Best CD rate I can find at the moment.

Brookswood

Brookswood

Senior Member
I just received an email from Marcus Bank. It offered over 5% on a one year CD. looking at my usual sources I can’t find one place that will come near that rate. Given the way interest rates have fallen in the last two weeks, I am going to jump on that deal big time. This might be the last time I am offered over 5% on a FDIC insured deposit.
 

I'm waffling trying to guess how soon consumer savings rates ratchet down again.

The Fed is forced to play games right now. There are many moving pieces on the chessboard including the election, which "they are not involved in." Hard telling how the new woes at the Bank of Japan figure into things but it may be the triggering event. The ECB may be the next to fall leaving just one leg (the Fed) on the global financial stool.

Japan's demographic collapse has recently accelerated beyond prior estimates. This has direct impact on the Bank of Japan, which has been trying to compensate by holding domestic interest rates near zero. Now there is far too much fiat money for the system to sustain it. We've seen other signs of this earlier in the year as Japanese automakers conduct more and more recalls and face domestic and Chinese supplier problems as well as supply chain delays.

If the Fed cut rates it would relieve a lot of pressure. However Japan's self-extinction trend may make the point moot for them.

Europe isn't far behind Japan, but they might have another decade left: collapse in 2040 rather than 2030 like Japan. Canada is on a course similar to Europe. The US probably has an additional decade, so 2050.

But in any case we are likely to see rates ratchet down and down and down now.

12 month CDs might look attractive, but a year from now when you can only get 1.75% (or less) again for several years... not so much. I think I'd hedge with some 2 and 3 year CDs right now.
 

5% for one year certainly does seem like a good deal. Sallie Mae's is slightly better...5.10% for 10 months. It was #1 on the list of Best CD Rates per Experian and Marcus came in 2nd. I had told my BFF that now would be the time to lock in rates before the Feds cut interest rates, which I've seen reports saying it may be sooner than September's scheduled meeting.
https://www.raisin.com/en-us/banks/sallie-mae/10-month-high-yield-cd
 
Everbank and West Town both have rates at 5% as of a few days ago. Both are strong banks especially Everbank--- is Online only with nice customer services. Was called TIAA
 
I stay at a year or less. Especially now. Too many unknowns. Look at the markets in the last week. Can’t seem to find a direction.

If one can go at least 6 figures, there are rates past 5%. The last time I visited to rollover, some foreign banks were offering between 5-6%. Bank of China was the highest, but I said no thanks to that one.
 
Aunt Bea said:
It’s hard to know what to do.

Is it better to take 5% for 12 months or a bit less for 24-36 months? 🤔
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Well it's a betting game.

12 month teaser rates are just to get hold of your cash. The question is where you expect rates to move by 12 months from now. If they go up, a longer term CD at a lower rate was a bit of a blunder. If they fall dramatically, after 12 months you stand hat in hand as inflation eats up your gains and more because you can't get decent interest any more.

That's where "laddering" comes in. It avoids having all of your cash tied up too long since some is always approaching maturity, but it lets you use longer term CDs to avoid taking a haircut when rates drop precipitously.
 
Brookswood said:
I just received an email from Marcus Bank. It offered over 5% on a one year CD. looking at my usual sources I can’t find one place that will come near that rate. Given the way interest rates have fallen in the last two weeks, I am going to jump on that deal big time. This might be the last time I am offered over 5% on a FDIC insured deposit.
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JMO, but I think High Yield Savings are a great way to go.
Several offer rates over 5%, and you can withdraw funds when you need it.
 
bobcat said:
JMO, but I think High Yield Savings are a great way to go.
Several offer rates over 5%, and you can withdraw funds when you need it.
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I’ve been using a short term bond fund since rates dropped to almost zero but it feels like we’re at a bit of a turning point.

I think @dilettante has the right idea, using a CD ladder.

In today’s world maintaining a small reserve is more important than where we keep it.

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Sarah "Papa always told us to save for a rainy day. So we did!"

Annie Elizabeth "Yes, but Papa never told us it would rain this long or this hard!"
 
Aunt Bea said:
It’s hard to know what to do.

Is it better to take 5% for 12 months or a bit less for 24-36 months? 🤔

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I've often read the advice to "ladder" your CDs. Divide your money and buy one for a year, one for 24 months and one for 36 months. That way if you need to cash one in before the three years, you can do so without penalty. Oops after going back and reading through the thread, I see that @dilettante already mentioned laddering.
 
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OneEyedDiva said:
I've often read the advice to "ladder" your CDs. Divide your money and buy one for a year, one for 24 months and one for 36 months. That way if you need to cash one in before the three years, you can do so without penalty.
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That's perhaps the primary reason. However laddering is also a way to spread risk.

If you buy a conventional CD at $9000 for 3 years you lock an interest rate in for 3 years, but your money is also tied up for 3 years. So if unexpected expenses came along you have no access to any of that money without paying a penalty.

If you buy a 1 year CD at $3000, another 2 year CD, and a third 3 year CD you spread your risk... at the possible expense of less interest. When the 1 year CD's term is up you may not need the money so you'd reinvest. Probably with a new 3 year CD. However at that time you may not be able to find a decent interest rate.

That ignores the short term teaser rates out there right now for 1 year and shorter CDs. It also ignores the "gambling" on where you think interest rates will move within your horizon. For example, a 3 year CD right now may pay less than a high-interest savings account. But if rates plummet soon that CD might be a far better deal, and vice versa.
 
EmptyCup said:
I stay at a year or less. Especially now. Too many unknowns. Look at the markets in the last week. Can’t seem to find a direction.

If one can go at least 6 figures, there are rates past 5%. The last time I visited to rollover, some foreign banks were offering between 5-6%. Bank of China was the highest, but I said no thanks to that one.
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I don't invest in CDs but research for friends who do. I've seen CDs that are close to 5% with a lot less than 6 figure minimums. Sallie Mae (linked in my reply #4) is offering 4.95% with a $1 minimum. Whatever one decides, it's best to do it before the Fed meeting in September when it seems lowering the rates is a done deal. I saw that it might be a half a percent. @Aunt Bea
 
Monkey-branching 1 year (or shorter) CDs almost defeats the purpose. It is riskier, since the entire point of CDs is to lock in interest rates to hedge against falling rates. There is also a risk that rates might rise instead, but that doesn't erode your money the same way. Then your bet is against inflation.

However swinging from CD to CD at teaser rates can succeed if you get lucky enough. It's just more of a gamble. Normally though, longer term CDs would be paying more interest than short term CDs. I think that banks have been signaling that they expect rates to drop dramatically before long and stay low for some time. Thus the inversion of interest rates on CDs.
 
Brookswood said:
I just received an email from Marcus Bank. It offered over 5% on a one year CD. looking at my usual sources I can’t find one place that will come near that rate. Given the way interest rates have fallen in the last two weeks, I am going to jump on that deal big time. This might be the last time I am offered over 5% on a FDIC insured deposit.
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Sadly the 5% and more CDs are gone from Marcus. One year is 4.7%. Two years is 4%. Not bad, but not as great as a month ago.
 
leastlongprime said:
Anything over 4.5% is requiring new money and over $25,000 for 12 months. I didn't look that hard since we don't have that much uncommitted funds. A few thousand yes but not +$25,000.
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I think the reality is finding rates and such may depend on where you are etc. I recently found CD's between 4.65 and 5.25 with most being anywhere from 3 months to 12 months.... minimum deposit as little as $500.
Look beyond the big names national banks and find smaller institutions or credit unions.
 
It looks like we are now moving from a 5% world to a 3.5 to 4.8 percent world. That’s probably still more normal. Just not quite as nice. The roller coaster is heading down for a while. Screaming is OK as long as you don’t panic and jump out of the car. I just locked in a 4% two year CD. Only a month ago I locked in a 5.1% 18 month CD.
Hanging on to the best I can find.
 
Yeah, I hear you. I just bought a new 4% 2 year certificate with a credit union for diversity, hedging against random bank failures or bail-ins. Then a 4.15% 3 year CD with a third bank where I can add to the balance until 9/21.

A bail-in is the opposite of a bailout. Instead of relief funds coming from outside (taxpayers), the funds come from inside (shareholders and depositors). Although bail-in relief has been implemented in Europe, it has never been used in the U.S.

Even so, bail-in relief was legalized in the U.S. with passage of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, following the 2007–2008 financial crisis in which banks deemed “too big to fail” were bailed out by the U.S. government. The specific section of Dodd-Frank that deals with bail-ins is Title II: Orderly Liquidation Authority (OLA).
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There are still a few CD’s out there at about 4.5% for a year or more. But, they are hard to find. And you end up scattering your money over many different banks, which can be a headache.
 
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Brookswood said:
There are still a few CD’s out there at an out 4.5% for a year or more. But, they are hard to find. And you end up scattering your money over many different banks, which can be a headache.
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Who knew that having money could be so difficult!
😉🤭😂

"Always remember two things: That I love you and the name of the bank."
- Leadville Johnny Brown
 
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