CD rates on the rise

[Jim_n_NYC]

On 10/7/2022 at 10:25 PM, Frequentflier said:

I've been buying T-bills on Fidelity and Schwab - secondary market mainly. For as short as 3 months I can get over 3% and the interest is not taxable at the state level.  And of course if someone should need to liquidate early its easier to sell a T-bill than cash out a CD early.

I'm glad you brought this to my attention.  I have a Fidelity account mainly cuz that's where my company has my 401K.  I just checked the rates there for the T-bills and the new issues are at 3.22% for the time frame I'm looking for (about 3 months) and the CD rates are anywhere from 3% to 3.3%.  So, almost exactly the same.  If I were buying these in a taxable account, being in NYC, I'd go your route and get the non-state & local tax treasuries for sure.

[BuffaloKyle]

On 9/21/2022 at 9:57 AM, BuffaloKyle said:

And now it just went up to 2.35%! You can get higher than that too from looking at that website I posted. And it'll go up again soon with another federal interest rate hike today.

My savings account just went up again to 3.00%! Really will be enjoying looking at my monthly interest. See that's why I'm not interested in cd's until they are done raising the federal interest rate. If I would have bought that 18 month cd in the first post on here in early August for 2.75% I'd be so mad right now having my money locked up at that rate. 

Edited October 20, 2022 by BuffaloKyle

[mike carey]

2 hours ago, BuffaloKyle said:

My savings account just went up again to 3.00%! Really will be enjoying looking at my monthly interest. See that's why I'm not interested in cd's until they are done raising the federal interest rate. If I would have bought that 18 month cd in the first post on here in early August for 2.75% I'd be so mad right now having my money locked up at that rate. 

My savings and transaction accounts are paying 3.2% now, haven't looked at term deposits. (I realise that I'm talking about Australia not the US.)

[Jim_n_NYC]

As an update to my Oct 10 post above, the T bills in my Fidelity account (for the 13 week which equates to 3 months bills) that I purchased when the rate was listed at 3.22% executed with an effective rate of 3.52%.  Not sure if that is because rates moved up while I waited for the order to execute or it was in the vagaries in how these things work.

[+ augustus]

2 hours ago, Jim_n_NYC said:

As an update to my Oct 10 post above, the T bills in my Fidelity account (for the 13 week which equates to 3 months bills) that I purchased when the rate was listed at 3.22% executed with an effective rate of 3.52%.  Not sure if that is because rates moved up while I waited for the order to execute or it was in the vagaries in how these things work.

You confused the coupon rate of the original issued bond with the present market rate of 3-month bills.

[Chads]

I bonds are paying 9.62% if you buy them before October 31st. $10,000.00 max per calendar year unless you buy another $5k through your tax return.  Must buy online for the $10k through treasurydirect.gov

You can cash in after 12 months and forfeit 3 months interst or no penalties after 5yrs, good for 30 years and tax deferred until you cash them in.

[Kevin Slater]

2 hours ago, Chads said:

I bonds are paying 9.62% if you buy them before October 31st. $10,000.00 max per calendar year unless you buy another $5k through your tax return.  Must buy online for the $10k through treasurydirect.gov

You can cash in after 12 months and forfeit 3 months interst or no penalties after 5yrs, good for 30 years and tax deferred until you cash them in.

Don't wait til the last minute; allow time for processing, and the 29th & 30th are weekends.

Kevin Slater

[+ augustus]

Brokered CD's purchased through Fidelity/Charles Schwab are hitting 5%.

[+ The Big Guy]

2 hours ago, augustus said:

Brokered CD's purchased through Fidelity/Charles Schwab are hitting 5%.

I agree this is a good way to go.  Just be careful that many of the longer term CD’s are callable after a short period of time and you may be forced to reinvest at lower rates later.  It depends on the individual situation but I prefer to take a modestly lower rate for CD’s that can’t be called.  

[Jim_n_NYC]

54 minutes ago, The Big Guy said:

I agree this is a good way to go.  Just be careful that many of the longer term CD’s are callable after a short period of time and you may be forced to reinvest at lower rates later.  It depends on the individual situation but I prefer to take a modestly lower rate for CD’s that can’t be called.  

I've actually found that buying the T-bills is a little better than the offerings in the bank CD's at Fidelity.  Since rates are still going up I've been buying 3 month CD's but took a look at the equivalent T-bills and the rate was a little higher on the same day (max bank was 3.75 and T-bill was 3.98).  I did a test buy beginning of Oct and the rate went up from the time I placed the order until the time it executed, which was nice (so that 3.98 ended up being over 4%). 

[Bucky]

How quickly do either the T-Bill or CD rates increase after yet another bump by the Fed which will happen today?  

Will we see corresponding increases within a couple days?

[Jim_n_NYC]

1 hour ago, Bucky said:

How quickly do either the T-Bill or CD rates increase after yet another bump by the Fed which will happen today?  

Will we see corresponding increases within a couple days?

No idea.  I almost put in an order a few days ago for 3 month treasuries but stopped when I realized the Fed meeting was this week.  I'm going to watch the next couple of days to see how it goes.

[+ augustus]

3 hours ago, Bucky said:

How quickly do either the T-Bill or CD rates increase after yet another bump by the Fed which will happen today?  

Will we see corresponding increases within a couple days?

You won't.  Today's rate increase was already anticipated by the bond market and was already taken into account.  In fact, short term Treasuries (a year or less) fell a few basis points today after the Fed announcement.

[Jim_n_NYC]

This afternoon, one of the savings accounts I have a large chunk of dough in went from 3.03% to 3.6%.  Of course, no idea if that is related to the Fed hike.  The 8 week treasuries are almost up to the rate that the 13 week ones (that I tend to buy atm) were last week.

I think the 13 week treasuries come out on Thursday, so should see if the rate increased from the ~4% rate of my last buy.

[VictorXX]

I love Fidelity and their rates

[Bucky]

BMO Bank now has 13 month CDs at 4.5%.  That's the highest I've seen so far.  

[Guest]

On 11/1/2022 at 4:55 PM, Jim_n_NYC said:

I've actually found that buying the T-bills is a little better than the offerings in the bank CD's at Fidelity.  Since rates are still going up I've been buying 3 month CD's but took a look at the equivalent T-bills and the rate was a little higher on the same day (max bank was 3.75 and T-bill was 3.98).  I did a test buy beginning of Oct and the rate went up from the time I placed the order until the time it executed, which was nice (so that 3.98 ended up being over 4%). 

Agreed.  Treasury securities have liquidity and appreciate in value if rates go down.    While they also go down in value if rates go up, it’s moot in comparison to a CD since both will be paid at par at maturity and CDs have no marketability until matured.  

Edited November 20, 2022 by BnaC

[Jim_n_NYC]

22 hours ago, Bucky said:

BMO Bank now has 13 month CDs at 4.5%.  That's the highest I've seen so far.  

I'm going to stick with shorter term bonds for now since I don't think rates are done rising yet.  I just put in an order for treasuries that expire mid Feb and the stated rate was 4.127%.  The thing I need to do, though, is to space this out a little more.  Currently, all my fixed income buys expire in the same month...I'd like to have 1/3 of them expire each month while I'm doing the short term bills game.

As a reference, the current highest yield 3-month CD rates are 4.0% on Fidelity.

Edited November 20, 2022 by Jim_n_NYC

[mike carey]

Following the RBA's Tuesday increase of the cash rate by 25 basis points to 3.1%, my bank has increased the rate it's paying on its transaction and savings accounts to 3.7% from mid-December. That's about as much as it's possible to earn on a bank term deposit here, and we have no tax-advantaged government bonds or the like and no simple methods of investing in those that are available, such as those in the US discussed in other threads here.

(And in a nod to the thread about credit cards, and the discussion there about cash-back cards, this bank sells gift cards at a discount to their face value with, for example, those for our two biggest supermarket chains selling at discounts of 3% for one and 4% for the other. This compares to an effective return of 1% if I use my credit card and redeem the reward points for gift cards, the only option apart from redeeming them for cash into my bank account which returns less.)

[handiacefailure]

On 11/20/2022 at 4:34 AM, BnaC said:

Agreed.  Treasury securities have liquidity and appreciate in value if rates go down.    While they also go down in value if rates go up, it’s moot in comparison to a CD since both will be paid at par at maturity and CDs have no marketability until matured.  

And if you live in a state with a high tax rate like I do, the Treasury interest isnt subject to state tax unlike a CD.   

[Cooper]

On 8/9/2022 at 3:20 PM, Cooper said:

For those of you who keep a savings account, check out the new CD rates at Citibank. Effective 8/9-8/15.

1 year 2.50%
1 year no penalty for early withdrawal 1.50%
18 month 2.75%

 

Was at Citibank today checking out the new CD rates.

12 month CD 4.15%
12 month no penalty CD 3.40%

Blackrock offers a 4.11% money market. That’s a flexible rate. I went with this one. 

[+ augustus]

6 month T-Bill is at 5%.

[jawjateck]

9 hours ago, augustus said:

6 month T-Bill is at 5%.

Uh huh.....I buy a 6-mo T-bill every week at auction, so I snagged this week at 5.03%. The 1 year is also above 5 now. The monthly auction is next week, and I'm buying it too. 

[+ FrankR]

22 minutes ago, jawjateck said:

Uh huh.....I buy a 6-mo T-bill every week at auction, so I snagged this week at 5.03%. The 1 year is also above 5 now. The monthly auction is next week, and I'm buying it too. 

Could you point us to a “how to” guide? I have the vanilla brokerage account, but never tried the auction purchase… 🤷🏽‍♂️

[jawjateck]

You can create an account at treasurydirect.gov. For those who caught last year's I-bond mania; it is the same account. It is linked to your bank account, and you can purchase bills, notes, or bonds directly from the US treasury on the days they auction the securities. It is considered a non-competitive purchase, but I started buying bills and notes last fall (3 month, 4 month, 6 month, 1, 2, 3 year), and I have always been assigned an interest rate a few basis points above where those securities are trading on the open market at the time. There are no fees. If it's a bill (one year or less), the bill is discounted on the date of issue, and then that amount plus the interest are automatically returned to your bank account when the bill matures. If it's a note (2 to 10 years), an interest payment is made to your bank account every 6 months, and the principal is returned to your bank when the note matures. Easy peasy!

You can view the list of upcoming auctions, and decide what you want to buy and when. They post interest rate results almost immediately after the auction, and the minimum purchase of any security is fairly modest. I've bought as little as 200 at a time; pretty sure you can go lower, and I've bought 10,000 at a time. Like I-bonds, the interest is subject to federal income tax, but exempt from state/local income taxes.

Edited February 17, 2023 by jawjateck