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Notes on Personal CD Investing: Rate-Chasing 101

The following is a guest post contributed by Charles Rechlin, a long-time reader and friend of the site. His last guest post covered Payable-On-Death Accounts. I would like to thank Charles for sharing more of his valuable experience on personal CD investing.

Notes on Personal CD Investing: Rate-Chasing 101

by Charles Rechlin

Sometimes, it seems as if I’ve been chasing CD rates my entire life, I’ve become so weary of doing it.

In truth, however, I’ve only been at it since 2008 when, thanks to Ben Bernanke, and in order to maintain a yield sufficient to pay my bills on time, I had to abandon a portfolio of US Treasury securities and replace it with a disparate collection of Federally-insured bank and credit union CDs.

Over time, I’ve developed some procedures designed to improve my chances of success. My latest foray into chasing rates is illustrative of my less-than-perfect system.

I Become a “Student” Again and Join a Credit Union

In early July, Ken published a Blog posting about a “Celebration Certificate Special” offered, for a limited time, by CFCU Community Credit Union, headquartered in Ithaca, NY. The promotion was for a 33-month CD which carried a rate, on balances of $100,000 or more, of 2.10% APY.

This piqued my interest, not only because I’d attended college and law school at Cornell University’s Ithaca campus many years ago, but also because I’d signed up to attend a 5-day, non-credit seminar on major 20th Century American trials (from Sacco and Vanzetti to OJ Simpson) during the last week of July as part of Cornell’s “Adult University” program. (This program is far from academically rigorous, and basically offers nostalgic oldsters like me an excuse for taking a vacation in the Finger Lakes region of New York State during the summer.)

I noted that CFCU’s field of membership includes anyone who “attends school in” Tompkins County, NY (home to Cornell).

I commented on the Blog posting that it looked like I qualified for membership, although I hadn’t lived in Ithaca, or been enrolled in a Cornell degree program, since 1971. Other readers offered helpful comments.

With that, I was off and running, chasing yet another CD rate.

I emailed CFCU to determine my eligibility for membership. An Ithaca branch rep confirmed in reply that I’d qualify to join based on my five-day stint at the Adult University. At my request, she emailed me the Truth in Savings Act disclosures for the CD, and she suggested I drop by in person when I was in Ithaca to apply for membership and open a CD.

Funding was something of an issue. I didn’t have handy the $100,000 I needed for a 2.10% APY CD, so I ended up closing two Ally Bank CDs maturing next year to get the requisite cash, paying a “grandfathered” 60-days’ interest early withdrawal penalty.

Having completed my sojourn at Cornell, I’m now a proud member (for life, no less) of CFCU, and the owner of a 33-month CD with, by my calculation, a 1.98% APY, after giving effect to the modest Ally EWP.

Some of My Procedures for Chasing CD Rates

My CFCU adventure demonstrates some of the techniques I employ for seeking out and getting favorable CD rates. Sometimes they work, sometimes they don’t. They’re almost never easy.

1. I Regularly Check the Best Available CD Rates on the Internet.

Knowledge is power, so I review CD rates and deals nationally and locally available on a daily basis.

There’s no question that the best place to find competitive CD rates and deals is DepositAccounts.com.

I review the rate tables on this site at least once a day, focusing on maturities that are currently of interest to me (for quite some time now, three to five years). I also read the Blog and Forum postings published throughout the course of the day.

I also visit Bankaholic.com, a website owned by Bankrate, Inc. where I posted as a freelancer for five years. Bankaholic’s blog postings are good sources for current CD deals, both nationally and locally, although the site lacks the active (and vocal) community of readers found at this site.

I further check, at least once a week, the websites of banks and credit unions where I’ve found good CD deals in the past, such as Alliant CU, Elements Financial, Synchrony, Barclays and Nationwide Bank.

I perform these daily and weekly reviews even during periods when I have no upcoming CD maturities. If a CD deal is good enough, it may warrant payment of an EWP to close another CD to provide funding. This is pretty rare, but sometimes it happens, as was the case with CFCU, whose “Celebration Certificate” I found in the course of my daily review of this site.

2. I keep close track of CD maturities at least 30 days out so I’m prepared to move money from one institution to another as rapidly as possible if a good CD deal materializes.

Believe it or not, I actually try to plan how I can move money out of a maturing CD most efficiently—i.e., in the shortest time and at the lowest cost--if the need arises to redeploy it. This often involves advance legwork, by email and phone.

For example, I’m currently staring at major CD maturities at XCEL FCU between August 19 and August 21. I’ve contacted both CFCU and XCEL about the arrangements I need to make to move all or part of the maturing XCEL balances into a 33-month Celebration CD, on the assumption that the CFCU promotion, which still remains open, continues throughout August and a better deal doesn’t show up elsewhere.

Right now, it looks like I’ll have to wire transfer the funds from my XCEL savings account into my CFCU savings account, and open the CD or CDs by phone, incurring $25 outgoing and $15 incoming wire fees. I suppose there are worse things.

3. I keep small savings or checking accounts at banks and credit unions at which I’ve previously maintained promotional CDs that are now closed.

Although this clutters up my balance sheet, I find it potentially useful to keep these accounts (which I think of as “orphan” or “anchor” accounts) open after I’ve closed out all my CDs at an institution. Examples would include a $5 savings account needed for membership at a credit union, or a no minimum balance checking or savings account at an online bank.

This avoids the potential delay involved in reapplying as a new account owner in order to pounce on a good CD deal at the institution—a delay that can result from a Patriot Act review, a hard or soft credit pull, establishing an ACH link, a bureaucratic glitch, or simple institutional inertia.

For example, I’ve had such an account for some time at Velocity Credit Union--a small savings account I keep open to maintain my membership. Velocity regularly offers promotional CDs, but since I closed my last CD there in November 2014, none of Velocity’s promotional deals have caught my fancy. But I remain hopeful that an attractive deal will eventually come along.

Of course, the trick here is to avoid an account that can attract an “inactivity fee.” Also, I have to stay on top of potential changes in minimum balance requirements and account fees. More work.

4. I try to identify outstanding CDs that, based on their rates and early withdrawal restrictions and penalties, may be candidates for early closure to fund an investment in a promotional CD.

Sadly, because of the need to fund my 33-month Celebration CD at CFCU, I’m now without any Ally Bank CD having a 60-days’ interest EWP. Other Ally CDs in my portfolio were previously closed to fund similar rate-chasing adventures.

Sadder still, my next best candidates for early withdrawals are the XCEL FCU CDs that mature this month, which have EWPs of 90 days’ interest. I actually considered closing these early to put more money into CFCU last month, but the numbers didn’t pencil-out.

As far as this source of CD rate-chasing goes, then, the cupboard is pretty much bare, absent some spectacular promotion somewhere that lures me into breaking a CD with a six-months’ interest penalty.

What I Don’t Do to Chase CD Rates

I don’t pile up money in a savings account and wait for a good CD deal to come along.

I’ve tried something like this a couple of times, setting up a savings or money market account with a six- or 12-month rate lock for high balances, and then letting the funds from maturing CDs accumulate in it for a time.

But I really don’t have the patience for this approach. I’m always convinced that the good deal looking me in the face at any moment is the best deal I’m ever going to see. I just can’t convince myself that CD rates are going to return to more favorable levels someday.


In the end, I think that successful CD rate-chasing is much less a matter of skill than of luck. Even with the procedures I try to follow, finding just the right deal at just the right time is usually the product of happenstance—like being in Ithaca, NY—2,500 miles from my home--precisely when the local credit union is conducting a limited-time promotion.

Besides, chasing rates involves more time than most people are able—or willing—to spend. Unlike me, most people have an actual “life” to live every day.

The endless pursuit of CD rate deals always puts me in mind of the 1960s cult novel by Richard Farina: “Been Down So Long It Looks Like Up to Me.” (By the way, the novel is set, in part, in Ithaca.)

At times I get so tired trying to find good CD deals that I seriously consider throwing it all up in favor of some more productive pursuit—like reading a good book, playing with my beagles or just taking a nap.

Editor's Note: DepositAccounts.com's Bank Alerts system can be useful to stay on top of changes at your banks and credit unions. With the Alerts system you can receive notifications whenever a bank or credit union updates their rates, adds a promotion and when we add a new blog post or a user submits a review for them.

  |     |   Comment #1
Thanks for your continuing insight(s).
  |     |   Comment #2
> Right now, it looks like I’ll have to wire transfer the funds from my XCEL savings account into my CFCU savings account,   ...
Don't know about CFCU, but XCEL offers shared branch services which may be useful to you?

Thanks so much for all the useful hints, suggestions, experiences.
  |     |   Comment #9
I'm already all teed-up for a wire transfer on Monday morning, plus, as far as I can tell, CFCU only participates in a shared ATM network.  Anyway, I'll look into shared branching as a way of moving money in the future. My assumption has been that it doesn't help me,  given the way I transfer funds (i.e., always remotely, over the phone, by fax o rvia the Internet).  Maybe that's wrong.
  |     |   Comment #3
Good for you, however, the negative rates could derail all of that planning overnight. A friend of my just came from Europe and what I learn from him is shocking:
The banks are flooded with money from ECB (their own QEs) and what ECB does is charging money for keeping the money on the bank's books.
To circumvent that, banks and insurers are now considering keeping cash in high security vaults to avoid charges with central banks. Munich Re bank already started yesterday and DB is planning soon to do same thing. While in UK, LLOYDS BANKING GROUP plc last month extended its cost reduction measures by announcing a further 3,000 job cuts and 200 branch closures, citing longer-term lower interest rates.
Commerzbank recently predicted that revenues will drop by €100m a year if interest rates remain low, prompting questions over the need for more radical cost-cutting.
The list is endless, every bank in Europe struggle to survive and is coming this way, therefore, I do not expect rate raise anytime soon here.
  |     |   Comment #10
I agree that negative rates are a nightmare scenario all around, not just for savers.  Also, as long as the ECB and the BOJ are on the loose, I'm not sure the Fed could do anything to raise long-term rates here, even if it wanted to (which it doesn't, at present).
  |     |   Comment #46
Remember, the FED started all this with never-ending QE's and Operation Twist.  For that reason, I don't buy the argument that the FED can't start raising rates because of what's happening in Europe and Japan.    The FED was the first one to lower rates (over the objections of China).  So, there's no reason why it can't be the first one to raise rates.  If they would have done this BEFORE the crash, maybe there wouldn't have been one in the first place.      
  |     |   Comment #4
Well I can tell you earning that little bit of extra rate each time will pay off over a long period of time. So like you, I will continue to chase rates and get the best that I can get.  So thanks for the article and I believe I will take that nap that you were talking about.
  |     |   Comment #5
You mention leaving some money at a credit union when the CD matures.  This keeps you from having to go back and re-apply for membership.  You mention dormancy or inactivity, but you do not mention the need to keep up with it especially at credit unions.  I have a list that I go through every January to move small amounts of money around or otherwise do whatever is needed to update the activity flag at that institution.  Some will update it with just a phone call, while most require some money coming in or going out from the share account.  Time consuming, but necessary if chase yields at many different institutions.  BANKS do not have as strict a policy on dormancy timeout as the credit unions.  Also, using shared branch options for the credit unions can make this much easier to update multiple credit unions if they participate in the SB network.
  |     |   Comment #14
A very valid point--I should have mentioned account "abandonment" or "dormancy."  For example, Velocity CU's membership agreement reserves the right to escheat your account balance if there are no transactions during a 12-month period.  I haven't had any transactions there in almost two years, so I better make a small deposit to be sure. 
  |     |   Comment #6
Great article Charles and closely mirrors the method I have been using since the mid-2000s also.  But I have often wondered if all this rate chasing can get us black-listed at some firm like Chex Systems or some such... and once tagged as a rate-chaser, if that moniker would eventually have any negative impact.  Does anybody have any info on this ???
  |     |   Comment #11
ChexSystem reports on "inquiries" are always a lurking problem for me. It's one reason I always hesitate to apply to a new institution in chasing CDs.  However, I can only recall one institution that finally denied my application because I was a rate-chaser--Technology FCU.  They gave me a full opportunity to explain why I had so many inquiries, but basically told me they weren't comfortable with me as a member, even though I rarely break a CD early.  And, as I said in the article, I have no CDs left to break as a practical matter.
the lof
  |     |   Comment #7
Ken, first thank you for this site, been with you since day one.   I've stayed strictly with a 5 year ladder, took time to develop, but made life easier.
  |     |   Comment #17
As I also did, years ago.  And I never give EWPs a second thought.  Never cashed out a  CD before it's maturity to chase rates  and have always kept enough cash in a more liquid account for emergencies, which fortunately I have never needed to  use. 
  |     |   Comment #18
I have used an early withdrawal one time when Penfed had a very good rate.
  |     |   Comment #19
I have never done a early withdrawal, but I once called and informed the bank representative that I was going to terminate my cd because I could get a better rate elsewhere.  Instead, the bank matched the rate and renewed the term of the cd.  
  |     |   Comment #27
Good luck doing it and repeating that stunt today.
  |     |   Comment #8
Very good and thoughtful article, Charles.  Happy you did well up in Ithaca.  I probably should hop up there myself and enroll in something, if not at Cornell then perhaps at IC.

The dilemma I'm facing today will not reoccur for some time.  I believe the outcome of the election in November will significantly impact rates going forward.  I acknowledge others do not share this viewpoint.  I'm not trying to convert anyone to my way of thinking.  But if I knew today the POTUS election winner, and the makeup of Congresss for the next two years, I would have a much clearer way forward with my CD investing.  As it is I'm on hold for a short while, though always with eyes wide open for a scintillating deal.
  |     |   Comment #12
always nice to read his articles which are practical and thought out.  Like Charles, I have too much time on my hands, which was refreshing to see him admit.  Keep up the articles Charles, seems like a lot of us are really enjoying them.
  |     |   Comment #15
Thanks.  There are a few more pieces scheduled this year--plus, I'm always learning by doing.
  |     |   Comment #16
Kudos for excellent blog aside...what we "also" need (Ken, you there too?) is (specific) educational opportunities at/near financial institutions that have high interest rates so we can perhaps make a tax deductible trip for educational purposes...and open an account too.  To travel as a tax deduction is nice, too.
  |     |   Comment #13
I look for the best rates and check this site daily. I shy away from the limited CDs (Small amounts and/or duration). I also do not limit myself to CD's. Some people have the time to chase rates so they can squeeze every dime of interest. I have several Muni bonds that are tax free and are paying me high rates. I stress that Muni's are not for everyone and you need to do your homework. I live in a high tax state too so an added plus. Many of my Muni's are paying 4 -5% that I bought at par. One is paying 5.75% but is callable in 2019. It has been paying me a nice coupon for years.
John Sears
  |     |   Comment #22
Great article, thaank you.  Something I learned on here was to transfer money from my expiring 5 year CD as I did recently into the Savings Acct. of the CU or bank I'm looking to open with.  Each one I dealt with said if rates were to change, it would happen Tuesday night.  This way, there was no way the rate would drop as my funds are transferring.  I get on the phone with them, the funds are all there and they set up the units Wednesday thru Friday, 
  |     |   Comment #31
Great article by Charles,  I read Ken's sight regularly and am doing exactly what Charlie was doing on a little smaller scale... I put up thoughts as I think are helpful... I have cds in a local FCU... I recently went to deposit some money in my savings acc... I have not used this acc. in years however I have a huge amt. of money in cd,s their,,, Guess what , They had it as inactive ...Since I had money in cds I didn't think this would be a problem.... I had to add money... Reopen it... Just a thought
  |     |   Comment #35
Interesting.  I guess I've avoided the problem of "inactive"  CD accounts because i arrange to withdraw interest/dividends to an external account after posting.  There's one cu I have only IRA CDs at, though, where I capitalize dividends and have no transactions in or out.  I'm going to check this one now.
  |     |   Comment #38
I have never heard much less run up against an "inactive CD account" penalty.  And one CU where I have most of my laddered CDs  which just roll over automatically, never assessed any dormant fees. I have had the problem with checking accounts at other financial institutions in the past though.
  |     |   Comment #40
I botched up my comment by referring to an "inactive CD account" .  My concern wasn't with a penalty on the IRA CDs , but with a penalty on (or closure of) my regular savings account at the credit union,  where dividends on prior regular CDs once were paid and withdrawn.  Having only IRA CDs left, I have no activity now in the savings account.
Ken Tumin
  |     |   Comment #33
Please keep the comments to be on the topic of this post. A comment was removed since it violated our comment policy "Any content posted that is off topic or adds no value may be deleted." All comments that were replies to this deleted comment were automatically removed. Comments that relate to issues that affect the economy and interest rates may be posted under the weekly rate summary posts.
  |     |   Comment #34
I agree, however, the value of the money are directly atrributable with present politics that the bureaucrats interweave into present economy that affects all of the savers.  CDs are not exception and only way to explain their present and future values must be linked at the root of the problem.
If some of us know the problem for the low CD rates, why not share it with the others.
  |     |   Comment #37
When talking about money, they can not be separated from the political, economic and the government influence.
The FED used to be independent until the politicians made it political body to serve the party in power.
Talking about the present and future rates of CDs, savings and bonds and bills and treasuries is pointless, unless we talk about of what is causing the low rates and when or if and how can be revived up.
If we the people are excluded from a debate, what is the point to comment, just to praise or denounce the rates, sounds to primitive and basic to me.
  |     |   Comment #39
Nothing like politics to ruin an excellent blog site.  Appreciate this site for what it is. 

Good to see Ken keeping a firm grip on it.
  |     |   Comment #42
#39, First you do not have to read the blog, second if you are not aware of what is the cause for the rates to stay low for so long, you are not interested in the truth, third, the value of the money is influenced by politics 90% and only 10% by the economy. It has been proven throughout the history.
Example: If a politician says, I'm for printing money the dollar will drop as a rock on the exchanges, If a politician says, we will balance the budget and stop the deficits, the dollar will jump at once on the currency markets, and this is only by talking, not acting yet.
China, Japan,  Canada, Great Britain and others may dump or start buying the treasuries and that will have a huge ramification to all of us, just if a politician mentions the dollar, the budget or the economy.
Being ignorant is the last thing you want to be in this day and age.
  |     |   Comment #43
Ken has given a place to continue the Blogs that appear in the comment portion of posts.
The commenters should not be trying to establish a decorum of their own Rules
  |     |   Comment #44
"Where ignorance is bliss, 'tis folly to be wise." 
  |     |   Comment #36
I been chasing rates since before the internet , used to have to subscribe to bank rate news letters ... and do everything by mail ....Ken has made things so simple ..just browse his website regularly, very simple
.this rate environment has been frustrating ,  should have been retired years ago ..no interest on your money and health care costs through the roof keeps me working..
  |     |   Comment #41
Update:  This morning, I wired my maturing account balances at XCEL to CFCU, then opened a second 33-month CD at CFCU over the phone.  The process took about four hours, and cost $40.  I can now take a break, because I won't have any more funds with which to chase CD rates until October. 
  |     |   Comment #48

Thanks for the article.

When you chase cd rates, do you avoid cd's from credit unions/banks that exist in other states, outside your residency, that have state income taxes for purposes of not having file state income taxes in these states on the interest income from the cd?

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