Are interest rates going up??

[RSKY]

I am having to move some money around for somebody else. It MUST be kept in CDs. Not my choice but the owners. This is a great deal of money. I have a choice of a fixed interest rate or one that is .2% lower that can be 'bumped up" twice in the five year term.

Personally I think the rates will go up as the economy heats up over the next three to seven years.

Any ideas?

Once again, I do not need to know about other investment opportunities. This is not my money. It is somebody else's and they only want it in CDs that are easily accessible for their future care.

Opinions on interest rates going up or down??

RSKY

 

[Travelover]

There is no doubt that rates have gone up and will continue to rise for a while. Ally bank has no penalty CDs currently paying 1.5%. This means you can pull the money out and move to to a higher rate CD with no penalty. When I sold my house, I put the money into CDs temporarily until I bought a new house. Compare CD Rates | High Interest CD Accounts | Ally Bank

 

[prichard]

I heard 2 more bumps this year, but don't know beyond that.

 

[RNeumann]

Going up. At 0.2% I’d let it ride- it can’t get much lower!

 

[TnAndy]

Going up. At 0.2% I’d let it ride- it can’t get much lower!

I think what he meant was the CD was paying .2% less than a higher one you can't bump later......like 2.5% instead of 2.7%.

But to the question, yes, they are likely going up. Things get really interesting however once the 10 year Treasury goes over 3% (running in the 2.8-2.9 range currently U.S. 1 Year Treasury Note - TMUBMUSD1Y Overview - MarketWatch ), because a lot of credit swaps are based on it staying under 3.

 

[RNeumann]

I think what he meant was the CD was paying .2% less than a higher one you can't bump later......like 2.5% instead of 2.7%.

But to the question, yes, they are likely going up. Things get really interesting however once the 10 year Treasury goes over 3% (running in the 2.8-2.9 range currently U.S. 1 Year Treasury Note - TMUBMUSD1Y Overview - MarketWatch ), because a lot of credit swaps are based on it staying under 3.

I understand- the wording probably sucked. Typically they pay a bit more to lock the rate. But at 0.2% difference and with such a low historical rate their is no real upside to locking the rate.

 

[Travelover]

Vanguard is paying 1.6% in their prime money market fund. Another option.

 

[Oldoak]

If you want to keep an eye on the general trend of interest rates for savings and CDs, tune in on this site:

Bank Deals | Best Bank Rates on Savings, Checking & CD Rate Accounts

 

[smstonypoint]

You could build a CD ladder -- CD Ladder Calculator | Bankrate.com.


Steve

 

[skipperbrown]

If this money is going to be parked for a while, do what Steve says, build a ladder, and roll the money over every six months into the new rate. And there are safe investments that are going to do a whole lot better than a CD!