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Last Chance to Lock into a 5 Percent CD?


With last Tuesday's historic Fed rate cut, banks are reponding fast and dropping their deposit rates. CD rates seem to be falling faster than savings account rates. I'm afraid it may be a while before we see 5% CDs again. There are still a few 5% long-term CDs available as of this morning:
Note these rates are based on what was listed on the financial institutions' websites as of the morning of 12/18/08. The two credit unions also offer these rates in IRAs. I'm not sure about Chase/WaMu.

One credit union, Christian Community CU, with easy membership is offering a special 5% APY CD for terms from 24 to 60 months. However, it does not have federal insurance via NCUA. It's only privately insured via ASI (credit union review).

In my next post, I'll look into the pros and cons of long-term CDs.
Related Pages: CD rates, IRA rates

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Tsunami Cid
  |     |   Comment #1
Hurry up people and lock your money away before the tsunami of low rates hits your bank! Capital One Bank got hit this morning, turning their 5yr 5% CD into 4.25% CD. Intervest, the biggest player in the game for the last month, has virtually disappeared from the cigar club. I just opened a 5 yr. 4.8% GMAC CD this morning. Over the phone, btw, for people who hate dealing with online security questions and such. Don't rely on DollarSavingsDirect, GMAC, or Provident to keep up their savings accounts. Lock in a 5yr CD today!
  |     |   Comment #2
It was plain bad luck to have a 5 year CD mature today at Capital One Bank. I was able to negotiate a 4.8% yield for a 5 year maturity or 5.25% for a 7year maturity over the phone with them. I took the 7 year CD to hedge against a long period of low rates since I have enough of a laddered 5 year plan in place already. On the Chase site, it appears you must open a checking account with them to get the 5%APY 5 year CD rate. Perhaps the only other 5% APY 5 year CD/share certificates available today (without opening a checking account)are at WAMU and the NAVY Federal CU.
  |     |   Comment #3
I guess I am one of those who are hesitant to lock in for that long of a term because interest rates could be much different in 5 years. The one investment that I truly missed were those 30 year treasury bonds offered at over 12% back in 1984. We had a huge budget deficit and a recession, yet rates were high due to inflation. Now we have all of that except no fear of inflation so rates are going lower. Man, I remember those Money market accounts offering 10% back in those days. You really made money back then, not with these rates that never go above 6% these days.
  |     |   Comment #4
Yes, I too discovered today that the Chase CD required opening a checking account. Otherwise the 60-month rate was only like 1.7%! However, I vaguely remembered Banking Guy saying something about a bonus for Chase checking, so I got out my BlackBerry right there on the spot, surfed to this site, and was able to get a code for a $50 bonus. That took away a bit of the sting :)
  |     |   Comment #5
If you qualify, Pentagon Federal Credit Union is still offering a 4.75% share certificate (3-5-7 years) through the end of the month. The Board of Directors of the credit union determines the rate monthly and doesn't react immediately to what the Fed does with interest rates. I went with them today for a three year term. I would do more with them but their other deposit accounts are nothing special rate-wise. They have a pretty competitive Rewards Visa credit card deal, though.
  |     |   Comment #6
An update with my experience with Capital One Bank. I renewed a CD over the phone for 7 years at a supposed APY of 5.25% after negotiating it up from 5.00%. Evidently the phone representative didn't give me the 5.25% even though she confirmed it three times. This was done on 12/18 and I found out that it was actually 5.00% after logging on to my account tonight 12/19. I will call them first thing tomorrow morning and hope they correct it and give me the higher rate. Somehow I don't have confidence they will do it however. If that is the case I will request the CD not be renewed and my funds be sent to me and go with another institution.
Tsunami Cid
  |     |   Comment #7

I had a similar experience at GMAC. I woke up extra early this past Thursday to try to find a desperate good rate before the big DROP on Friday. I locked in a 4.8% 5 yr, but logged in today and saw that it had dropped to 4.35, their Friday rate. I called a bit irate since they had also told me multiple times that 4.8% was locked. Luckily I talked to a nice guy who did some "research" and then changed back my rate to the 4.8%. But, like you, I'll believe it when I see it. Otherwise, they had better let me withdraw my funds with no penalty.
  |     |   Comment #8
Well Capital One Bank did update my 7 year CD APY to 5.25%. It appears that a negotiated rate has to be approved and will appear about 3 business days later when you log onto your account (per phone confirmation). It was there when I looked today. It would be nice if they informed one of this when renewing an account.
  |     |   Comment #9
Apple FCU, Chase Bank, and WaMu/Chase rates listed above have all gone down now.

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