Comments on: Bank CD Rates

By: Jim

Jim — Thu, 09 Jul 2009 04:37:58 +0000

I think you had mentioned this earlier and I tried to find data but couldn’t. However, now all my interest rate tables are pulling from a database, which means in about a year I’ll have at least a little historical information to play with.

By: Dustin

Dustin — Thu, 09 Jul 2009 03:24:47 +0000

Jim

I have always thought a monthly comparison of CD rates and high-yield savings accounts would be nice information.

Thoughts?
Dustin

By: Jim

Jim — Wed, 08 Jul 2009 13:34:34 +0000

I remember when savings accounts yielded 5%. 5%!!!! Those were nice… unfortunately, I think we will be returning to those days but only because inflation will spike.

By: Damon Day

Damon Day — Wed, 08 Jul 2009 12:23:04 +0000

You said it eric, remember the good old days when Ing was paying 4.5% and a little higher on their savings accounts? That was only a few years ago. My how times have changed.

By: eric

eric — Wed, 08 Jul 2009 05:15:50 +0000

What sad, sad rates.

By: Dave M.

Dave M. — Tue, 07 Jul 2009 18:44:03 +0000

Don’t get me wrong, I completely agree that there’s a point where the gain isn’t worth the extra time setting up a CD. I was simply pointing out that in your $50,000 emergency savings example, there’s no reason not to spend a few minutes putting that money in a CD and get a better return.

By: MoneyNing

MoneyNing — Tue, 07 Jul 2009 16:42:13 +0000

When I say account, I actually mean the same bank. These online banks usually have a list of all your accounts under them. I’m not sure if they all do that but at least, from personal experience, that HSBC, Etrade, Ally, and ING all list them conveniently on one screen.

Also, you need to start exporting them into your Quicken instead of doing it manually Even if you enter them manually, you really only need to do it once when you set it up. It’s some work but I’d say it’s worth it if you can get more interests out of the work (just don’t literally open a CD every time you receive one dollar!!)

By: dilbert69

dilbert69 — Tue, 07 Jul 2009 16:18:32 +0000

This depends greatly on your bank. Also, if you use Quicken and enter all your transactions manually, as I do, it can be quite a bit of overhead.

By: dilbert69

dilbert69 — Tue, 07 Jul 2009 16:17:51 +0000

Some banks have (at least in the past) offered add-on CDs, but most do not. And I’m pretty sure the add-on CDs don’t have the most competitive rates.

By: My Journey

My Journey — Tue, 07 Jul 2009 16:16:59 +0000

First of all we are talking about $400 when you have liquid $50,000. I have absolutely NO stats on it, but I am going to assume most Americans do not have $50K liquid, but I could be wrong.

When we are talking about $500 or $1,000 you are talking about less than a McDonald’s value meal to lock up your money (I see that you are arguing what that penalty is, but when we are talking about a net gain of $5 bucks ANY penalty is likely to be substantial in comparison).

By: dilbert69

dilbert69 — Tue, 07 Jul 2009 16:12:50 +0000

I learned the hard way that interest in multi-year CDs is deemed by the IRS to have been paid annually, not at maturity. Therefore, if you have a five-year, $10K CD earning 3% and you’re letting it compound rather than taking the interest payments in cash, at the end of year 1 you’ll have $300 in taxable income but no way (short of liquidating the entire CD) to access that income to pay the tax (my combined state/federal tax rate is about 40% or $120; yours may be very different). So I have to come up with $120 for the taxing authorities out of my wages or savings, and slightly more in years 2-4. It would be nice if a bank would let you compound 60% of the interest and take the other 40% in cash, but I’ve never heard of one that would. Has anyone? Obviously this isn’t a huge problem on a $10K CD, but on a $100K CD, I would have to have extra withheld from each paycheck to make it work.

By: Jim

Jim — Tue, 07 Jul 2009 16:09:01 +0000

I don’t think any CD can be added to.

By: MoneyNing

MoneyNing — Tue, 07 Jul 2009 16:08:19 +0000

You can always just buy more CDs. In some way, it seems like account and organizational overload but if you open them within the same account, it’s just a list within the same screen which is manageable IMHO.

By: dilbert69

dilbert69 — Tue, 07 Jul 2009 16:05:17 +0000

Most CDs cannot be added to, so your $1 CD will remain $1 until maturity.

By: Dave M.

Dave M. — Tue, 07 Jul 2009 15:05:26 +0000

$400 for 20 minutes’ work, that’s why.

Just get a CD with a small penalty for early withdrawal, then your money’s not “locked up”. Most CDs I’ve looked at penalize 3 months’ simple interest on the amount withdrawn if there is a year or less left to maturity, 6 months for one to five years left.

So, if no emergency arises, you get a few hundred extra bucks in your pocket. Worst case scenario, something comes up and you have to dip into the CD, then the penalty drops your effective yield, but you’re almost certainly no worse off than you would have been with the savings account.