Dedicated to Deposits: Deals, Data, and Discussion

TobyFCU’s Prime Rate Certificate Is a Great Long-Term CD Deal

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Tobyhanna Federal Credit Union

One of the good deposit deals at Tobyhanna Federal Credit Union (TobyFCU) is its Prime Rate Certificate. It has a 7-year term and its rate is based on the Prime Rate (Prime Rate - 3.25% with a floor of 3.04%). Since the current Prime Rate is 3.25%, the current certificate rate is the floor rate of 3.04%. That’s a very competitive rate for 7-year CDs. The rate is variable, but it can only go up since the floor rate is 3.04%. Another nice feature of this CD is that additional contributions may be made at any time throughout the term. Minimum deposit is $1,000. The only downside I could find about this CD is that it has a harsh early withdrawal penalty of two years of dividends. This information is only based on what’s listed at this credit union page as of 5/28/2014 and what I was told by a credit union CSR. I haven’t reviewed the disclosure of this CD, so if you find any other issues, please leave a comment.

DETAILSINSTITUTIONAPYMINMAXPRODUCT
Tobyhanna Federal Credit Union3.04%$1k-7 Year Prime Share Certificate
Accounts mentioned in this post. Rates as of July 29, 2014

As I mentioned yesterday, membership in TobyFCU is available to members of the American Consumer Council. The full details of TobyFCU’s membership qualifications are listed in the credit union’s How to Join page. Membership requires a minimum balance of $5 in the share savings account.

The credit union has an online application for membership and for opening several of the deposit products. I did not see this Prime Rate Certificate in the application, but I was told it can be opened online once you join.

TobyFCU is headquartered in Scranton, Pennsylvania with branches in Scranton, Wilkes-Barre, Tobyhanna and East Stroudsburg.

The DA reader QED is a member of TobyFCU and had this to say about the credit union in the comments:

Toby FCU has treated me right, but it's a relatively small, more home town or home region, kind of credit union. That's not a criticism, just something of which others should remain aware going forward. Toby is good. But size-wise it's not Alliant, PFCU, or even DCU.

TobyFCU has an overall health grade at DepositAccounts.com of a B with a Texas ratio of 22.12% (average) based on December 2013 data. Please refer to our financial overview of TobyFCU for more details. The credit union is federally insured by the NCUA (Charter # 9198).

How This CD Compares

The highest standard 7-year CD rate that’s nationally available is 2.42% APY at Franklin Federal Savings Bank. Non-callable 7-year brokered CDs are available at Fidelity with rates of 2.65%.

5-year CDs appear to be better deals these days. The highest rate is currently 2.30% APY at GE Capital Retail Bank.

These rates are accurate as of 5/28/2014.


  Tags: Tobyhanna Federal Credit Union, Pennsylvania, CD rates

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Comments
159 Comments.
Comment #1 by QED posted on
QED
I discovered this Prime Rate deal after reading Ken's Toby article yesterday.  Here is my take:

This far out the two year loss of interest would be, for me, a deal killer.  I could not commit a lot of money to something like that; it's just too punitive and dangerous.  However:

This deal is reminiscent of the great NWFCU deal which saw me through the financial crisis back circa 2008-2009;  except this deal is so much longer.  The beauty here is the low entry fee combined with the add-on feature.  Only $1000 gets you in.  Then, later, when some time has run off the clock and with (time-related) risk thereby reduced, you jump in with more money if rates have remained low.  I checked with Toby and can report that adding new funds does NOT change the maturity date of your CD.  Your maturity date is set into stone on the day you open your CD.  It will not change.

Finally, I think this product is imprudent for Toby to be offering.  When NWFCU did this, there were sufficient resources to support any losses.  Toby, it seems to me, does not have resources available to remain afloat if this goes south for them.  Course they could always do the sort of thing USCU tried to do a few years back when faced with trouble.  If you recall, that miscue resulted in the USCU president having to resign.  I was in the middle of that one.  It was messy.

18
Comment #2 by me1004 posted on
me1004
Gee, at first glance, this seems like a worthwhile CD. I would normally never even consider a 7-year term, but with this add-on feature, in theory I could put a small amount in now ($1,000) to lock this in and have the 7 years start counting, and add more in years down the line when it would amount to a shorter term. 
But in considering the arithmetic, I see an issue with that approach. It seems to me that you would probably only come out ahead on this CD for money you actually put into it in its early time rather than later. I suspect that later you will only be getting what you otherwise could find in a CD at various other places at that time. So, your only benefit would be on the money you actually do lock up for most of the seven-year term. Maybe -- this calculation is of the unknowable, of course.
This CD is pegged to what goes on with interest rates. We have been pretty bamboozled over the past few years over what to expect about when rates will go up and by how much -- so in the end, who knows. Still, my wild guess is that this CD would be at this very interest rate for a good three years, maybe longer. I would certainly hope that three years from now, rates will have risen and there would be other shorter term CDs available at around 3.04% -- but again, who knows. This CD will not go up until the prime rate hits 6.30% -- 3.25% more than it is now. If so, that would mean you benefitted from this CD for only the first three or so years, and after that you were probably still competitive but not likely ahead of the game necessarily, and maybe someone else would have a promo that even beats is -- maybe. Of course, maybe you would benefit for a longer time, but again, only for money in there, not money you add in for or more years down the line.
So, if you put in only a small amount now because you don't want to lock your money up for so long, then you likely would find later that you gained nothing for that effort since by the time  you would be ready to add more, you might find plenty of other options to compete or beat. On  the other hand, if interest rates remain low, then this could still be higher than otherwise available for a shorter term CD when you want to add to it in maybe 3-4-5 years from now. 
I think this is incredible marketing, although it has some dangers all around, even for the CU. I agree with QED's comment about wondering whether this kind of account could be the demise of the CU -- gee, I see while they are giving out this 3.04%, they are also giving out home equity and other loans for less than 3% -- how do you make a profit like that?! If they go under, so does your CD and its terms. So, if they went under in, say in three years, you could find your CD being closed, so never even be able to take advantage of it when it gets to a shorter timeframe.
None of this says not to go for this. One rule of thumb is always that a bird in hand is worth two in the bush. For a mere $1,000 down now, you might find in 3-4-5 years that you do have a very good option to add a much larger amount of money then. and if you don't, you only have $1,000 locked in there. To my mind, this might be the only way to consider this CD: minimum now and see when its time frame gets shorter whether it is still something you might be interested in. But that means keeping track of it for the next seven years and dealing with its paperwork and whatever, over a mere $1,000 -- not a lot of effort, but part of the consideration, yet another loose end to keep track of.

13
Comment #4 by QED posted on
QED
Yup.  The real peril for Toby comes in the out years, depending of course on interest rates at that time.  But if rates remain where they are today then, in year 5 for example, you can invest in (what amounts to) a two year CD at a rate far higher than competing two year rates.  This is what I (and many others) did at NWFCU.

When the walls began to collapse on the USCU deal, and I think it was circa seven years ago but Ken would remember . . regardless what USCU sought to do was change the terms of their deal, limiting new investments, even though no such limitations existed at the outset.  Lawyers and (I think - not sure) even the NCUA became involved.  Oh my goodness was that a mess!  And there were many, mostly out of town (Asheville), very upset members.  I'm not certain USCU has recovered fully to this day!

I hope nothing similar happens to Toby.  But they are assuming risk with this deal I'm not certain they fully understand.  Regardless of all that, for $1000 this deal is darn great insurance for us!

5
Comment #7 by cumulus posted on
cumulus
me1004, QED thanks for all the thoughtful,
considerate comments.  As always major
thanks to Ken.

7
Comment #3 by Anonymous posted on
Anonymous
Doesn't sound bad to me if you are laddering

5
Comment #5 by Anonymous posted on
Anonymous
So, does everybody agree that the way to go is to put $1,000 in now and see where rates are in a couple of years and then decide whether to put more in at that time?

6
Comment #6 by Anonymous posted on
Anonymous
That is actually not a bad idea.... just in case interest rates do move up sooner than people think they will.

2
Comment #8 by Anonymous posted on
Anonymous
No, #5,  everybody does not agree.

1
Comment #11 by Anonymous posted on
Anonymous
Do you disagree?

1
Comment #9 by Anonymous posted on
Anonymous
Have you done your due diligence on the CU?  What is its primary customer/membership base...is that an issue in the long/short term, e.g. will the "base" be open in x years?  Are you physically "close" to a branch?  Is the financial statement robust?  Why is there a posting of an opening for a CFO...why is there a vacancy?  What red flags are there?  And, what is the "delta" in the rates from that otherwise available (after all that is all "you" are looking at!) or what is in your financial bucket list?

Have fun!  But spend/invest wisely!

7
Comment #10 by Anonymous posted on
Anonymous
Prime rate minus 3.25% is just a gimmick, it will not apply for the next 7 years, just count on the 3.04% for the life of the CD.

14
Comment #12 by Anonymous posted on
Anonymous
You nailed it. If there was ever a sign something is fundamentally wrong just look at how challenging it is for Grandma to purchase a CD in today's environment. Twenty years ago all it took was a newspaper and a cup of coffee!

8
Comment #17 by me1004 posted on
me1004
#10, why do you say the rate that is the basic fundamental of this CD willntapply for the next 7 years? Are you saying you think that interest rates will remain low for that long, or perhaps you read through the disclosures and found some out for them that they won't have to pay a higher rate? 

3
Comment #41 by Anonymous posted on
Anonymous
#17, just think logically for few seconds, if the prime rate is at 6.5% the rest of the banks will offer CDs in the range of 4-5%, you still lose money and if you pay 2 years of penalties, you have not made any money on your money for the last 5-7 years. All interest rates are interconnected and move in tandem.

6
Comment #13 by moneysaver posted on
moneysaver
I don't see anything wrong with a basic 3%+, 7-year CD in today's, or any near future, marketplace. In fact, this offer aside, there's almost no place that's offering 3%+ for ANY CD term right now, except for some brokered CDs. And despite this being a small CU, your funds with them are still NCUA insured. So the worst that could happen would be getting your funds back early if something went south.

The two-year EWP is a negative, but not so much if, like me, you're someone who never breaks their CD terms, because you keep enough liquid assets in other areas to avoid that kind of necessity.

Heck, these days, with few exceptions, you can't even get a Rewards Checking account with a 3%+ rate. And with this CD, at least you know the rate is never going to go down -- which is something we certainly can't say for RCA interest rates over the past couple years.

It certainly seems to me to be something well worth checking into and checking out.

8
Comment #42 by Anonymous posted on
Anonymous
#13, just include the taxes, inflation and dead money for 7 years and that will show the answer for "nothing wrong for 3.04% for 7 years".

3
Comment #54 by Anonymous posted on
Anonymous
#42, you are correct. I wanted to invest 100K which will give me 3K a year and I'm in the 25% tax bracket which will cost me 750/year x 7 = 5200 in taxes only, minus 3% inflation on the principal and interest is 3630 for a grand total of cost: 8830 down the drain (very conservative calculations).
Actual interest will be 1.7% and not 3.04%.
I did not include any EWP in the calculations since I assume the rates will stay same for the entire period. Should the rates rise just 1% in few years, you will lose all of the benefits and the interest on this CD.

3
Comment #14 by OldGuy posted on
OldGuy
The full Truth in Savings disclosure on the 7-year CD apparently isn't made available until the moment the account is opened.  I consider that a major negative.  Even more of a negative for me: according to a CSR, posted dividends/interest can't be withdrawn until maturity.  I can't live with paying taxes on income I can't receive in cash.  This might be a good product, though, for someone younger than I am who is building up an IRA.

9
Comment #16 by QED posted on
QED
Thank you for posting.  That's excellent detective work on your part.  I agree inability to withdraw dividends (interest) is a major negative.  It's not just the taxes.  Some folks live day-to-day on their interest.  For them this feature is all but a deal killer.

Still, I am opening the account with the minimum allowed amount.  I can afford that.  And all negatives will fade with the passage of time.  I just hope Toby remains up and running in the out years, when this deal will start to show some juice.   

2
Comment #15 by QED posted on
QED
Just as a "heads up" for others:

When I spoke with Toby this morning I asked a question I had not asked prior.  I can report the two year interest penalty applies whether the interest has been earned or not.  So if, for example, you open with $1000 today and need the money back next week, for reasons today unforeseen, you will get your money back minus $60.  I don't think this is a big deal provided folks know in advance and have opportunity to adjust their behavior accordingly.  While the (unlikely) loss of $60 is really small potatoes, the possible loss of $600 or $6000 might loom larger for certain people, depending on their individual circumstances.  I'm still going into this deal personally, for reasons earlier elucidated.  Suggest others do the same, but only with eyes wide open.    

5
Comment #18 by Anonymous posted on
Anonymous
What do you think of opening the CD now with $1,000, then seeing where interest rates are in July, and depending on where interest rates are then, possibly bringing the balance in the CD up to $250,000?

2
Comment #20 by QED posted on
QED
What do I think?  If you're referring to July of 2014:  not much!  This is only my opinion.  I'm respectful of those who might disagree.  But for me, at least two years will have to run off the clock before I would give any thought whatsoever to investing further.

Frankly, a great deal more will be known about what to do here in November of 2016.  Until then you simply open your account for a small amount . . . . then play the waiting game.  The entry cost to do this is very low.  

Remember, even if the nature of American leadership changes in January of 2017, it will be a full year after that before any change will be possible at the Fed.  Barring her death, Yellen will be in office until at least January of 2018.  That's not a small matter.  But with this CD not maturing until 2021, there remains opportunity for profit . . . . just not so much earlier on in its life.

3
Comment #21 by Anonymous posted on
Anonymous
So, what's the best way to play this CD?  Put $1,000 in now and wait until November of 2016 and then decide whether to put more in?

2
Comment #22 by QED posted on
QED
That's not a bad approach.  The right approach will be different for everyone, depending on individual circumstances.

Might be smart to buy these out over time . . . one right now  . . . then another in six months or whatever. . . and so forth.  This is almost as much an insurance policy as a CD.  It ensures that many years from now you will be able to invest your money at at least 3.04%.  That's pretty cool!

As with all insurance, sometimes you end up needing the coverage, other times you do not.  But considering Toby is paying you 3+% interest, even on a small account balance, this is pretty darn inexpensive insurance.

4
Comment #24 by James Barnes posted on
James Barnes
That sounds like a good approach.  The only problem I see is: what if Toby doesn't maintain the 3.04% interest rate.  What if it drops in six months to a lower rate?

1
Comment #26 by QED posted on
QED
Nominally, at least, 3.04% is the floor rate for this CD product.  This means any drop below that rate of interest would be a breach of Toby's contract with the member.

That said, I would rule nothing out should financial circumstances in future place Toby at risk.  I've already written here what happened at USCU some years back.

But for now the interest rate cannot fall below 3.04%.

2
Comment #27 by QED posted on
QED
Oh, OK.  Sorry.  I misunderstood your post.  Ignore my other reply (no way to eradicate it).

Yes, of course, I take your point.  The wisdom of any future purchases of this CD type, say six months from now (or whatever), would depend on the interest rate being offered at that time. 

2
Comment #28 by James Barnes posted on
James Barnes
Right.  I like the idea of buying a $1,000 CD every six months as a way to lock in the 3.04%APY for the future.  I'm just afraid the 3.04% APY may not last very long.  I guess the best thing to do is check every six months to see if Toby is still offering the 3.04%APY.  If Toby is offering it, buy a$1,000 CD.  If Toby is no longer offering the 3.04% APY, wait unitl November, 2016 and then fully fund the 3.04% CD I am opening now.  Put another $200,000 or so in the CD in November, 2016.  Does this make sense?

2
Comment #30 by QED posted on
QED
Yes and no.  If leadership of the present type, at the Fed and elsewhere, garners support in the November 2016 elections, then it might make sense to drop in $200K that early.  If much more pro-growth leadership takes over at that time, then another decision might be appropriate.

The beauty of the Toby CD is that it is, in essence, a "convertable" CD.  When we open for only $1000, even though the term is nominally long, it's not enough money to matter.  Thereafter, at any point along the way when you fully fund the CD, you in essence "convert" the CD to whatever term of seven years or less you choose.  You choose your term merely by waiting until you are comfortable (and feel safe) with the remaining time on the CD, and then jumping in with both feet.  That's a pretty cool feature.  Some people feel safe today.  For others, like me, it's gonna take a while.  But seven years is a long time and $1000 is not a burdensome amount of money.

6
Comment #32 by Anonymous posted on
Anonymous
I like your reasoning.  What would you think about buying a $1,000 CD every month as long as the interest rate stays at 3.04% or higher?

2
Comment #36 by QED posted on
QED
That's an individual decision.  The answer depends on what percentage of one's entire nest egg $1000 represents.  If it's only an infinitesimal percentage then, sure, buy one every month.  Other folks, for whom $1000 is not quite such a small amount of money, might decide to purchase less often.

For the truly compulsive, perhaps a call to Toby every week or so, to inquire as to a possible change of rate or total dropping of the product, might be an answer.

IMO, Toby is today likely seeing a greater than anticipated opening of accounts with close to the minimum allowed balance.  If Toby management is smart, they will view with some alarm the danger this represents to the institution.  Course, Toby management might not be that smart.  The dude at USCU wasn't, he nearly took USCU down, and the board later canned him.

I agree with other posters here who point to concerns with things that are "going on" at Toby.  However, over the many years, it's these precise situations which have been most lucrative for me.  I want to do business with institutions like Toby as long as the NCUA exists.  In the past my money, a lot of it, was in three different institutions, at different times, when they went belly up.  In a fourth instance I missed a failure (my CD matured) by exactly one week.  These were all very enjoyable and  profitable experiences for me.  I never lost a dime, and by having invested with the shaky institutions I brought in a lot of interest.  In all cases, obviously, there was either FDIC or NCUA insurance.  

2
Comment #38 by me1004 posted on
me1004
The terms of this account is that it cannot go below the current 3.04%. 

2
Comment #19 by racoon (anonymous) posted on
racoon
There is a ceiling rate of 7.23

3
Comment #23 by Anonymous posted on
Anonymous
No need to be concerned about that ceiling! 

3
Comment #25 by Anonymous posted on
Anonymous
If any thought that it could go to that...IBonds may be the answer and no penalty if redeemed after 5 years!

3
Comment #29 by Anonymous posted on
Anonymous
You can get almost the same long term rate with brokered c.d.'s  and have access to your dividends immediately.  I prefer this over the prime rate certificate being offered by Toby.

2
Comment #31 by QED posted on
QED
I'm respectful of your thinking and your preference.

For others, though, the ability at Toby to add to a 3+% CD, over a seven year window, trumps other considerations.

Of course if you're seeing brokered CDs that also offer this add-on feature, I hope you will share.  I'm personally unaware of those, and I don't believe Ken has featured any such CDs here on depositaccounts.com.

Not for everyone;  but you see for many of us it's the add-on feature that is the juice in the Toby deal.

4
Comment #33 by Anonymous posted on
Anonymous
I agree.  The add-on feature is the great part of the Toby CD.  I am unaware of any brokered CDs that have a feature such as this.

2
Comment #34 by Anonymous posted on
Anonymous
Hope everything works well, but have you ever wondered why Toby would stretch out on this when they could get  investors just as eager to go for a standard 7 year 3.04% cd without any obligations for the add on feature that would go south on them if interest rates go lower?  Also, they pay more if the prime rate goes over 6.29%  (However this  is not likely to happen in the 7 year term)   Something is not adding up on this so that is why I am a little hesitant to jump at it.  What is in this deal for Toby? Is there small writing in the disclosure that maybe they can lower the minimum rate later?  If what poster no. 9 says is true about the CFO, that would be even more reason to maybe stay away.  Anyway, good luck and I hope it works out.  It is NCUA insured, so no principal should be lost in the deal. As far as brokerage rate cd's, they come and go.  Just investigate the most popular discount brokered CD's and you can get some rate information.  There are several options from 7 to 10 years, but they come and go throughout the week.  It is best to look at rates at the beginning of the week as this is generally when new issues are posted.  Currently, the 10 year actually pays more but the less maturity ones are slightly under 3.04% that Toby pays on the prime certificate.

1
Comment #35 by Anonymous posted on
Anonymous
I'm not sure why they would offer the add-on feature.  My guess is that most CD investors would not want to tie up their funds for 7 years for 3.04%, so Toby offers the add-on feature as a way to sweeten the deal and get investors to buy the CDs.  Do you agree?

1
Comment #39 by Anonymous posted on
Anonymous
No I do not agree. 3.04% is the highest cd rate that I know of for a 7 year term.  So why would they have any more reason to add more perks to sweeten the deal?

4
Comment #44 by Anonymous posted on
Anonymous
I did an ACH to Toby to have funds onboard to allow me to buy the CD.  Toby said they would email me a copy of the receipt for the ACH, but I've seen nothing so far, and its now after 5pm on the east coast.  Hope the ACH went through!

2
Comment #49 by QED posted on
QED
Don't become too worried.  You will be OK.  They are swamped!

2
Comment #55 by Anonymous posted on
Anonymous
Thanks.  I hope you are right.  How do you know they are swamped? 

1
Comment #37 by moneysaver posted on
moneysaver
"Even more of a negative for me: according to a CSR, posted dividends/interest can't be withdrawn until maturity."

If this info above posted by Oldguy is correct, that's a deal changer (breaker) for me, at least in terms of investing any substantial amount of funds at the outset in a Toby CD.

On the flip side, as people have mentioned, not much of a downside to just opening a CD with the minimum amount and wait to see what happens with interest rates over the ensuing 7-year life of the CD.

As for just sitting and waiting now, I'd doubt this particular offer will be long-lived. Seems like more of a promotional kind of thing.

3
Comment #40 by me1004 posted on
me1004
Has anyone gotten hold of and read through the CD disclosures? I am wondering if their might be any catches, in particular about the add-on feature. We are all talking about this as if we can add on as much as we want at any time and add on as often as we want -- but maybe the disclosure say otherwise. Is there any limit to how much we can add on? Or how often? Or when? I have seen banks in the past limit you to only a one-time add on, and others that limit how much, sometimes as a percentage of your original principle. 

3
Comment #43 by Anonymous posted on
Anonymous
This deal is a scam, avoid it if you can. You do not get the money until maturity but are exposed to taxes, inflation and Toby makes money on your money by not paying you anything for 7 years, so your actual interest rate after 7 years is around 2%, if you can hold your breath that long.
You will wind up in the poor house if you open substantially big CD.

3
Comment #45 by Anonymous posted on
Anonymous
I talked to a CSR today who said she has this type of CD for her 2 children.She did not get a 1099 for them for last year.The interest is posted to the account
monthly.She checked with someone who said taxes would not be due until
you take money from the CD.If true that it is paid and added to CD monthly,
you would get the APR promised.I'm going to be sure about the tax
situation before I go in.

5
Comment #46 by OldGuy posted on
OldGuy
As I understand the tax laws, interest must be posted at least once a year.  If it isn't (e.g., as is the case with the recent EverBank Treasury CD), then the CD is considered to be issued with "original issue discount."  You play taxes on annual posted interest whether you withdraw it or not.  If there's no interest posted but there's OID instead, you pay taxes annually on the amortized amount of that.

2
Comment #48 by Anonymous posted on
Anonymous
I think it is worth opening the CD for $1,000, and then seeing what happens.

2
Comment #50 by Anonymous posted on
Anonymous
#45, according to IRS rules, once the interest is posted, the tax is due, there are no ifs or buts. Whether you have access to the money or not is irrelevant. Ask the CSR to mail you a written statement with IRS exemption code, if she can not do it, you have been scammed.

3
Comment #51 by Ed (anonymous) posted on
Ed
Interest are taxed each and every year....whether you take that out of the CD or not.

That and itself is the reason why this CD is a bad deal for me : no monthly income (I use CDs for income), you are taxed each year on interest you cannot even spend, and finally that principle and interest are locked up for 7 years.

1
Comment #52 by Anonymous posted on
Anonymous
Ask for a preforma 1099 as to income of x interest for the year on the CD and as they characterize it, i.e. is it "really" income"...of course, the question then, is why?

1
Comment #53 by Anonymous posted on
Anonymous
Sorry for typos...let me try again

Ask for a proforma 1099 as to income of $x interest for the year on the CD and how they characterize it even if not distributed, i.e. is it "really" income" for tax purposes...of course, the question then, is why?  And, the reply is...why is this any different than an IRA whereby no interest is posted on the 1099.  1099s are a big problem!

2
Comment #56 by anon5552 (anonymous) posted on
anon5552
TWO THINGS:
(#1) I don't see what all the fuss about taxes are here -- you have to pay the taxes in ANY normal (non IRA) CD anywhere, right? So what's all the big fuss here? It doesn't matter (taxes-wise anyway) if you can take out your interest monthly, or if the interest is locked in until maturity. I have a CD elsewhere (with a 3% rate, but that'll be ending soon) and each year I've received IRS paperwork from the bank, and have had to pay the taxes on that CD I've been earning (even though I have it set up for the interest to just be added to the account until maturity). I assume it'd be the same if I decided to instead TAKE OUT my interest every year. I mean, it's "income" (interest income) and you're going to be taxed on it. So why all the fuss about this here? ANYPLACE YOU OPEN A (normal) CD, YOU'LL HAVE TO PAY THE INTEREST ON IT TO THE IRS.

(#2) For me, the ADD-ON option is what sells it. If in the future, at some small window in time, a great CD deal is offered elsewhere, I can always jump on it... but I'm the type that likes to put away $300 here... $600 there... etc. You can't do that with 99.9% of the CDs out there, and this is WAY better than the next-to-nothing rates on normal savings accounts. So if you don't mind the SEVERE PENALTY for early withdrawl (ie, if your goal is to save and not TOUCH it), I think it's great. I'll probably open one up.

3
Comment #57 by moneysaver posted on
moneysaver
The questions about that notion you raise in #2, #56, are ones raised above by an earlier poster: What are the CU's policies on the frequency, numbers, minimum and/or maximum amounts of any future deposits to an existing CD. I didn't see anything in Ken's post or all the subsequent comments that clearly answered those questions.

1
Comment #59 by Anonymous posted on
Anonymous
We need answers to these questions.

1
Comment #92 by Anonymous posted on
Anonymous
Guys - I called Tobyhanna and asked them for a copy of their Terms and Conditions (Certificate Account Agreement) pertaining to the "Prime Rate Certificate."  They e-mailed me a blank copy.  It's a bit minimalist, but does contain important info. It gives the dividend rate; states that dividends are compounded monthly; spells out penalties for early withdrawal; and that "Deposits can be made at any time."  There was no mention of minimum or maximum amounts that can be added.  It states that the Certificate will be automatically renewed in 84 months, and if that is not desired, what steps to take. (The latter seems to be standard wording on some other CDs I have.) 

I'm thinking carefully about this but believe that, for me, investing only the minimal $1,000 now and then waiting to see what unfolds in the future provides the best risk/reward situation. I don't have any CDs coming due for the next 2-3 years, so I'll re-evaluate at that time.   The best stratety for for anyone is based on their particular circumstances.

1
Comment #93 by Anonymous posted on
Anonymous
When I read, "There was no mention of minimum or maximum amounts that can be added," I'm reminded that if the "document" is short on explanation...try to get clarification and if not forthcoming confirming that "there is no minimum/maximum, etc. (or whatever the concern is) and hopefully "any ambiguity will be construed 'your way'."

1
Comment #58 by Anonymous posted on
Anonymous
Good points.

1
Comment #60 by Anonymous posted on
Anonymous
I agree.  The tax issue is irrelevant.  Also agree, the ADD-ON option is what sells this deal.

1
Comment #61 by Anonymous posted on
Anonymous
#56, you are wrong, taxes do matter a lot when you are paying them out of other savings instead of the Toby CD. It is like paying for a CD that you do not get any benefits. If you are on fixed income, your own money cost you more money, get it?

1
Comment #62 by Anonymous posted on
Anonymous
But either way you pay the same amount of taxes, so what's the difference?

2
Comment #65 by Anonymous posted on
Anonymous
What possibly could be the real difference is if the following scenario happened:

 Suppose you paid taxes on 4 years of unpaid earnings and thenToby goes under. NCUA pays your insured principal amount but not the unpaid accrued interest earned that you have paid 4 years of taxes on.  I really do not know that this would be the case, but I would have to get some kind of written verification that I would not lose the 4 years of accrued interest that I already paid income taxes on.

1
Comment #70 by QED posted on
QED
Trust me, dude.  Provided principal plus interest is south of the NCUA limit, they will make good on everything.  Been there.  Done that.  Got the T-shirt.

Please try to relax just a bit.  Why not consider a switch to decaf?

6
Comment #72 by Anonymous posted on
Anonymous
I agree.  All principal and interest will be paid.  I too have been there done that.

1
Comment #78 by Ed (anonymous) posted on
Ed
Of course there's a difference. In economics, there is something called 'opportunity costs'. Not having access to both your principle and interest for 7 years is a lot of missed opportunity costs.

For CDs that allow monthly interest to be paid out, you can use that money for things right there and then. Reinvested, pay for bills, buy things, etc.

Plus, the interest earned on that 7 year lock is not even compounded.....are you that desperate for the 3% rate because you had missed out on PenFed's deal?

2
Comment #79 by QED posted on
QED
Not compounded!?  You had better take another look.

4
Comment #86 by Anonymous posted on
Anonymous
The interest is compounded.  Read the disclosure.

1
Comment #63 by Anonymous posted on
Anonymous
The interest (i.e. benefit) is simply deferred until maturity. In the meantime, annual taxes must be paid on taxable earnings whether you collect them or not. The same goes for reinvested stock dividends or compounded interest. If you need interest/dividend income there are plenty of choices available.

2
Comment #64 by San Diego, CA (anonymous) posted on
San Diego, CA
So, if you cannot withdraw your interest, and you don't want to go over the NCUA insurance limit of $250K by the end of the 7 years, then you should not deposit more than about $200K maximum into this account. 

2
Comment #66 by Anonymous posted on
Anonymous
For those who have elected to take advantage of this offer, can you please report on your experience in opening and funding your CD (whatever the amount).

4
Comment #68 by Anonymous posted on
Anonymous
Yes, please.  I will be very interested to hear.

3
Comment #69 by QED posted on
QED
Opened account by sending money via ACH into my Toby savings account.  Called and they opened CD for me using those funds.

Today (1 June) I collected my first interest payment on my new Toby CD account.  I am today officially 25 cents richer than I was yesterday!!  This is fun!!

3
Comment #71 by Anonymous posted on
Anonymous
Great to hear QED..I assume you implemented your stated strategy of just funding a small  amount now as a placeholder?  I was planning hold my next CD allocation to see what kind of end of year promotions are avail (like Penfed's typical).  Was thinking we might see some higher rates if in fact the fed's QE ends in the fall as predicted.  But you make a ton of sense locking in a 3% option for 7 years if think don't pan out.

2
Comment #73 by Anonymous posted on
Anonymous
I  called on Friday and asked them to put $1,000 in my Toby savings account by ACH.  So far, the funds have not gone out of my external checking account, the funds have not arrived in my Toby savings account, and I have not received the emailed receipt for the ACH transaction.  I want to buy the Prime Rate certificate in the amount of $1,000 but I am becoming worried that nothing has happened yet and I'm afraid the Prime Rate certificate deal will end before I can get in.  Any thoughts on what I can do to be certain I get in?  Thanks. 

1
Comment #75 by QED posted on
QED
OK, sorry.  I thought this was implied but I was wrong.  I need to state this:

When I wrote that I moved funds via ACH I was talking about an ACH push out of my Alliant account.  I was certainly not talking about any nature of ACH pull.

Sometimes I get carried away and simply assume everyone has an Alliant hub.  Everyone does not, but Alliant is so tightly woven into my own financial affairs that sometimes I just forget.  Again, I am sorry.  This was my bad.

I'm absolutely certain there are many other ways to ACH money into Toby without using Alliant or having an Alliant account.  But I'm not familiar with any of those other ways.  With Alliant, ACH is overnight.  It's very nearly as good as a wire;  and it's free.  After Ken posted about Toby, I was able to move very fast and have money at Toby, ready to invest, overnight.  All this with neither help nor any involvement whatsoever from the very busy and overworked Toby staff.  Should have mentioned this earlier.  Now, belatedly, I have.

3
Comment #87 by Anonymous posted on
Anonymous
When I opened my certificate, the certificate said interest is compounded.  Is this your understanding also?

1
Comment #88 by Anonymous posted on
Anonymous
The APY helps to show if compounding, e.g. if the APY rate is higher than the % then there is compounding.  If not, no compounding...like simple interest

1
Comment #143 by Sylvia posted on
Sylvia
#75, Toby charges a $5 fee for outgoing ACHs.  To get your account established for ACH through Alliant, were you charged by Toby for Alliant's withdrawal to offset its small verification deposit?  I had wanted to push funds from my Alliant account, but decided to pull from Toby instead to avoid potential $5 fee.  It's been 2+ business days since I initiated ACH through Toby.  Funds are still sitting in Alliant account.  According to one rep, Toby has no set schedule for ACHs (unlike Alliant).  They can happen any time, including weekends, according to the rep, which makes little sense.  Ugh!

1
Comment #67 by Anonymous posted on
Anonymous
Yes, $203,000.

2
Comment #74 by OldGuy posted on
OldGuy
Has anyone yet received a Truth in Savings disclosure statement for this product they can linked here electronically?  So far, there's been a lot of discussion under this post about an instrument whose legal terms remain unclear to many of us.  Thanks for your help.

3
Comment #76 by gregk posted on
gregk
Very helpful discussion concerning the ups and downs of this offer.  Thanks everyone.  But with a few others, I'd like to have clarified just what limits and/or restrictions might apply to the "adding funds" feature of the account.  Can one do so at any time, in any amount, and as many times as one chooses over the course of the 7 year term?

2
Comment #77 by Anonymous posted on
Anonymous
Yes, let's get this clarified.

1
Comment #81 by Anonymous posted on
Anonymous
I opened a share account on line yesterday.  NO option to open the CD I wanted.  I called today and was told all signed paperwork would have to be in, including a certificate from  the consumer thing and a copy of my dl before I could open that cd. I smell a rat!
My application was approved. 
They should sell me the product.

1
Comment #82 by Anonymous posted on
Anonymous
I opened the Prime Rate Certificate CD this morning for $1,000.  Now the question is: When should I begin adding funds to the account?  What is everyone's  opinion on this?

1
Comment #95 by Anonymous posted on
Anonymous
Okay, I think I was wrong. I have now gotten the share account opened and have my $1000 on the way to my share account.  I have found the overworked CSR's very nice and helpful and responsive.  

2
Comment #83 by gregk posted on
gregk
No rat scents in that #80 & #81, - what you describe is pretty standard procedure in my experience.  Provide Toby the paperwork & identity verification (DL) and they'll open the CD.

3
Comment #84 by gregk posted on
gregk
Scroll back and read through the thread #82, - there's abundant consideration of your inquiry.  No point in posters repeating what's already been said, unless they wish to.

3
Comment #85 by Anonymous posted on
Anonymous
The deal itself, 3.04% for a 7 year certificate, seems pretty good in itself.  I'm wondering if it makes more sense to wait for a year or two to add to the certificate, or if it would make more sense to just fully fund the certificate now, say for $200,000 or so.  I realize that mathematically it makes more sense to wait, because one will receive 3.04% on a shorter duration CD, but the longer one waits, the longer he misses the 3.04% return.  Wouldn't it make more sense to fully fund the CD now?

1
Comment #89 by gregk posted on
gregk
The point that's been made is if you put all your eggs in this basket immediately and rates rise significantly in the next few years you've lost the flexibility to take advantage of them (especially so given the heavy 2 year EWP on this certificate).  Alternatively if rates continue at present levels for the forseeable future you'll be ahead of the game with such a full deployment.  Whether you make the best choice will be known only in retrospect.  Given the unknowns some posters here have suggested opening the CD with a minimal initial investment and seeing how things unfold over the next couple of years.  With 5 years left in the term and no increase in rates having occurred or seeming likely at that point, then fully funding the CD might be a good choice for the remaining period.  But you're right, - you'd have missed out on the 3.04% for 2 years.  However if rates rise and in 2 years a 5 year CD is paying 4.04% (for example) you'll do better in the end by waiting.  Some like a bird in the hand now and feel good knowing their 3.04% is locked in should such an offer disappear and never return.  Others fudge at commiting to such an historically paltry rate for almost a decade in the belief some significant rate "correction" might be just around the corner.  Temperment and expectations rule in these decisions.  No one can tell you what to do or what makes sense given so much human variability and economic uncertainty  Tell us what you decide.

5
Comment #90 by Anonymous posted on
Anonymous
Thanks for this good analysis.  I find this a particularly hard decision to make.  3.04% now seems very good.  But I agree I could really regret going in fully at this point if rates rise.  I think I will think about this for a month or so and see what the lay of the land looks like in July, and then decide what to do at that time.  This seems like a very close decision to me.

1
Comment #91 by gregk posted on
gregk
As I see it, once you've made the initial $1,000 investment in this CD there's no longer any real pressure to "do something now or miss out", - as can happen with certain other offers one's been brooding about and vacillating over when they're likely soon to be withdrawn.  With the Toby CD one can think about it from month to month and always know there's the option to act if one becomes convinced it's "right", but without the "now or never" sweat that can discomfort one when one isn't convinced.   

7
Comment #94 by Anonymous posted on
Anonymous
Thanks.  I agree with you. I want to look at this again in early July.

1
Comment #114 by general frank (anonymous) posted on
general frank
mathematically it makes more sense to fully fund it now.  This is the highest rate around.  Rates are not likely to go up much if at all in the next year and a half and maybe not after that. We have been waiting already many years for rates to go up but the fed with its own agenda keeps pushing them down.

1
Comment #96 by pt (anonymous) posted on
pt
I opened several Prime Rate Certificates with Toby over a year ago, when the EWP was only 6 months.  They have been great.  Interest is posted monthly and yes, it is compounded.  I have everything re-invested at this time, but I have been told that I can have my interest sent to me.  My only problem now is that I am hoping that other people don't sink this boat!!! 

2
Comment #97 by lou posted on
lou
A year ago the EWP was one year.

1
Comment #98 by Anonymous posted on
Anonymous
What is the advantage of opening several certificates, rather than just one?

1
Comment #99 by Anonymous posted on
Anonymous
If you need cash you can close one CD, pay the penalty and leave the others intact. At one institution I have 150K split into four CD's ( 50,50,30,20).  

1
Comment #100 by gregk posted on
gregk
A potentially useful strategy only if the FI doesn't allow partial withdrawals from its CD's (don't know Toby's stance in this regard, - but with a 2 year EWP no one should even be thinking they might close early under any plausible scenario).

Don't know what any rationale would be for opening multiple certificates all at once, unless it had to do with the arranging of POD beneficiaries for certain purposes.  I could understand if this offer continued for some time potentially doing a new certificate every 6 months or so to create a laddering effect in the maturity dates, - but these deals don't tend to hang around long enough to create such a structure.  One typically does that piecemeal and spread out over multiple FI's. 

1
Comment #102 by Anonymous posted on
Anonymous
I do not see that there is any advantage opening more than one $1,000 CD.  Anytime you decide to, you can put $200,000 into the one CD, so I don't see the advantage to opening a $1,000 CD every six months.  Am I missing something? 

1
Comment #104 by QED posted on
QED
Possibly.  It's too early to say.  Rather than being specific, I'm willing only to commend to your attention the possibility Toby might, in future, change certain terms and/or conditions of the CD.  I went through this at USCU during the turbulence there, which was attached to their "add on" CD situation.  "Add on" CDs are not at all trivial, and the longer the term of any such CD, the less trivial (and the more complex) it is.

2
Comment #108 by Anonymous posted on
Anonymous
I'm very willing to open additional $1000 Prime Rate certificates.  I'm just trying to determine if there is any advantage to doing so.

1
Comment #103 by Anonymous posted on
Anonymous
Is the 2-year penalty a maximum based on earned interest or two-year's of interest regardless of time?

1
Comment #105 by QED posted on
QED
Yours is a very good and important question.  Suggest you read Comment #15.

2
Comment #107 by Anonymous posted on
Anonymous
Thank you.

1
Comment #106 by Anonymous posted on
Anonymous
With the further moves by the ECB to negative interest rates, are people more likely to jump on this deal?  For everyone that wasn't already a member of Toby, how long did it take you to open an account and get your CD fully funded?

1
Comment #109 by Anonymous posted on
Anonymous
If one already has a $1,000 Prime Rate certificate, is this a good time to fully fund it, or is it better to wait awhile and see what happens to interest rates?

1
Comment #110 by Ratesaver posted on
Ratesaver
I opened this Cd on the 4th and walk in and in 40 min was out the door.  I am going the full road with this cd. and hope I am right in 7yrs.  I will be opening another in 4days or so and intend to keep some small in case I need to cashin some for money in the future.. Don't expect to but you never know... I think it is great for retired people that don't trust the stock market... I don't think the negative interest rates the ECB has moved will be a concern... But who knows ..

1
Comment #111 by Anonymous posted on
Anonymous
I'm thinking fully funding this might be the way to go.  Which is better, the 7 year Toby at 3.04% or the 37 month Greater Nevada at 2.20%?

1
Comment #113 by elroy (anonymous) posted on
elroy
3.04 is better

1
Comment #115 by James Barnes posted on
James Barnes
Which is better, 3.04% for 7 years at Toby or 3.00% for 4 years at Greater Nevada?

1
Comment #116 by Anonymous posted on
Anonymous
Not sure, but 4 years later, I will be able to answer your question.

1
Comment #112 by Anonymous posted on
Anonymous
I opened on line a week ago Saturday. Called Monday or Tuesday and had papers sent to sign and uploaded them back. Had money sent from my savings bank and on Friday called and bought the CD with $1000.  The signature papers for CD  were supposed to be emailed but I haven't received them yet.  But I think I'm all set.  So a week to do it all.

2
Comment #117 by Sylvia posted on
Sylvia
Has anyone seen documentation on process for reviewing interest rate?  Assuming best case scenario, when we'll be facing rising interest rates, how and when does Toby adjust rates upwards (don't laugh)?  I left question with customer service by voicemail.  Thought I might get a quicker response from experienced accountholders here.

1
Comment #118 by Ratesaver posted on
Ratesaver
The CSR that opened my 2nd Cd said that Tobyhanna would send a letter by mail informing you of the rate increase.. When is another question I didn't ask but assumed soon after the rate increases... I was able to set up payable upon death papers in case something happens to my wife and I before the 7rys is up

2
Comment #123 by Sylvia posted on
Sylvia
Thanks for sharing.  Here's what one rep wrote in an e-mail response, after I pressed on the question: "As far as the frequency of review,  it is monthly.  It is not documented in our disclosures.  So, for example if prime goes in [sic] in August your rate will be adjusted the following month."  I'm alittle surprised by the scanty disclosure on this CD, especially considering the precise language of Toby's Truth-In-Savings disclosure.  Interestingly, another rep told me the CD has been offered since 2009.  With interest rates the way they've been, everyone probably discounts this CD's variable feature, including Toby.

1
Comment #119 by Anonymous posted on
Anonymous
Prime is currently at 3.25% which means prime must go to 6.29% before there's an increase from the base of 3.04% on this CD.

1
Comment #120 by QED posted on
QED
I understand and sympathize with the yearning of many persons for higher interest rates.

Some of us, though, should be careful what we wish for.  Higher interest rates will surely be preceded by far higher inflation than now is the case.  But many of us are unaware of the taxes, many today hidden, which await the fatter incomes which will come with higher interest on our CDs.

A couple of years ago (things are even worse today) I experienced a one-time only increase in my annual income.  It was just for the one year.  The taxes I had to pay that one year completely knocked by socks off.  They were previously unknown to me, and they were confiscatory.  My income is back to normal now.  But I have learned the lesson of what higher interest rates can mean when it comes to payment of taxes.  Believe me:  it ain't pretty!!

Higher interest rates will mean, certainly, more after-tax take home.  But for many, after taxes, it will not be enough to make up for the accompanying higher inflation!!

2
Comment #121 by paoli2 posted on
paoli2
#120  Doesn't it all even out?  If we have higher interest funds coming in, we will have more money to pay for the higher taxes and things we have to purchase.  You just happened to fall into a "one-time" hole with your higher increase in your annual income.

Years ago when we had high inflation and we were getting 12 -16% interest on our CDs, I never felt the sting of inflation.  I would not have known we were in it other than reading the news or hearing about it on tv.  I don't think we will ever see those rates again and if we did, it would have to do great damage to our economy because of all the debt we owe to others.  I sure would not be against getting even 3% for 5 year CDs tho.

2
Comment #124 by QED posted on
QED
I can only tell you the taxes were coming from places other than the customary.  They were not coming strictly as an outcome of the FIT tables, for example.

Even under Bush, but today far more assertively and intrusively under Obama, new taxes have been instituted which target the "rich".  But "rich" is defined in terms of a fixed number of dollars, NOT adjusted for inflation.  And "rich" (trust me) does not mean, for example, a million dollars.  The taxes kick in FAR below that.

Wish for whatever you want.  This is only just fair warning;  no more.  I'm trying to raise awareness.  The taxes are out there, waiting to bite, when nominal income goes up.  This is true even when that increased income is, in reality, merely "inflatodollars" possessing much less buying power than one might hope for and anticipate.

IMHO, it's a massive government-initiated scam already baked into the cake, and waiting to unfold and strike at average people when (if ever) inflation and higher interest rates eventuate.

2
Comment #122 by Anonymous posted on
Anonymous
For example, if you have a $20,000 CD earning 3% and it earns interest of $600 dollars for the tax year and you are in the 25% tax bracket, then you will pay $150 in taxes for a net return of $450 after taxes.  However if you were earning 6% on that same amount, you would earn $1,200 dollars for the tax year.  Your taxes would be $300 for a net return of $900.  So with the higher rate, your total net return after taxes is $450 more.

 I will gladly take the higher rates and pay the difference in the taxes.   Been there.  Done that.  Got the T-shirt.

3
Comment #125 by Anonymous posted on
Anonymous
Is it better to fully fund the Toby now, or wait until later to fully fund it? 

1
Comment #126 by gregk posted on
gregk
It depends.  I'll tell you in 7 years.

1
Comment #127 by paoli2 posted on
paoli2
#125  If you fully fund it and need your money in a couple of years, they have a 2 year EWP.  I don't care how high an interest rate is, I don't fool with such harsh EWPs because I know unexpected emergencies can hit you when you least expect them.  This CD product sounds like it is made for those who have a big backup of funds for emergencies.  Do you?  You should reread Ken's article on it very carefully and maybe you can get the answer you are looking for.  What someone else would do may not be right for you according to what your finances are.
I can understand your wanting to know what more posters would do but you don't know what their finances are.  It makes a big difference. At least you now know why I am not going for it and I hope it is a bit of help to you with your concerns.

2
Comment #128 by Anonymous posted on
Anonymous
Another consideration...if one is 701/2 and the account is an IRA you are required to take a distribution each year.  Normally, a bank/cu will impose no EWP for an IRA...the t&c.  Thus, I usually only use long term CDs for an IRA (and perhaps a local financial institution for same) given the current (non)interest environment

1
Comment #130 by QED posted on
QED
This is specious thinking.  There is every reason to invest $1000 in this product.  However, one must have the sense to realize this is (today) an insurance policy, not a CD per se.  Unless one is very very poor, someone for whom $1000 represents a substantial portion of their nestegg, this CD make wonderful sense . . . as an insurance policy paying 3% interest.  Most insurance coverage costs money.  This insurance actually pays the account holder modestly high interest!!  That's pretty darn cool.

Now do I think I'll ever need this insurance?  I've really no idea, but I'm guessing probably not.  An account with such a high EWP will not, for me, become viable as a CD until (perhaps) two or three years prior to maturity.  By then I think interest rates will be a lot higher.  But I've been horribly wrong about rates in the past and I could easily be wrong this time, too.  And if I'm wrong, my Toby add-on CD is gonna fatten like gangbusters in future, once the EWP becomes less of a consideration.  And if I never need the insurance, I'll just continue to collect my 3% with a watermelon smile and with the confidence only such insurance can provide!

4
Comment #132 by James Barnes posted on
James Barnes
Thanks very much, I appreciate your analysis.  I read Ken's comments as saying he thinks buying the 7 year Toby is a good idea and not just for a minimum amount like $1,000.  I think Ken thinks it is a good buy.  Am I misinterpreting him?

1
Comment #133 by QED posted on
QED
Dunno.  I'm not disagreeing with Ken.  If some persons think the Toby CD is a good and viable investment today purely as a CD, I respect their view.  I do think, given the high EWP, that can be argued both ways.  It's an individual decision.

But what cannot be argued is the value of this product as insurance.  That's why I wrote as I did.  It's great insurance . . . period!!  You cannot do better for a thousand bucks with 3% interest to boot!  But is it also a great CD deal?  Opinions will differ, and that's fine.

Point is, for whatever your reason or purpose, unless you are really poor, there is no sensible excuse to avoid this add-on CD.  (Almost) everyone should have (at least) one of these.  Deals like this do not surface all that often.  Deals like this are not growing on trees!!

4
Comment #137 by lou posted on
lou
Where did Ken opine about the merits of investing a lot of money in a Tobyhanna CD today? I don't see how anyone can give a definitive answer to this question. It is a very personal decision based on your specific circumstances. The poster who keeps asking everybody what he should do is wasting his time and polluting this board with ridiculous questions no one can answer for him.

2
Comment #139 by Anonymous posted on
Anonymous
I'm only asking for opinions, what's wrong with that?

1
Comment #140 by lou posted on
lou
Because you asked the same question about a hundred times. No matter what anyone tells you, you're not going to be satisfied. Just make a decision and live with it, instead of haranguing all the readers of this site.

2
Comment #129 by Anonymous posted on
Anonymous
If you wait long enough until interest rates go up, then you will not have to ever fund the Toby.

1
Comment #131 by Anonymous posted on
Anonymous
This is a no brainer. If you can spare the $1000 lock to get in it will give you the oportunity to have a 2 or 3 year or longer with additional funds @ 3% if interest rates take another nose dive. If you decide that you want out with your $1000, you pay the $60 and move on 

2
Comment #134 by paoli2 posted on
paoli2
Why would anyone waste time trying to get 3% on just $1000.00?  I know to lock it in for "just in case?".    If one wants to make money they would have to put in a larger amount and if they do that and have to get out, they are out a heck of a lot more than just $60.00.  Like another poster wrote, if you just want an insurance policy that is another thing but for a CD, it is not for me.

2
Comment #135 by Anonymous posted on
Anonymous
The reason to get in w/$1000 is because no one knows what the CD interest enviorment will be in 5 or 6 years and this will enable you to invest a larger sum of money @ 3% as a short term CD while accepting the fact that you will not want to exercise the early redemption!
If 2 or 3 year CD rates are as they are today or worse this will be an attractive option. 

3
Comment #136 by paoli2 posted on
paoli2
That makes good sense but I am always looking for the largest payout I can get at this time and it seems just $1,000.00 wouldn't do it for my interests.  It's a good idea if one has your thinking.

1
Comment #138 by Anonymous posted on
Anonymous
If one goes in heavily now, would you do the full $250,000, or would you go in at about $200,000 so that principle plus interest combined will stay under the NCUA maximum insurance?

1
Comment #141 by paoli2 posted on
paoli2
Since you seem to be a "worrywart" (like myself) when it comes to this particular CD, I think you would sleep better going in at the $200,000 to cover all your concerns since you can't take the interest out.  I have a feeling you are not even going to put anything in this CD considering your questions. 

1
Comment #145 by Anonymous posted on
Anonymous
I have $1,005 in it now.  I'm thinking of seeing what happens with interest rates in the next week or two, and depending on that, increasing the balance to $203,000.  What is your opinion of this strategy?

1
Comment #146 by Anonymous posted on
Anonymous
My opinion on this strategy is that if you have $203K to invest in a 3% cd then you do not need to be asking what you should be doing. 

1
Comment #149 by Anonymous posted on
Anonymous
I want to be certain that the $203,000 is invested in the best possible way.

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Comment #150 by Anonymous posted on
Anonymous
You can't be certain.

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Comment #142 by Anonymous posted on
Anonymous
To answer your specific question:

Taken from www.mycreditunion.gov

"NCUA insurance covers members' accounts at each federally insured credit union, dollar-for-dollar, including principal and any accrued interest through the date of the insured credit union’s closing, up to the insurance limit"

IOW, if you put in the full $250,000 now, accrued interest would fall outside the maximum insurance.

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Comment #144 by E-Non-E-Mus (anonymous) posted on
E-Non-E-Mus
You know, almost four years ago I decided to open a 5-year add-on CD paying 3.2%. Though their penalty was only 90 days instead of 2 years interest, I thought it was good to have just in case. And at the time I thought "oh, interest rates will SURELY go up in a year or two... five years is such a long time!" Well, it's been almost 4 years since then, and look where we are. How common are 3% CDs? (let alone add-on ones, that are almost non-existant now, or at 0.5%?) Of course it's been so long that I think rates will indeed rise in a year or two (if the Fed is right, the end of 2015). This isn't the end-all deal-of-the-century CD, and if I had a wad of money I don't know if I'd put it here (at this point, it'd be a coin flip), but it's simply nice to have a product where I can deposit $100 here, $50 there, for the long term and know it'll be earning at least 3%. Most CDs you can't add to, so what about that extra $200 you want to put in this month? Doesn't work. This one makes a nice (little) savings instrument, as long as you don't mind keeping it in for the long haul.

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Comment #147 by Anonymous posted on
Anonymous
It is impossible to establish membership with them if you apply over their web site and/or out of state. I've signed for ACC. I've even sent a copy of my drive licence by mail. No result. Maybe they already stopped doing that 7-year special CD.

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Comment #148 by Freddie J (anonymous) posted on
Freddie J
IMPORTANT!!! For those opening a CD at Toby, you need to know the following: if you DO need to either close completely, or take out some money before the 7 years are up, that "2 year's of interest" penalty will NOT be on just the amount you take out, but the TOTAL AMOUNT of the CD (in other words, if you have $25,000 in your CD, and you need to take out $5,000 before the 7 years are up, your "2 years of interest" penalty won't be just 2 years of interest on the $5,000 you take out prematurely, but will be 2 years of interest of $25,000 even though you're only taking out part of it). I asked this question to a CSR rep who wasn't quite sure, so went to verify it with a supervisor, and that's what I was told. So just be aware of that. One possible solution you might want to consider is to open up two CDs instead of just one, and when you make deposits, split them up (that way if you face the above senario, you won't be dinged as much). Personally, if I decide to open up with Toby, I will probably open up two CDs, but for a different reason (both will go towards completely different savings goals, so I want to keep them separate). But just know going in, that should you need any or all funds before the 7 years are up, your penalty will be not on the amount you might take out prematurely, but on the total amount you have in the CD.

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Comment #151 by gregk posted on
gregk
I assume under that scenario they would simply assess the penalty on the entire amount of the CD and then terminate it and return the balance. Typically in my experience, when no partial withdrawals are allowed on a CD and you want to access your funds (in any amount) the agreement is effectively being ended. 

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Comment #152 by Wiley posted on
Wiley
The prime rate certificate is available as an IRA.  For those of us old enough to be hit with the RMD, here's a point to keep in mind:  your total RMD for the year -- not just proportional to the amount in your Toby Prime Rate IRA CD -- can be withdrawn without penalty (or so I was told by a CSR who said, "Yes, even if you have a dozen different IRA's, we'll let you withdraw your full RMD for the year without penalty" but one must provide "evidence" of the RMD for the year.)  So, if your Toby acct. becomes your lowest earning IRA, you can make a significant annual withdrawal w/o the 2 year penalty (unless they change their policy on this...).

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Comment #153 by paoli2 posted on
paoli2
The CSR was correct.  DP has several IRAs and we can take the entire large amount from anyone of the IRAs as long as we make sure it covers ALL of the amounts owed for all his RMDs.  Been doing this for years and never had a problem with it or been questioned about it.  They can't charge us a penalty for withdrawal because the government rules state we "must" start taking RMDs once we reach 70 1/2.  So Toby can't penalize you either if it is an RMD withdrawal.  Just make sure the amount is accurate in case you have to show proof.

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Comment #154 by Anonymous posted on
Anonymous
Paoli2  Re: "They can't charge us a penalty for withdrawal because the government rules state we "must" start taking RMDs once we reach 70 1/2.  So Toby can't penalize you either if it is an RMD withdrawal"

Where does the IRS state that there will be no penalty for RMD withdraws if the bank's policy states otherwise?

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Comment #155 by paoli2 posted on
paoli2
The bank's policy has to adhere to what the government rules when it comes to RMDs.  I have asked everyone of our banks and credit unions about this and they all agree everyone "must" follow the same policy for these penalty-free withdrawals.  I did not bother to call the IRS on it since in all our years we have never had a problem doing it this way. I just make sure I get the form from each bank or brokerage showing the withdrawal was for the RMD and how much it was for.  I don't have time to call the IRS about any actual ruling on this but it must be true since the institutions are not going to do this on their own if they can make money charging us penalties.  We are in the process at the end of this month doing a Trustee to Trustee Transfers of both of our IRAs and that was the first question I asked of both and was told "no EWP for RMDs".

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Comment #156 by Anonymous posted on
Anonymous
Suppose you have 4 different IRA cd's from 4 different institutions.  You are limited only to the maximum amount of your calculated rmd amount based upon the previous end of year market value of that individual cd. If you try to take more than that amount out of that individual cd to cover the rmd for the other three cd's, then I think the early withdrawal penalty would apply.

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Comment #158 by paoli2 posted on
paoli2
You seem to be misunderstanding how the RMD works. You can have several CDs and if you are due $25,000.00 for your RMD, you can take it all from "one" of the CDs or divide it up anyway you want as long as the government sees you took out the correct amount for the RMD for that year which covered "all" your IRAs.  We do it all the time.  Many times one brokerage will send us a note that we did not take out our full RMD for the year and I will tell them I have proof I took it out but from other CD IRA accounts.  I keep a ledger each year showing what each RMD for every IRA account is supposed to be and what I actually withdrew.  If both columns balance out to show the same total for the year, I know I am ok with the IRS,  I keep it to the penny and maybe go over by a few dollars for "just in case" and have never had a problem.  Some banks may not allow you to take it all out of one CD that is not yet matured so I make sure I have a CD maturing for each year for the amount of the RMD we will need.  I have it worked out to 2022 so far.  It's a bit of work but it gives me peace of mine to not have to be concerned about it. 

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Comment #157 by paoli2 posted on
paoli2
I think I have to clarify my earlier post.  I don't think there is a government rule that the institutions have to allow us to do this penalty free.  I think it depends upon who you have your IRA with.  When we "had" our IRAs with Chase they just let us take the amount out of the CD before maturity and did not break the CD or charge us a penalty.  They said they did that because we "had" to take the withdrawal due to government rules.  I don't think all banks have to do this so that is why I ask how each one handles the RMDS.  You should ask your particular bank or brokerage how you can set up your RMD so that you won't have to incur a penalty.  There are many ways to do it.

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Comment #159 by Anonymous posted on
Anonymous
I opened one add on CD in Tobyfcu  but right after that I am having trouble accessing my account and connecting with my external bank. It is very difficult to contact customer service and get your problem solved. Even writing email is not helping . I made several calls and wrote so many emails but still didn't get satisfactory response.  So I have decided not to make any large deposit here. 

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Comment #160 by Anonymous posted on
Anonymous
gh said.  I too tried to call Toby.  Could not reach anyone.  I do not plan to do any business with a bank or credit union if you have difficulty in talking to them by phone.

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Comment #161 by Anonymous posted on
Anonymous
For Comment 160 You may want contact one of the branches by phone . Some people are on vacation and with only 4 branches it may be crazy...Good luck..

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