Unusual CD Offer from Capital One

[Maxwell76]

To sort of follow-up on Brig's thread. Capital One is now offering a Certificates of Deposit with a rate of 5.30% for 7 years with a $5,000 minimum.

I find that kind of unusual. Even at 5.30% who would lock their money in for 7 years? Especially in today's environment?

[brig2221]

I am not a banking expert by any means, but to me, that wreaks of a bank trying to shore up their balance sheet. It probably doesn't do the banks books much good if they can get some new deposits for only 6 months at a time. However, if they can get a good amount of people on the books for a 5 year term, I am sure that would do wonders for their books.

That is purely speculation on my part, but I can't think of any other explanation here. I doubt it will have much success, as you yourself just said, why would anyone lock up their money for 5 years?

[jIM_Ohio]

If I was retired, I would take the 5% guarantee with any portion of my cash allocation for 5 years. This is an example of where CDs will be a better mid-long term investment than money markets, savings, and possibly bonds.

[DebbieL]

Here in Canada, if the term is longer than 5 years it is NOT CDIC (our equivalent to FDIC) insured. Please check into this before you invest.

[Maxwell76]

Thanks for the responses.

What brig and DebbieL said concerns me a little as I have an account with Capital One... That is where I keep most of my savings. Should I consider pulling out?

[bigsaver]

What are the penalties for breaking that cd early?