Certificats of Deposit

[MoKelly]

Our bank will call you when the CD is maturing and let you renew, transfer to a money market or change rates/terms over the phone.

Pretty simple.

Great Southern Bank.

 

[EarPlug]

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[ruffdog]

I have done CDs for years and have never been "burned" by a bank or CU. I keep track of all my accts on a ledger and am never surprised by a maturity date. They will either send a letter or email to notify us of the impending maturity date and procedures.

 

[tallyho8]

I have had many CDs over the years. The best one I had was years ago when Carter was president. I put $20,000 in a 5 year CD at 18% interest. I had over $40,000 when it matured.

Banks use "Special" cds to try to trap people into lower rates. These special cds are usually 5 or 11 or 13 months and renew at 6 or 12 months. The special rate may be 5% or more but when they renew at 6 or 12 months it will be a much lower rate because many people will forget to close them out and put them in another cd that pays much higher rates.

I just had an 11 month cd at 4% mature and the bank offered a 12 month one for 4.9% but I closed it out and put it in a different bank for 11 months at 5.4%. The banks always notify me 20 days before it matures in case I have forgotten about it.

For quite a few years I hid my money instead of putting it in a bank because they only offered about .01% interest but as soon as interest rates started going up, I quickly went back to cds.

 

[duffer]

As an alternative to look at, try US Treasury notes, bills, and bonds. Notes and Bills are short term duration US Treasuries. Most are paying 5%+ depending on the maturity. You can buy them for a 2 week maturity, all the way up to 30 years and everything in between.

But the bonus here is this: US Treasury interest is exempt from state income taxes. Doesn't matter if it's a 0% coupon bond (you buy at a discount) or a 5% coupon bond. The interest is state exempt. The OP looks like he lives in IL. (a high tax state)

CD interest is fully taxable at Fed, State, and local levels. So is Money Market interest. I switched from CD's and MMkt's to UST's a couple of months ago, and already have saved a bundle in state income taxes. I have a Fidelity acct and you can buy them online without any fees or commissions. Easy-peasy.

 

[RSKY]

Not worried about minimums, we have about 100k too much in checking. I know, it's a good problem to have but it's still a problem. Wife finally started making money and we aren't spending it.

By having your cash in a non interest bearing checking account you are losing more than $5600 a year as compared to the one year Fidelity CD. Nothing to sneeze about.

After twenty years of controlling my own finances I deal strictly with Fidelity. Go to their website and check them out. CD's rates this morning are 5.4% for three and six months, 5.55% for nine months, and 5.65% for twelve months. The twelve months CDs have been 5.7% and will probably go back to that this week. When the CD expires your money automatically deposits into what I call a holding fund (SPAXX) which is a money market fund currently paying 4.99%. It takes about a day for you to transfer money to a checking account depending on the time of day you make your request. The longest it has ever taken me to get money back in my bank account is two days not counting weekends.

Or, you can put your money in FZDXX which is a Fidelity Prime Money Market Mutual Fund and leave it. That is currently paying 5.21%. There is a $100,000 minimum to get into this fund but once in I have gone down to about $20,000 buying something else with no complaints from Fidelity.

And Please keep good records for your wife and children. I spent three-four months about ten years ago searching for CDs in every bank in two states after a phone call from a friend alerting me that there was a CD in my mother's and my names drawing less than 0.1%. She had them scattered everywhere in her name and all her descendants names in multiple banks. She was over ninety years old and had just lost track. CDs were in all three of her kids names, plus five grands, six great grands, and several (but not all) of her ten great grands. I had to straighten the mess out and redo everything in a fair way. It was a nightmare.

Anyway, good luck and give Fidelity a look.

RSKY

 

[RSKY]

I forgot something in my post above.

I am currently laddering my CDs so that I have a large one coming due every three months. I have three with maturity in March, June, and September. One came out in October and I am holding the cash in the above mentioned prime money market account until December. That way I will have one coming out every three months if we need the cash. My suggestion to you is to buy three, six, nine, and twelve month CDs. When the three month one matures buy another twelve month. Same way with the six and nine month CDs. When they mature buy a twelve month. In a year you will have four CDs each maturing at three month intervals. Nice safe guaranteed insured way to have money available while earning some interest.

RSKY (aka Mr. Know-it-All)

 

[CloverKnollFarms]

We just bought a 70k 12 mo at 5.67%

As long as rates remain in that area, we are buying another 12 mo, each month, at $7k per month.

The 401 and ROTH IRAs are still getting funded, but I want a better cash position in the next several years.

Sounds like the Fed signaled possible rate increases coming again, so bad for consumers, good for cash holders.

 

[RSKY]

We just bought a 70k 12 mo at 5.67%

As long as rates remain in that area, we are buying another 12 mo, each month, at $7k per month.

The 401 and ROTH IRAs are still getting funded, but I want a better cash position in the next several years.

Sounds like the Fed signaled possible rate increases coming again, so bad for consumers, good for cash holders.

Smart !!

 

[hosspuller]

Ponytug & RSKY have posted good advice IMHO... The brokerage houses have access to high rate CD's Their websites are good and easy to use. With the internet, there no reason to limit yourself to the local banks.

I use Fidelity. I always decline the CD auto roll-over. At maturity the funds automatically flow to the cash account.

A few tidbits. CD's are generally protected by the FDIC. Some money market funds are not. Look for "call protection" on your CD. If interest rates fall, the bank can cash out your CD.