WWYD- CD Communication FCU

heretoday | Jun 7, 2021 | 3 posts since 2021

Hello, First time poster and would like input on WWYD in choosing a CD at Communication FCU. I had a CD mature on Saturday at NFCU and will have another mature 8/4, (2.23%). I have CD’s at NFCU that mature on 7/8/24 & 8/14/24, (3.44%). Also, have a ROTH at Navy that will mature on 5/2/22, (3.68%).

I opened a Step-UP CD at Communication FCU on 8/31/20, (1.29%) and funded it with $1000, as a hedge against dropping rates. I can add money one time and/or take advantage of a higher rate one time.

I want to stay with Communication FCU. Right now they are offering the following Step-Up CD’s. One time money added and/or rate increase.

2yr - 0.85%

3yr - 0.95%

4yr - 1.05%

5yr - 1.05%

Would like to hear your thoughts!

Thanks!

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Answers

micheleforan | Jun 8, 2021 | 39 posts since 2018

I would NEVER lock in a rate near 1% for any CD since the interest rates will not be going much lower for CDs (in my opinion-- based on the inflation that will be coming.). In any case, you can get 1% in a checking account at T-Mobile right now with no limit on the amount of money you want to put in or take out. Also, there are no requirements to get this account and it is open to everyone (unlike most credit unions). You can earn a lot more interest if you have a smaller amount of money to invest.( For example, Porte [savings] pays 3% up to $15,000, and Charter bank[checking] pays 2% up to $15,000. I can get you a $100 gift at Porte if you use my signup bonus link.) Amazingly, these accounts at T-Mobile, Porte, and Charter have no hoops to jump through to earn the higher interest.
However, these rates of 1% , 2%, and 3% are not guaranteed like those of a CD, but you could buy a $100 step-up CD at your Communication FCU so that if the CD looks good in a year or two or three it will be easy to transfer the money from your checking and/or savings into your CD.

Kaight | Jun 7, 2021 | 1,192 posts since 2011

It all depends on eligibility to join Keesler FCU. If I could get in I would dump all the money into a Keesler HIMMA Plus account where the minimum interest rate is 1.3% APY, my money would be liquid, and there is a six month lock on that high rate. This is a screaming no brainer.

Were I ineligible for Keesler membership I might contemplate suicide.

No way in hell would I consider tying my money up for two years at south of 1% APY, or (even worse) for five years at only just a bit more than 1%. That's nuts.

And I do not like step up CDs. They are too easy for any financial institution to circumvent.

heretoday | Jun 7, 2021 | 3 posts since 2021

Thank You Kaight for the recommendation of Kessler. Unfortunately, it doesn’t look like I am eligible for membership.

Kaight | Jun 7, 2021 | 1,192 posts since 2011

My condolences. Anyone ineligible for Keesler today is experiencing a financial handicap.
On the remote chance you did not understand regarding step up circumvention, here is the scenario:

Financial institution offers five year (or whatever) step up. Year (or whatever) later five year rates are up and it's time to do something so . . .

They begin offering a sixty-four month "special" rate CD . . or a fifty-eight month "special" rate CD . . you get the idea. Since those offerings are not five year CDs they do not trigger your step-up privilege. But they still allow the financial institution to have the advantage of a CD with very close to a five year term, while leaving you out in the cold.

heretoday | Jun 7, 2021 | 3 posts since 2021

Thank you, Kaight, for bringing this tactic to my attention. It didn’t occur to me that this could happen, even though I have taken advantage of these type CD’s at Navy. I’m at a bit of a loss now as to where to go. The money is sitting in checking at 0.45%. Right now the best I can do between Navy and Communication, outside a CD, is a MM at 0.50%.

Choice | Jun 7, 2021 | 937 posts since 2020

Lock in the lowest amount, eg 1k, in 4year cd add-on…to cover any further downside. Leave rest in liquid checking acct @.45….then go to sleep/trip, ie all of this is foreseeable! Go ask PD

Kaight | Jun 7, 2021 | 1,192 posts since 2011

You are welcome, heretoday. But do not change your plans on account of my warning. That scenario I mentioned obviously does not happen every time. However, you should go in with eyes wide open, aware of the possibility. Choose your financial institution with considerable care if you decide to opt for a step-up CD.

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