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In case anyone is interested, new issue FDIC CDs at Schwab are currently at 3.05% for one-year issues. I would surmise that similar issues are available at other brokers also.
Fido has similar CD rates for the 1 year at 3%, but the 10-year new issue CDs aren't that much higher at 3.80%. Would be nice to see longer-term CD rates well above 4%, then I would nibble....or maybe gobble.
Bonds are not CDs, but most CDs are guaranteed by the FDIC--- unless you belong to a Credit Union like I belong to, in the Los Angeles suburbs: deposits are PRIVATELY insured. (GASCU, not GASFCU.)
Anyhow, I hate to once again mention this, and I don't recommend it for political reasons: The State of Israel has never defaulted. In 2003, I snagged a 10-year Zero animal at 5.68%. After maturity, I almost doubled my money.
These bonds are offered Stateside, in DOLLARS. The offered rates might deserve your attention. I note a 5-year bond at 4.68%. (But it's not a "Zero." Perhaps it could be arranged to re-invest the dividends?)
Most credit unions are insured by NCUA, a federal agency.
One of the NCUA’s responsibilities is managing the National Credit Union Share Insurance Fund. It is the NCUSIF that guarantees money in credit union accounts is backed with the full faith and credit of the U.S. government.
Thanks @yogibb. You can drag your finger or mouse pointer from one location to another, and the rates pop right up.
The site also indicated that CD rates are much competitive in larger cities than those of smaller ones. The top 1 year CD rate is about 2.0% (assuming that is real time). Still that is over 1% behind those CDs found in major brokerages.
@Old_Joe : From prior trial, it appears that rates shown @ Schwab aren't available at the bank issuing the rates. I don't know if this statement is 100 % true, but the one bank I looked into in my area showed no cd rate as what Schwab showed. Thus only available thru Schwab. Have a good day, Derf
Not locking my money up for fixed rate for a year now. Rates will be increasing across the board at least rest of year. Merchant Bank of Indiana 2.75% flex CD. As rates rise so does CD rate...jus sayin!
Bought a 1-year Wells Fargo Bank CD yesterday from Fidelity at 3.05%. Today, no longer available. Only remaining 1-year CD is from another bank at 2.90%. Looks like they are selling like hot cakes. Good luck, Fred
I think Fidelity and Schwab offer a greater choice of CD's because these are brokered CD's that can be bought effortlessly by investors without involving branch personnel to handle paperwork for CD's sold locally.
Brokered CDs are also quick way for banks (some lesser known) to raise funds. It has been noted that the deals are often for limited times and may not be available directly from offering banks. For banks, it is an expensive but fast channel to acquire deposits without tying up banking staff or facilities.
Interesting that Wells Fargo had to resort to this particular channel to raise funds. Perhaps they are still hurting from their long series of misdeeds, he said hopefully.
My credit union used to be very competitive on CDs and money market rates. Now they don’t even come close to Fidelity’s offerings. Even a 5-year CD is only yielding 0.85% at my credit union, and its MM is yielding only 0.4%. Needless to say, I don’t hold much cash at my credit union any more.
Historically, MMFs paid higher rates than bank/CU MMAs. They have to. Why would anyone use a lower yielding, uninsured product that can, and thanks to the Reserve Fund has, lose money?
The GFC and ZIRP turned things upside down. MMF yields would have been negative except that their sponsors subsidized them to keep them afloat. For fund families, that was an acceptable business expense - a loss leader if you wish. But 0.01%, while positive, was not competitive with banks.
Just checked Ally Bank online 3 Year CD is Lower than a 3 year Ally CD bought through Schwab. I have previously had CD at Marcus online. Be warned - you can easily chat with a human when depositing funds. But it is impossible to reach a human when withdrawing them. On withdrawal you can only communicate with online chat, and bots. It takes days to get a human response. Altogether, not worth the trouble .
Just checked Ally Bank online 3 Year CD is Lower than a 3 year Ally CD bought through Schwab. I have previously had CD at Marcus online. Be warned - you can easily chat with a human when depositing funds. But it is impossible to reach a human when withdrawing them. On withdrawal you can only communicate with online chat, and bots. It takes days to get a human response. Altogether, not worth the trouble .
THANK you for the heads-up. Why am I not surprised???? Doink-heads.
Serious question here as I feel I should but do not know the answer.
CDs.
When I buy them thru a bank, let's say for example sake, $100k, 3% APY, I see $103000 a year later in my account.
How does that work for CDs that you buy thru Schwab. When I look at the value, it makes no sense to me what the value and gain/loss is. For instance I opened a 3.55% brokered CD thru Schwab 3.5 years ago with $90k and it states the value is ~$90,492. No way that can be correct right? I called and their rep could not explain it. Does it all "true up" at the end of the CD term?
Brokered CDs differ in one important respect from BANK CDs (bought directly from banks). Brokered CDs FLUCTUATE daily in value according to the current bid-ask in the SECONDARY market that depend on interest rates and other factors. The new buyers of brokered CDs are bothered/puzzled by this mark-to-market practice. One will get the current bid if one sells early (retail buyers sell at bid, buy at ask). There may also be nominal FEES for buying or selling CDs in the secondary market. The secondary market for CDs is not very liquid and selling brokered CDs early may incur large losses. However, they will pay full/promised amount (principal plus interest) on MATURITY. On the other hand, bank CDs have defined interest PENALTIES for early withdrawals (typically 3–6-month interest) but don't fluctuate daily in value. https://ybbpersonalfinance.proboards.com/thread/308/brokered-cds
To enlarge on yogi's comments, note that your account at Schwab shows the "Market Value" of your CD. Because the best return on currently offered CDs is around 3%, and your CD is paying 3.55%, it would be worth more to someone desiring to buy it from you in the secondary market.
Conversely, if your CD was returning 2.5%, it would be worth less to a purchaser.
None of this has any relationship as to the amount your CD will be worth at maturity. At maturity, you will receive the face amount plus any accrued interest.
.....So, the thing can be used as a sellable/buy-able item, ifsodesired. That's all? Otherwise, the promised maturity value will hold when the thing does mature and come due...
Comments
Anyhow, I hate to once again mention this, and I don't recommend it for political reasons: The State of Israel has never defaulted. In 2003, I snagged a 10-year Zero animal at 5.68%. After maturity, I almost doubled my money.
These bonds are offered Stateside, in DOLLARS. The offered rates might deserve your attention. I note a 5-year bond at 4.68%. (But it's not a "Zero." Perhaps it could be arranged to re-invest the dividends?)
There are no 10-year beasts being offered these days. And I do believe these bonds are non-callable, too.
https://www.israelbonds.com/Offerings-Rates/Current-Rates.aspx
Some state-chartered credit unions like GASCU are not members of NCUA, but rather choose to buy private insurance. About 20 years ago, Patelco switched over to American Share Insurance, the same insurer that GASCU uses. It made the switch to get higher coverage limits. In 2009, it switched back, for reasons given in this piece:
https://www.depositaccounts.com/blog/2007/11/patelco-credit-union-is-scheduled-to-be.html
Fidelity and Vanguard offer the same 1 year CDs that yield 3.05%.
Now they are far behind.
https://www.depositaccounts.com/banks/rates-map/
The site also indicated that CD rates are much competitive in larger cities than those of smaller ones. The top 1 year CD rate is about 2.0% (assuming that is real time). Still that is over 1% behind those CDs found in major brokerages.
Have a good day, Derf
Looks like they are selling like hot cakes.
Good luck,
Fred
Add: just checked Schwab- no more there either.
The GFC and ZIRP turned things upside down. MMF yields would have been negative except that their sponsors subsidized them to keep them afloat. For fund families, that was an acceptable business expense - a loss leader if you wish. But 0.01%, while positive, was not competitive with banks.
Serious question here as I feel I should but do not know the answer.
CDs.
When I buy them thru a bank, let's say for example sake, $100k, 3% APY, I see $103000 a year later in my account.
How does that work for CDs that you buy thru Schwab. When I look at the value, it makes no sense to me what the value and gain/loss is. For instance I opened a 3.55% brokered CD thru Schwab 3.5 years ago with $90k and it states the value is ~$90,492. No way that can be correct right? I called and their rep could not explain it. Does it all "true up" at the end of the CD term?
I hope this question makes sense.
Best,
Baseball Fan
https://ybbpersonalfinance.proboards.com/thread/308/brokered-cds
Conversely, if your CD was returning 2.5%, it would be worth less to a purchaser.
None of this has any relationship as to the amount your CD will be worth at maturity. At maturity, you will receive the face amount plus any accrued interest.