What Term CD Would You Pick?

Jack11
  |     |   180 posts since 2019

My options seem to be:

2 Year 1.10%

3 Year 1.20%

3 Year Bump Rate 1.25%

4 Year 1.35%

5 Year 1.60%

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All my recent CDs have been shorter terms, mostly 30 month. I am leaning toward the 5 year but would like some feedback. I am hoping these rates hold for another 10 days. I have another CD maturing in Late Oct and then a total of 5 in 2021.



Answers
gbtexas
  |     |   78 posts since 2013
I’ve generally gone for the five years. But the times are certainly not of the variety we’d refer as ordinary times. Therefore, in view of the feds wanting to keep their rate right at zero, and with immediate concerns for inflation being relatively low, and with the outlook for at,least a couple of years being about the same as today, I’m opting for the 18 month and 2 year cds. While they pay next to nothing, it appears, at least to me, that this is the least undesirable option. There are many varied views, each having a few merits in its favor.
alan1
  |     |   500 posts since 2015
I would immediately eliminate the 3-year 1.20% CD from consideration.

The 3-year bump rate is 1.25%. Even if the bump feature turns out to be worthless, you're still getting a higher rate than on the 3-year non-bump CD.
Choice
  |     |   245 posts since 2020
Another consideration...why not bank of mattress? What is he lost opportunities by doing nothing? What do u think most of us will do in next couple of years when higher rate CDs mature? Same as 2011-2016+? I currently have an Add-On for 2.33% for 11remaining months and for each $10k not added, I’m “losing/not gaining” approximately $233...my inclination...big deal! If the FIs have less funds, rates will go up, too!
All...we are talking about CD rates not the stock market!  Go short! 
Jack11
  |     |   180 posts since 2019
Mattress is not a viable option. What opportunities lost? Stocks? Maybe if the market were to decline a lot but I have multiple other CDs maturing over the next year or two and my IRA is 35% cash.
I am not going to buy houses for rent or to flip. I don't need the aggravation even if I could make a good return. I think I am going with the 5 year. Hard for me to see how rates will increase much anytime soon. I have never had an add-on.
deplorable_1
  |     |   188 posts since 2020
@Jack11: You could also purchase CD's with a 2% credit card. Even a one year CD with a 1% interest rate would get you 3%. A 6 month CD at 1% would get you 5%.
https://www.doctorofcredit.com/does-funding-a-bank-account-with-a-credit-card-count-as-a-purchase-or-cash-advance/
Plenty of bank bonuses still around that have a ROI of well over 5%
https://www.doctorofcredit.com/best-bank-account-bonuses/
Also you could look at MYGA(multi year guaranteed annuities) these are most like CD's and their rates may be higher depending on your state.
https://www.immediateannuities.com/
Just beware of any surrender charges for closing early and read all the fine print.
GM right notes non-FDIC insured is paying 2% on liquid cash.
Dividend paying stocks in fairly safe sectors like utilities for example could be another option. They even have utility ETF's which hold a basket of utility companies for added safety and diversification.
https://www.dividend.com/dividend-stocks/utilities/#tm=3-sector-stocks&r=ES%3A%3ADividendStock%3A%3AStock%23CWT--NYSE&f_1=utilities&only=meta%2Cdata%2Cthead&sort_by=latest_yield
and
https://etfdb.com/etfs/sector/utilities/#etfs__dividends&sort_name=dividend_yield&sort_order=desc&page=1
Any of these would beat 1.6% easily.
me1004
  |     |   988 posts since 2010
I see no CDs in your list that I find acceptible. But rates aside, with what the Fed is doing and says it will be doing, I have to think 2-3 year terms are best choice, leaning to3 years -- but only if you can lock in an exceptionally good rate. You don't want to lock in a low rate for an extended term.

If you can't find anything better, Vibrant Credit Unon has a 15-month CD at 1.30%. You can hope for better by the end of next year, although it is not necesarily going to be any better, from what the Fed says. But I think you will be able to at least get the rates in your list here at that time.

If you have a military relationship, Barksdall FCU has several good deals, such as a 2-year CD at 1.51%. And youcan get that raised as high as 2.12% for the 5-year rate by opening their Plus Point Certificates, which are very much a 5-year ladder ofCDs, but you can put a mere $1,000 in the terms you don't want, and all the rest in the term you do, at a high rate. From what the Fed has been saying, and considering that Trump's appointees will be dominating it for the next about four years at least, its unlikely you will be finding better than 2.12% for five years any time in the next three years anyway, probaly four years.
Jack11
  |     |   180 posts since 2019
No military relationship for me. And not keen on a 15 month for just 1.30% with a new CU. CDs with a credit card is not a viable option as my 2% card has a low $7500 limit. Afraid of putting such large amounts in stocks with the market relatively high. Not doing an annuity. I am still leaning toward the 1.6% 5 year Jumbo but since my late Oct CD is less than a Jumbo I will hold back about $25k so I can get a Jumbo then since they seem to have slightly better rates. (The rates above are for jumbos)

I have plenty of stock exposure as it is. I am looking into transferring some of my IRA cash to a local cu which has a great IRA rate. 2.02% on savings. That rate has held steady for probably a decade or so now. (And their regular savings is 1% and that too held when rates were low. The downside is their regular savings has a limit of 3 withdrawals per month. So I have not really been using it this time around. Last time I opened a 2nd savings to get more but they don't have the hub functionality that I prefer. And, I have not been keeping much liquid because I know I always have another CD maturing before long. I know that with a 5-10 year time frame I would probably do better in stocks but there is a lot of uncertainty too. What if Biden gets elected? What if the riots continue and increase to more areas? And Covid has already cost so much.
me1004
  |     |   988 posts since 2010
Are you aware, the military relationship can be a relative, maybe your father.
Jack11
  |     |   180 posts since 2019
Yes, my dead great uncle does not count.
Jet131821
  |     |   2 posts since 2016
I used my brother, Vietnam vey
Jack11
  |     |   180 posts since 2019
Those rates have dropped.
Now 2 year 1.00%
3 year 1.10%
3 year bump 1.15%
4 year 1.25%
5 year 1.50%.

They also mention a 1 year FirstStep at 1.05%. Not sure what that is except the minimum is $25 whereas their other minimums are $1000. It does not show a max. Their normal 1 year rate is .75%.

These are all some bad options.
Jack11
  |     |   180 posts since 2019
I asked about the 1 year first step. Its essentially an add on, no penalty 1 year CD. That is interesting. I am still undecided though. I just can't see doing nothing and putting it in a savings account at .80% but which may well drop more soon. All of those options are competitive with any other options available to me but not great. And I see little chance of better deals in the near term. There is a credit union in my state that has better rates but I am not eligible unless I were to try the "worship" thing.
blazer9
  |     |   117 posts since 2019
If you succeed,Be sure afterwards to use the confessional also.
Choice
  |     |   245 posts since 2020
I’m reminded...Years ago I went to a CU where I did not qualify except a place of worship which I attended. Went to the CU and started new account, etc and they seemingly wanted everything. Frustrated, I asked if they wanted a note from my pastor. They got the point and promptly said no and got more reasonable on open issues!
Jack11
  |     |   180 posts since 2019
Ok, My options seem to be:

Assuming they don't drop their rates my options are
1 year...1.05% (add on and/or possibly no penalty too?) Their website is not clear
2 year...1.10%
3 year bump 1.25%
4 year 1.35%
5 year 1.60%.
I previously thought these rates had dropped last week but I did not scroll down to the jumbos.
I need to clarify the 1 year CD deal. I have another CD maturing in late Oct so the option to add it to the 1.05% CD would seem valuable particularly if I go with the 3,4 or 5 for the jumbo.

FirstStep Certificates
Begin or enhance your savings portfolio.
$25
Add to account at any time with minimum $10 deposit.
1 year
(The first step is not available in an IRA but Im not doing an IRA)
Jack11
  |     |   180 posts since 2019
After much thought & changing my mind multiple times, I went with the 1 year add on at 1.05%. I held back just enough so that when my next CD matures late next month I will be able to buy a jumbo if needed. I did not want to bother with a new account so I went with Keesler where I have a number of CDs. The maturing CD came from Andrews where I no longer have any money with them except the $5 minimum.
Jack11
  |     |   180 posts since 2019
To clarify for future reference... by getting the 1 year I am in effect hoping I can get better rates somewhere a year from now. Not sure how likely it is, but its possible.

And I have a number of CDs maturing before then. I will likely go longer than a year on some of them.

1 year add on...1.05%
2 year...1.10%
3 year bump 1.25%
4 year 1.35%
5 year 1.60%.
Jack11
  |     |   180 posts since 2019
I am second guessing myself here on the 1.05% 1 year add on I did. I have a local CU that still pays 1% on their share saving and they have never went below that in past low rate periods. The only downside to that account is they limit you to 3 electronic withdrawals per month. With my upcoming CD maturities, I will probably require a bigger than .05% premium for even a short term CD. I'm leaning toward the 3 year bump if its still available in about 5 weeks when I have a maturity coming.


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