Don't buy a long term CD right now

coffeebreak · #1 (**permalink**) 03-12-2005, 04:22 AM

Inflation pressures are fairly high in the economy, so personally I don't think it would be a good idea to get a CD (Certificate of Deposit) for any period longer than 2 years. I am not sure I would go beyond 1 year.

Once you get a CD you are locked in to that rate for the term of the CD. If you jump ship you will usually lose half the earned interest.

PRICEPLUS · #2 (**permalink**) 03-12-2005, 07:04 AM

Sounds like excellent advice given the present state of uncertainty and rising gas prices.

bluek9 · #3 (**permalink**) 03-14-2005, 06:13 AM

Not sure if I totally agree with this "wait-wait-wait". Yes, I agree with the postings that CD rates will probably be going up for the foreseeable future. I would definately wait 8 more days as the Fed meets on 3/22. But if we wait forever one's saving will sit in the miserable bank acct's rate too long. My answer?, you guessed it...ladder your CD's. That is, take out each a 1, 2 , 3 & (maybe) a 4 yr CD. Then as each matures turn them over (ie renew them) each year at the higher 4 yr rate. So, in effect, each will only be a 1 yr CD but you will receive the 4 yr rate. That way each year you take advantage of any rate increases & not feel like you missed out.

coffeebreak · #4 (**permalink**) 03-14-2005, 06:37 AM

Quote:

Originally Posted by bluek9

Not sure if I totally agree with this "wait-wait-wait". Yes, I agree with the postings that CD rates will probably be going up for the foreseeable future. I would definately wait 8 more days as the Fed meets on 3/22. But if we wait forever one's saving will sit in the miserable bank acct's rate too long. My answer?, you guessed it...ladder your CD's. That is, take out each a 1, 2 , 3 & (maybe) a 4 yr CD. Then as each matures turn them over (ie renew them) each year at the higher 4 yr rate. So, in effect, each will only be a 1 yr CD but you will receive the 4 yr rate. That way each year you take advantage of any rate increases & not feel like you missed out.

I didn't say, wait, wait, wait. My only point is that buying a long term CD right now is not a good idea because inflation pressures are high and the fed is going to raise the rates again. I also didn't say starting a ladder was a bad idea.

loveofpets · #5 (**permalink**) 03-14-2005, 11:57 AM

I have a 5 laddered cd's through ING direct - earning from 2.5 to 4.5% interest. My first one comes up for renewal in a month or so, so this is great news that the rates are expected to increase. I can't wait! And then, I can open up even more as I have more in savings than I need....yippee

sbsake · #6 (**permalink**) 03-28-2005, 09:50 PM

Pay close attention to the market when purchasing CDS or Cap 1 also has a no regrets cd that allow you to reenter in the same cd at higher rate once during the term of the cd check it out www.capitalone.com

loveofpets · #7 (**permalink**) 04-04-2005, 07:32 AM

If anyone has relatives in Vermont who are members of the VERMONT FEDERAL CREDIT UNION, they now have CD's earning 5% interest -- I believe it is a 5-yr CD; but if you have extra money that you want to invest and don't need it for your emergency fund, it's earning more interest there than other places. The only caveat is that you do have to be a family member of a VTFCU member.