April Fools' Day

Kaight | Mar 29, 2024 | 1,192 posts since 2011

This is pretty much a mindless post so feel free to ignore it and move on with my blessing.

As I write this we have reached the final business day of March. April looms Monday. I'm facing the prospect with a certain measure of trepidation and concern. It's because I'm worried too many financial institutions will celebrate the blossoming new month by further lowering their CD interest rates.

Certainly hope I'm full of prunes on this one because I have a significantly sized NFCU CD finally maturing early in April. And prospects for leaving the money where it is appear to be somewhere between slim and none . . . . with slim just seen leaving town.

I do so want to be wrong about this. Guess we will know quite soon.

Post a comment

MY2CENTSWORTH | Mar 29, 2024 | 440 posts since 2016

I hope you are wrong too! I do have a nice 5.25% & another 5.75% add-on for backup in case that happens the first week in April.

Kaight | Mar 29, 2024 | 1,192 posts since 2011

Understood and I'm happy for you. However:

What is the term of those add-ons? I mean:

Short (year and under) CDs are dime a dozen today. That is unlikely to change Monday and is not my concern. I need longer terms than that, CDs I would classify as having "intermediate" terms. I'm talking at LEAST 18 months and (preferably) two year terms even all the way out to thirty months. Those are the CDs I'm worried will decline in APY come April.

Robb | Mar 29, 2024 | 324 posts since 2018

I’m in the same boat as you both. 5% Navy set to move out next month. Half to go into a 5.75% add-on. The other half to go into a mid term…yet to be determined based on what happens on the 1st. Not a big fan of taking anything with a 12 month EWP given the current inflation backdrop (gas prices at a 4 month high) and runaway spending by both parties.

https://finance.yahoo.com/news/gas-prices-why-the-national-average-could-keep-going-up-194220210.htm...

racecar | Mar 30, 2024 | 628 posts since 2014

Kaight,
18mo-24mo is the timeframe I'm now most interested in as well for the next few years (shifting from 5yrs to continous 12-24 month-ers now due personal reasons). Some CDs of mine will mature in the fall, but a couple will mature in early summer so I'm hoping rates don't drop too much in the 12-24mo catagories.

A lot of places sure decided to act before the Fed and dropped even their shorter-term rates in anticipation, so hopefully some of the "better" outfits will wait before dropping further until the Fed actually acts, but you never know. EFCU didn't even wait until the 1st of the month to drop their rates this month (unusual for them). Best thing I can tell you is that everything happens in cycles, and at least we all benefited from when it was high. Human nature makes it harder when you lose something that you actually had once (in this case, 5%+ CDs) than if you never had it in the first place. All we can do is do our best as things start to fall.

Marfa | Mar 29, 2024 | 68 posts since 2022

My brokered cd from chase paying 5.75@ got called in a few days ago!! Nice while it lasted

Kaight | Mar 30, 2024 | 1,192 posts since 2011

Thank you, Marfa, for that update.

I'm a CD person today. But decades ago I was solely invested in individual bonds, muni bonds to be precise. This opinion proceeds from that earlier experience:

I believe there should exist, in the minds of everyone, a bright line distinction between "normal" certificates of deposit (or share certificates) and those which are callable or indexed. That is apples and oranges (and plums) territory. Those three things are not at all the same investment types.

I always wince when I see listed, among or alongside highest yielding CDs of a particular term, so-called "flex" CDs. "Flex" just means that the interest rate is variable. You cannot fairly compare two (or more) CDs, one having a fixed interest rate throughout its life, and the other having a variable rate. Ditto when one of the CDs is callable and the other is not. Anyway, that is my opinion and I'm sticking to it.

True story:

Years ago, pre-pandemic, I knowingly bought a variable rate CD because I was of the opinion we were in a rising interest rate environment. At the outset interest rates did indeed rise and I was very pleased, making increasingly more money as my variable APY went up. Life was good.

Then things changed. I think it might have been the pandemic that did me in. Regardless, rates turned around and began falling, right along with my income from that CD. I had never factored a pandemic into my original purchase decision, and I got what was coming to me. Had I bought a fixed interest rate CD in the first place, I would have remained in the tall alfalfa regardless the pandemic.

For the record I didn't see the 2008 crash coming either. My prescience regarding matters of finance is not al all exemplary.

racecar | Mar 31, 2024 | 628 posts since 2014

I agree. Especially because sometimes some FIs give their (normal fixed) CDs names like "flex cd" if the CD has extra features, like one penalty-free early withdrawal allowed, or an additional deposit allowed. So the casual observer who doesn't look into the weeds might think another FI's "flex CD" is the same -- but at that other place, their "flex" CD has a changeable, non-guaranteed rate.

I never once bothered with a variable rate or callable CD because I see as not much different than high yield savings accounts (without even being liquid). The main "feature" of a normal CD is that the rate is locked and guaranteed. And if rates DO go up, one can do the math to see if it's worth it to take the EWP and move it elsewhere or stay with what you have. By the way, that's another reason I won't go for a brokered CD -- because I HAVE often, through the years, taken advantage of the EWP to close out a CD early to get better rates when the math made it worth it, and that option (realistically) is not available on brokered CDs (yes, you can try to resell them on the secondary market but the reality is that the loss you'd take would almost never make it worth selling early).

As far as anyone's ability to predict or not, that's why (normal, guaranteed-rate) CDs with a mild EWP are by far the best bet. Guaranteed if things go south, but if things go north, you can get out of it with just a small penalty.

txFish1 | Mar 31, 2024 | 479 posts since 2023

There are times where Brokered CD'S are actually better. Case in point I bought some Wells Fargo 5 year monthly pay CD'S paying 5.05% apr last December at Fidelity right as FI's started dropping their longer term rates. I was able to sell them well above par and make some money and invest the proceeds at Advancial earning 5.40% APY. Came out really well and could not have done that if my original CD had been held directly at the Bank/CU. Does not always work this way but Brokered CD's have their merits

w00d00w | Mar 30, 2024 | 360 posts since 2012

i've also had a few brokered CDs at 5.5% called recently. basically, the banks are beginning to refinance their debt to depositors at lower rates

Kaight | Apr 1, 2024 | 1,192 posts since 2011

Groan

I picked up a decent (not great, but OK) two year CD only a week or ten days ago. Harbored hope of repeating the deed ten days hence when my NFCU CD finally matures.

Hain't gonna happen.

As I feared when I wrote the OP, April got me. They lowered the rate as of today, April Fools' Day.

It is turning out to be bad luck, and bad timing, having CDs maturing here in 2024.

Feel like I'm Icarus with those melting wax wings after flying too close to the sun. Except in this present situation the "sun" is actually the election.

MY2CENTSWORTH | Apr 1, 2024 | 440 posts since 2016

Kaight, Credit Human still showing 5.20 APY for 18-23 month and while I am not a long time member there things have been nothing but smooth sailing with CSR, private messages, transfers, etc.

Kaight | Apr 1, 2024 | 1,192 posts since 2011

Thanks. Appreciated.

But you gotta remember, with my ChexSystems problem, I cannot get in. Recently applied to five or six different high APY credit unions. Got into just one (Pelican). All the others garnered me only a ChexSystems rejection.

MY2CENTSWORTH | Apr 1, 2024 | 440 posts since 2016

Ah, didn't know, but hey things may have changed with them. I know everyones situation is different but I had opened four new memberships at other CU's immediately prior to applying for a membership with them and had heard that they were rejecting some memberships based on that dreaded BS ChexSystems. I did get a phone call inquiring about my ChexSystem hits and I simply told the CSR that I was chasing rates. That was it for me so unsure what their exact criteria might be. I got in and like I stated they have been great so far.

Kaight | Apr 1, 2024 | 1,192 posts since 2011

Good input. Thanks. Maybe worth a shot.

The financial institution, product, and APY (Annual Percentage Yield) data displayed on this website is gathered from various sources and may not reflect all of the offers available in your region. Although we strive to provide the most accurate data possible, we cannot guarantee its accuracy. The content displayed is for general information purposes only; always verify account details and availability with the financial institution before opening an account. Contact [email protected] to report inaccurate info or to request offers be included in this website. We are not affiliated with the financial institutions included in this website.