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Are There Any 5%+ 5-Year Cds Out There Now?

me1004
  |     |   1,379 posts since 2010

April Fool's certainly was unpleasant this year, seeing the banks and credit unions taking their rates the opposite way of the latest Fed hike. Down went the 5.05% 5-year All In CU CD, down when the 4.9% 4-year Nasa FCU CD.

It looks like the Fed is planning to stop its hikes, at least for the time being (it very well might find that inflation, which remains very high, does not want to cooperate with that view). But there is no talk of it lowering rates soon.

Is there any bank or credit union offering 5% or more for a 5-year, or at least a 4-year CD? Please, if anyone knows of any, post them here -- DepositsAccounts can only post what it knows of, and its tools cannont find all of them. Ken has always encouraged readers her to tell what they know. What we want is to lock in a 5% rate long term, not for only a year or two, and then renew at maybe 1.5% again.

Please excuse the following raving, but it does put things into perspective:

It is unfortunate that in the past 15 years, reasonable or even decent rates have disappeared under the Fed low-rate leadership. The Fed had to be dragged kicking and screaming into raising rates, from an insane 0% Fed rate it never should have gone to nor stayed at. It waited and watched inflation soar and soar before starting a rate raise, and then only very slowly. We can expact the same to return sooner than later as the Fed already is stopping its hikes too early. We should not have to grab 5% now, it should always be available for a CD, as it once was years back -- savers do deserve a FAIR return, and 1-2% is not even close to that. There is nothing high about 5% CDs for locking your money into a bank or CU. You should not be losing access to your money for a piddling 1%, 2%, even 3% return! A healthy economy should support well more than that, it should not require robbing from savers to give out just about free money to support ever higher and higher prices and living beyond means, and the Fed changing from seeking zero inflation to insisting on at least 2% inflation -- never before has the Fed insisted on having inflation. It would tolerate a small amount, warily, but it would not insist on having it.

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Answers
sams1985
  |     |   781 posts since 2022
GTE financial still has their 4.8% 60 month Jumbo CD available...i know it's not 5% but compared to what is available at the moment, is a decent deal. The difference is about $500 per year on a 250k CD. I've been through this rise and fall cycle before and I'm not 100% convinced 5% Cd's (and possibly higher) are gone for good.

But I also took the gamble by locking everything in a few weeks ago b/c nobody knows what is going to happen with inflation, return to ZIRP, recession, etc. There are too many variables at play. Likewise banks are being overly cautious on locking up long term deposits at high rates but that could change. I feel your pain though. It's absurd that we've been giving banks loads of money for the past 10 years for basically nothing in return. It's causing us all to collectively lose our minds over 5% but in reality it's just a DECENT rate of return.
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Infinityy
  |     |   107 posts since 2020
Lafayette FCU (nationwide membership option) is offering 4.85% on a 5-year Jumbo ($100k+)
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IGR
  |     |   580 posts since 2020
As a contrarian thought...
in current environment where prevalence of short/intermediate deposit terms is alarming, what do you think will be happening next when all past specials will mature at once from summer of this year into fist half of next, including long term old deposit contracts...
in current environment where liquidity is already an issue and funds outflow is ongoing concern.
will paradigm shift from following FED to watching out for the competitor's moves?
I could bet on another run of Specials at 6+% interest while funds could be comfortably waiting on holds at 4.5% in liquid MM/S accounts, unless 4-5 years Certificate offerings come with 90 days EWP.
It is just my unconventional wait and see approach.
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Steve58
  |     |   459 posts since 2018
"it very well might find that inflation, which remains very high, does not want to cooperate with that view"

I would argue that inflation is waning since June last year when inflation was explosive. Over the last 8 months, the un-adjusted CPI-U numbers are showing inflation is up 1.53% which equates to a 2.29% yearly rate.

University FCU still has there 4 year 5% CD available nation wide according to this site. Have you tried that?
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JeffinEasternFL
  |     |   744 posts since 2020
Kinda as expected! The banks want to promo short to mid-term but, hedge against long term mistakes (they remember 2008-9,and 2010). tomorrow may have some surprises, just keep searchin!

Lucky for me, I decide the winter early spring was a time to GO (after the SVB debacle) and I grabbed Jumbo CDs from Savebetter/Sallie Mae 27 mos (STILL AVAILABLE 5.15%), Quorum FCU 36 mos (STILL AVAILABLE 5.15%), University CU 48 mos (STILL AVAILABLE 5.0%) and All In CU 60 mos, all (Gone but not forgotten!) all were/are APY from 5-5.25%! whew!
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w00d00w
  |     |   360 posts since 2012
interesting that upper bound of the Fed funds rate is 5% and yet no 5 year-5% CDs to be found, at the moment...i presume mostly due to the Treasury bond market makers who are trading the benchmark 5 year Treasury in the 3.4% range
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me1004
  |     |   1,379 posts since 2010
CBC FCU in Oxnard, CA, is offering a 5-year CD at 5.0% APY regular, or 5.25% APY with its Epic Premium Only.” By Epic Premium, I believe they are talking of their checking account, which gives you a .25% bonus on certain CDs.

Their Website is a bit confusing, quite unclear, so you better call and confirm this. You can see the CD in their rates list at:

https://www.cbcfcu.org/saving-rates/

Membership is limited to people who live or otherwise have a connection, even weak, to Ventura County, CA, such as your company, while it and you might be elsewhere, has a facility in Ventura County, CA. Or you have relatives who are members. It might not hurt to call and ask if there is some group to join to qualify for this CU, it seems to be stretching to allow people in. You can see the membership requirements here:

https://www.cbcfcu.org/join-cbc/eligibility/

Re confusing Website, I see they promote a promo of a 5.0% CD for two years at the Website. But the small print at the headline saying that ended March 31. I do see in the rates page, the 2-year regular account is now 4.85% APY, but with the “Epic Premium Only,” it is listed as 5.25%.
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lostsoul
  |     |   31 posts since 2019
that looks great, but your right it is a little confusing..

Im not too far away but not close enough to get covered. I'll call tomorrow and see if they will allow it if some group is joined. I just need one good 5 year to add to the ladder and Im done with this drama for a while.
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me1004
  |     |   1,379 posts since 2010
I have confirmed, this is a nationally available, easy acess CU. Anyone can join as a member of the American Consumer Council, and the CU will pay to enroll you in that. You can join the CU online, and when done, they wili give you your account number, and you can open an online account as part of the application, and sign into it immediately upon getting your account number.

But watch out, check the fees involved. If you want the 5.25%, you must take their Epic Premium checking with it, and that has an $8 a month fee, no way around the fee. No free check up front, other than two sheets of temporary checks, but you have to go into the branch to get those, they will not mail them. Be careful, apparentely if you use a credit card to fund your share savings, it will not be put through as a purchase, it warns that you might get a cash advance charge.

Also, their Website and information is poorly stated, so ask lots of questions to confirm what you think it says. And the application to join is constructed about as well, it took me three days and many tries before I could get it done, it does not work! It's not confusing, it just doesn't work. And that worries me, not a good sign. I finally got it done this morning, after trying several times since Friday.

I'm biting the bullet, will open the CD at 5.0%, because that $8 monthly fee on the premium checking just irks me, and it will nag me every month for five years. The extra interest would get me well more than the $8, but it will just nag me and nag me. I would rather get, say, an extra .2 or even .15 for taking that account – a loss of more thatn $48 a month – but not have the $8 fee. That's jsut me. So, I take a loss of the .25% extra. Irks me, give with one hand, but take it back with the other. And I would have to pay attention to that checking every month for five years, or it will bounce the fee at some point, and a bounce fee.
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CDCA
  |     |   18 posts since 2023
FYI EWP info from website: Amount of Penalty. For all accounts, the amount of
the early withdrawal penalty is based on the term of your
account. The penalty schedule is as follows:
Terms of 3 months 31 days’ dividends
Terms of 6 months 90 days’ dividends
Terms of 1 year and 18 months 180 days’ dividends
Terms of 2 to 5 years 365 days’ dividends
b. How the Penalty Works. The penalty is calculated
as a forfeiture of part of the dividends that have been or
would be earned on the account. It applies whether or not
the dividends have been earned. In other words, if the
account has not yet earned enough dividends or if the
dividends have already been paid, the penalty will be
deducted from the principal.
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me1004
  |     |   1,379 posts since 2010
This find is an example of why I posted this thread -- this offer would have slipped by with no notice on the national stage. If others also would make such posts, we might find more options. CDs that at first glance seem local only could turn out to be nationally available, you can't always find that out without asking into it. It's suprising how many places don't mention the way for anyone anywhere to join unless you ask.
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JeffinEasternFL
  |     |   744 posts since 2020
Is there a minimum balance you can put into the epic checking account to not have the $8 month fee and thus, leave it alone, just like the CD for 5 years?
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me1004
  |     |   1,379 posts since 2010
No, there is no way to avoiding the fee on the Premium Epic checking. I already asked into it.

It just rubs me wrong, although I would still get more by paying that $8 and getting the 0.25% higher rate. But like you said, can't we just leave it there like the CD? :)
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JeffinEasternFL
  |     |   744 posts since 2020
For a couple months there was SO MANY 5%+ opportunities (enough that I put a 2-year thru 5-year annual ladder of jumbos together, each one 5% APY or greater!) available. Once the SVB banking debacle came about the news THAT should have been THE TRIGGER to GO NOW and lock in rates for sure. If that didn't do it, what stopped anyone who had the funds available?

As the economy "waxes and wanes", there may be better rates "here and there" as the Fed has indicated raising a few/couple/some more times. Though banks are not wanting to be left holding longer term CD obligations (like 2008--10) the choices will be limited. Don't expect the same opportunities we just had 1Q 2023!

Have your liquid dollars available to ACH or wire and be proactive checking rates here a couple times a week and GO APPLY if/when you see one that fits your timeframe and dollar need!

Chances are a slowdown is coming and rates will drop again. This government/administration will always want to spend money not received and thus paying back debt at very low interest rates vice historic rates of pre 21st century is the probable outcome!
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sams1985
  |     |   781 posts since 2022
Does anyone know what happens to the accumulated interest if you sell a brokered CD? Is that basically forfeited?
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anonlol
  |     |   178 posts since 2016
well said, we'll see what happens soon; if the Fed would stop backstopping every bank they would have to pay better interest to attract depositors.
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John19
  |     |   395 posts since 2022
sams1985, You get the accumulated interest, I had to pay $1 per bond ($1000 CD) to sell it as well.
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Rightdx
  |     |   43 posts since 2022
You may get the accumulated interest, but don't expect to get a good price. Expect a low-ball bid which will result in less than the "market value" predicted by your broker.
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CDCA
  |     |   18 posts since 2023
Rightdx
I am curious on brokered CD selling price in secondary mkt. I assumed in a falling rate environment that brokered CDs bought with higher rate would sell at a premium and I wonder if you know by experience what looks like. Any experience shared would be appreciated.
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sams1985
  |     |   781 posts since 2022
Anything over 4.7% 60 month is going above par. If you open the depth of book on Fidelity you can see even the bid prices are above par. For example on Fidelity i have an offer to sell my 4.8% CD for $100.319 which will fill immediately. You can also ask whatever you want for the CD and see if it fills.
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CDCA
  |     |   18 posts since 2023
I always read that there is little demand for these. Perhaps that is true when rates have not moved much. To be able to sell them above par easily makes them superior to bank CDs with EWP. But that only works in a falling rate environment. I wonder how it looked during a rising rate environment of one has to sell.
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sams1985
  |     |   781 posts since 2022
If you time the peak correctly Brokered CD's are vastly superior, esp. in a falling rate environment. You could flip them anytime for a profit and there are tons of bids (ready and willing buyers) Conversely, the opposite is true when you are trying to get rid of one you picked up at lower rate in a rising rate environment.

For example my Cap One 250k CD @ 4.3 60 month is trading around 97.84. So would e a loss of apprx. $5,400 which equals an EWP of about 6 month- still not bad. Except the problem here is that there are no buyers at this price. I'd have to put an ask and see if it fills. It will eventually if rates keep falling.

In a year if rates continue to fall, the 4.3 will likely be back up to Par or more as well. Now if you buy a 2-3% CD and rates rise rapidly to 4-5% you're out of luck. Some of those are trading well below $90 which is a 3-4 year EWP)
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Steve58
  |     |   459 posts since 2018
Seems a bit of a zero sum game. Yes you could sell a 5 year 5% at a profit in a falling rate environment, but to what end? Yes, it is nice if you need the money and do not have to take an EWP to get it. But if you do not need the money, what will you do with the balance received? Get lower interest rates CDs or bonds. You may get a marginal victory at best if you are good at market timing.
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CDCA
  |     |   18 posts since 2023
The point of this is to compare selling brokered CD vs closing out bank CD with EWP. Cost and ease of execution as some of us have gone through having to rotate out low rate fixed income investments and some of them with significant losses such as TIPS Lossing 19% in 2022.
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CDCA
  |     |   18 posts since 2023
Sams1985,
Thank you for the examples. The only other reason I have not bought brokered CDs is lack of FDIC coverage for larger amounts, as it seems too much trouble or even impossible to assemble, say, 10 CDs from 10 different issuers, whereas a I only need to have 2 joint owners with 5 beneficiaries to get 2.5m coverage for a bank CD. If your brokerage acct is joint with spouse, do you get 500k coverage in coverage for a single bank issued brokered CD?
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sams1985
  |     |   781 posts since 2022
Yes you are covered up to 500k in a joint brokerage account. It's actually very easy to consolidate everything in a brokerage account without having to fill out multiple applications, open multiple accounts, etc. Plus you are spreading out your risk for any bank failures. If you depend on one bank for all of your fixed income and it fails you're out of luck.

This cycle there have been multiple banks offering 5% 60 month brokered CD's - way more than non-brokered. Discover, capital one, Amex, Synchrony, City national, And Morgan stanley was at 4.9%. That's $3 million insured and covered in a joint account alone. There were many many other choices just shy of 5% this cycle so you can quickly and efficiently deploy all your funds while maintaining full FDIC coverage. Plus all interest goes into one account and you have one tax form at the end of the year.

You also dont have to worry about that auto renew grace period-principle is returned at the end of the term right back into your brokerage account. Fidelity also has an excellent fixed income analysis tool so i can see my monthly income for the next 5 years. It keeps track of the total par value of all CD's and it's basically effortless- set and forget. And when you need the money send a free wire through Fidelity or get the Fidelity 2% unlimited cash back credit card and pay all my bills right from my dividends. All shows up on the same login too.
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John19
  |     |   395 posts since 2022
Does that Fidelity bonus match really work? I'll have to look into it. My problem is the potential bonuses. There are SO many, there's no way I could leave it on Schwab. Chase Private Client alone is $3000.
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sams1985
  |     |   781 posts since 2022
It might be worth a shot...i was tempted by the wells fargo, chase etc. bonus but i actually dont want to leave Fidelity.
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John19
  |     |   395 posts since 2022
Me neither, I like Schwab and that's not the way I like doing things. But these brokerages want your business so they're willing to pay up I guess. Like that Capital One bonus was $1000, It was easily worth $750 after the rate difference. That is a monster payday for an account that I keep $100 in.
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CDCA
  |     |   18 posts since 2023
I agree that chasing bank CDs is way more work than chasing brokered CDs but brokered CDs come in shorter spurts and I am always concerned that there is 50 percent chance that rates could go up further under which bank CD EWP may be better and easier to unload. I had a brokered CD that my mother owned and after her passing it took Vanguard weeks to sell. There is no such thing as owner death clause as in bank CDs. Not having sold BROKERED CD esp during rising rate is the driver of my continuing buying bank CDs. I always instruct bank to not renew CD and have not run into one that would refuse. I use Fidelity as a hub now more so than Ally as it has much faster wire and EFT. F is also much better than Vanguard in that regard but F pays quarter lower mmk rate vs Vanguard. I will try using F as a bill payment hub.
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John19
  |     |   395 posts since 2022
Brokered CDs are puttable on death. The main fear for me is the need to sell it at sometime rather than call the bank and immediately have my money. And fear of an unlimited EWP lol. I've tried to get a good mix of both.
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