Dedicated to Deposits: Deals, Data, and Discussion
Featured Savings Rates
Featured Accounts

TD Ameritrade 15-Yr Callable Step-Up CD -- Worth It?

Wednesday, March 12, 2014 - 9:57 AM
Just received an email announcement this morning
(with an anticipated order period through March 25th)

This is through Goldman Sachs, about which I found some more info at this link
[which indicates an average 3.88% annual return, with a $25K minimum]:

CD Rates - Step Up, Callable CD Rates - Updated Daily

The TD Ameritrade email says the "price" is only $100.
Some more info, from the announcement, follows . . .

*********************
TD Ameritrade will be participating in a Callable Step-Up CD Offering       
TD Ameritrade is participating in the FDIC Insured* Goldman Sachs Bank USA Callable Step-up CD offering.

Offering details:

Issuer:    Goldman Sachs Bank USA

Rating:    FDIC Insured*

Order Period:    Now through March 25, 2014 (expected)

Coupons:   
Steps: 3.25% till 03/26/2021,
3.50% till 03/26/2024,
4.00% till 03/26/2027,
5.00% till 03/26/2028,
7.00% till 09/26/2028,
9.00% till 03/26/2029

Maturity:    March 26, 2029 (15 Year)

Payment Frequency:    Semi-Annual - First Pay 09/26/2014

Call Status:    Callable March 26th, 2015 (Semi-Annually thereafter)

Survivor's Option:    Yes - up to applicable limits

Price:    $100.00
*********************

Any thoughts?
2
0955600390955600391 posts since
Jan 17, 2014
Rep Points: 2
1. Wednesday, March 12, 2014 - 10:30 AM
I do not use Callable CDs but I was wondering.  Does it have an EWP in case at any time you want to cash out of it before they call it?  As I see it, you can only count on 3.25% for about one year and if they call it in 2015 and rates have gone lower, you may not be able to get the 2% rates we have now.  Even if they don't call it in 2015, you will have to be concerned that they can for every 6 months thereafter.    I need to know what I can count on for a certain number of years so I could never do Callable CDs but it's up to what you can handle. 
2
paoli2paoli21,365 posts since
Aug 10, 2011
Rep Points: 5,982
2. Wednesday, March 12, 2014 - 9:03 PM
It's a brokered CD. If you want out you will have to 'trade' it and hope for the best.
6
ShorebreakShorebreak2,602 posts since
Apr 6, 2010
Rep Points: 14,080
3. Thursday, March 13, 2014 - 1:06 AM
Not a good deal. What are the chances you will ever see the higher rates in the later years: never, if market rates are considerably less. However, if market rates do go higher, you're stuck with this baby.
3
loulou541 posts since
Aug 3, 2010
Rep Points: 3,388
4. Thursday, March 13, 2014 - 6:35 AM
"The Goldman CD, however, lacks parity in risk.  Goldman is funding itself at a very attractive rate with an option to return purchasers’ money in two years.   Depositors, however, are taking on the following risk: 1)   The risk of having their money tied up in an illiquid manner for 15 years, 2)   The risk of earning 3.50% or less on their cash for the next 10 years and 4% on their cash for the next 13 years, and 3)   The call risk of having the CD returned in 2 years if interest rates stay low."

Goldman Sachs Bank USA Launches Callable Step-Up CD
6
ShorebreakShorebreak2,602 posts since
Apr 6, 2010
Rep Points: 14,080
Reply