that one can sell on the secondary market, if the brokerage accommodates you. Yield to Maturity is the key to understanding the risk involved in selling (or buying for that matter) prior to maturity. Long-term CD's (> 2 years) are not for everyone; brokered CD's even more so.

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Comment #65 by jib2424 posted on
jib2424
Brokered CDs are a possibility.  Are there any other risk free investments that look good now?

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Comment #66 by lou posted on
lou
This why we need public employee pension reform in Ca. These very high pensions will bankrupt the state if nothing is done about it in the near future.

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Comment #67 by gregk posted on
gregk
Bankruptcy is in the future, Lou, whereas promising high pensions is something that can win votes right NOW.  What politician would talk about and ACT in light of the former at the expense of the latter.  None that I know of.  They'll be out of office when the trouble hits.  Let their successors worry about it.

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Comment #68 by lou posted on
lou
In Ca. we have the public employee unions providing extortion money to the politicians in exchange for their votes. In the private sector you would go to prison for at least 10 years for this type of behavior but for some bizarre reason it is allowed in the public sector. Go figure!

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Comment #69 by Anonymous posted on
Anonymous
Lou, welcome to Mexico.  I mean America.

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