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Moving From 3% To 4% CD?

chrisoffice
  |     |   21 posts since 2018

With the current 4% CD rate at 5 years, I am thinking about closing out the 7-year CD (still have more than 5 years left) with Andrews FCU, of course I need to pay 180 days worth of dividend as penalty.

Two questions,

First, do you guys think now is the time to move? Or should I wait a bit longer for a 4.5% CD maybe?

Second, since the dividend is paid quarterly at the Andrews, will I forfeit all the dividends accumulated between the last payment date and the CD termination date?

Any inputs will be appreciated!

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9


Answers
Ricochet
  |     |   522 posts since 2010
chrisoffice
Using DA site calculators

AT 25k you have $28,981.85 if you keep CD
$29,960.08 if you change. You gain $978.23 if you go 4%
Time out of earning interest is concern
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10
Ricochet
  |     |   522 posts since 2010
I'm out this week and next.
Funding myself for holidays and stash
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1
Ricochet
  |     |   522 posts since 2010
I dumbly thought I would be able to close CDs when they reached 21 months. 1yr 9m. to not lose interest.
They don't go by my quarters. Will have to wait to December 31 div post.
Charlie Brown Christmas for me.
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2
RickZ
  |     |   218 posts since 2010
Are you sure that's the case? I closed an Andrews IRA CD in August to fund an Achieva CD and I received all accumulated but unposted interest through the day of closure.
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2
Ricochet
  |     |   522 posts since 2010
Are IRA CDs under different W/D terms? Something about your age that makes it ok for you. I 'll see again tomorrow. Might just be the CSR shuffle I dealt with Asking supervisor. I can handle W/D penalty. I do believe you correct though.

I Must not post w/o firm confirmation
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1
Ricochet
  |     |   522 posts since 2010
Confirmed thank you
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1
AnnO
  |     |   129 posts since 2018
Yes, Andrews goes by calendar quarters - Mar 31, Jun 30, Sep 30, Dec 31. The first interest I received from them was a smaller-than-usual amount because I joined in the middle of a quarter.
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2
me1004
  |     |   1,379 posts since 2010
I don't know when might be the best time for you to make such a change. You will have to do the arithmetic (and when doing so, consider any affect of the the new tax rules, for instance, whether you can still write off a penalty assessment on your bank account).

However, regarding rising rates, at the moment the expectation is that the Fed will raise rates in December, and then three more times next year.

That's the expectation at this moment, we will have to wait to see what really happens next year.
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OAG
  |     |   23 posts since 2010
FYI EWP can be written off 2018 - requires you to use IRS 1040 to do so.
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4
payitforward
  |     |   46 posts since 2016
Correct. 2018 1040 Schedule 1.
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RickZ
  |     |   218 posts since 2010
Penalties on early withdrawal of savings are an above the line adjustment to income (line 30), not a Schedule A deduction, so the adjustment is not affected by the new tax laws including the increase in the standard deduction. The only effect is that if your tax rate went down in 2018 then you may end up paying a higher tax rate on the interest then the tax rate that you will now be getting for the adjustment.
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7
Ally6770
  |     |   4,294 posts since 2010
My opinion would be to wait until you see what happens after the Fed meeting in Dec. I have a feeling that PenFed will be doing something pretty big for IRA's because they have left IRA CD's out of their increases.
It has been quite a while since they were near the top and I think they will try to get back in the game. Just a feeling though.
If it is a reg. CD. I would at least wait until the end of Dec or first of Jan and then start laddering your CD's.
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7
BA
  |     |   2 posts since 2018
I also have the same CD. Good thing is Andrews FCU has only 6 months withdrawal penalty. Most others have 12 months. If we want to break new 4% CD again in in next few years if rates rise fast-it takes 3 years time to get 3% rate after penalty. Once rates go up better to cash ours and wait for best deals. Better to wait 6 to 9 months before we lock in our long term CD's. Just my opinion ! I am not an expert.
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1


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