Savers prioritize APY and term length when choosing CDs
10 posts across 4 communities in the last 30 days; 40% from r/Banking.
“I have ~$15k in a CD that's just matured. I do like having it in a CD so that it can't be touched and remains savings, but the interest rate of ~4% isn't doing much in the way of creating more wealth. Are there any other methods of utilizing this fund that would be a better use…”
“If they’re calling to offer to renew your CD 2 months early, penalty free, because rates rose, then I fail to see what the issue even is. Just take the phone call, renew the CD, and move on with your life. 🤣🤣”
“I've got my first CD coming up on maturity and I only recently realized I probably shouldn't treat the renewal as a set it and forget it thing. My original thought was basically, money is already there, let it roll over and move on with my life. But if I'm understanding this…”
Users focus on Annual Percentage Yield (APY), minimum deposit requirements, and the CD's term length when selecting Certificates of Deposit. They are primarily concerned with maximizing returns on funds not needed for immediate expenses, and often disregard early withdrawal penalties.
SOURCES (24)
“Is one better than the other? I’m inexperienced (and nervous!), so I’ve been procrastinating with moving money out of a regular savings account into either HYSA or CD? About $20,000. Is one better than the other? I have an emergency acct too $20000 in a…”
“I have ~$15k in a CD that's just matured. I do like having it in a CD so that it can't be touched and remains savings, but the interest rate of ~4% isn't doing much in the way of creating more wealth. Are there any other methods of utilizing this fund that would be a better use of time than a CD? submitted by /u/__rainmaker [link] [comments]”
“I've got my first CD coming up on maturity and I only recently realized I probably shouldn't treat the renewal as a set it and forget it thing. My original thought was basically, money is already there, let it roll over and move on with my life. But if I'm understanding this correctly, the renewal can be into a new term and rate, which means whatever made the original CD attractive doesn't necessarily apply anymore. So what do you normally do when one is getting close to maturity”
“time frame as in how long i want the money in investments/a cd? for a cd i think 12 months as of right now, as i think that period of time seems to have the best apy (least @ triple a). for risk tolerance… i can accept the risk of putting money into the market, but i dont wanna put all of it in there as i dont wanna loss it all if things go badly. so id say a bit risk tolerant… job security… i dont have a job (yes i know, bum activity smh 😞. i just graduated college and am very much looking) so”
“I have about $200K of CDs rolling over soon (about 5% of my NW, this is my emergency buffer in case the world collapses). Should I roll them into a new CD at 4.30% for 9months? Or are money market funds better? If so, which product is best? I am in a high tax state. I am planning to keep about 60-70K of this liquid as well. My HYSA offers 3.50% - is there a better option than this? Thanks very much submitted by /u/cyclist_1490 [link] [comments]”
“I’d stop trying to call the next rate move. If this is for early retirement spending, split it across CDs that mature when you’ll need the cash.”
“We have some money (~$100K) from a maturing CD that we'd like to keep in CDs for early retirement expenses. It almost rolled over a couple of weeks ago at 3.5%, but we caught it and stopped the rollover, so it went back to savings. Now rates appear to be about 4.5%. Should we lock in, or are the rates gonna keep going up? submitted by /u/SingularityII [link] [comments]”
“Because rates will be going up again soon and the CD rates will inevitably follow. So your CD will be cheaper to them if they renew it now as opposed to January.”
“I’ve never seen a bank be ordered to keep something in the highest-yielding deposit account. In my experience it is up to the representative or trustee to renew CDs.”
“When they “call” the cd, they pay you interest for the 12 months but at 10 months? Or are they offering to renew the CD early but only if you roll it over within their bank?”
“With interest rates rising, is better to get CDs instead of the stock market?? submitted by /u/HornyAzMF [link] [comments]”
“I'm getting 4% on 6 months Many now are over 4%, some approaching 5%. Easy money, no trading, buying or extra book keeping.”
“Could just be a funding or balance sheet decision. The new CD rate doesn’t necessarily mean they want to keep the old liability.”
“If they’re calling to offer to renew your CD 2 months early, penalty free, because rates rose, then I fail to see what the issue even is. Just take the phone call, renew the CD, and move on with your life. 🤣🤣”
“some cds are callable. some are not. the ones that are callable have higher rates and they make it clear up front that they are callable”
“If the expectation is that rates are going to continue rising, it would be better for them to lock you in for a year at today’s rates, than lock you in 2 months from now at a higher rate, right?”
“At my FI, this is exactly the case. We'd rather eat the extra .5 in interest because we can lend that money out and earn more on it.”
“I just had a 1 year CD called at 10 months. I can understand it when CD rates fall. But in this case, the bank is now offering 1-yr CDs at .75% higher than what they were paying me. Why would a bank do this--cash out my cheaper CD and pay for a more expensive one? I am OK with it as I can just re-purchase a new one at the higher rate. I just can't figure out why the bank would not keep my cheaper money and use that for a couple more months. They are a large US bank and I am sure these small,”
“Honestly, just choose the highest APY and a term that makes sense for you. CDs are basic, don’t go chasing the highest APY every 6 months unless the difference is drastic or you have hundreds of thousands in that CD where the small difference in APY would make a big difference at the end of the CD term and if that’s the case tho, then you have bigger issues”
“Forgive me if this is a rudimentary question. I’m considering investing about 50% in cds, with interest starting on rung one of 4.3% and increasing to 4.75 on rung 5. The calculator is stating this will provide an annual cash flow of 2315. Does that mean that at the end of 5 years, I will have 11,575 in interest? submitted by /u/TraditionalCup4005 [link] [comments]”
“These are two possible reasons I suppose: if it's callable and you don't want to take that risk if the minimum quantity is more than you want to buy But otherwise, is there any reason you shouldn't pick the highest yielding brokered CD that's available for your desired time duration? I haven't seen ratings or anything on these CDs that could sway my decision one way or another. submitted by /u/blackratsnakes [link] [comments]”
“I used to have CDs, but then I realized I’m in California so it’s a better move to get treasury bonds and treasury-only funds: slightly lower rate perhaps but no state income taxes mean they still win in real terms (at least as of when I last did the math).”
“For me, the same things mentioned already: the APY, the minimum deposit, and the term. I go for the higher APY. It's money I don't need for immediate expenses and I might as well get the highest APY. I'm not concerned with early withdrawal penalties because I'm cautious and don't put in the money I need for immediate expenses. Even a penalty wouldn't be a disaster; I'd only lose a few months' interest and keep most of the principal. I also like to keep my CDs at m”
“The only time we used CDs in planning were as short term defined purpose future projects. Putting in a fence in the spring with 10k? Throw it in a 10m CD. Buying a car next summer? Put it in a 12m CD. Have money for a trip scheduled for December? Throw it in a 3m CD. Never just go to the bank and say what’s your best rate CD. It’s a failure to plan”