Should I renew

[Duchesse]

In about two weeks I have a $20k 6month CD maturing.( I put it there so I could think.) Should I renew the CD?I'm considering laddering. GMAC has a 5.30% CD. Does anyone know of any higher rates? I'd like to know how they compare to the T-bill. When it comes to T-bills, I've heard of them but I need to do more research. I've looked at Vanguards funds, even though they seem to come hightly recommended, I can't seem to make up my mind. I lost money with mutuals a few years ago. I'm ULTRA conservative. I'd rather be safe than sorry. In the story of the Turtle and the rabbit, I'm the turtle by choice, slow but steady.

Any suggestions?

[JoyJoy]

Re: Should I renew

Bankrate.com has good current information about CD rates. They also have a "what if" scenario on CD laddering. You just enter your information and they give you an example of how to make it work.

Good luck to you whatever you choose to do.

[sweeps]

Re: Should I renew

GMAC's 1-year CD is 5.3%. 6-month is 5.1%. Very good rates. I like JoyJoy's suggestion to ladder. You could put most of the money in the money market (4.75%) and some in a CD every month until it's all laddered.

E*Trade's rates are very competitive too. 6-month is 5.21%. 1-year is 5.3%.

[Duchesse]

Re: Should I renew

GMAC's 1-year CD is 5.3%. 6-month is 5.1%. Very good rates. I like JoyJoy's suggestion to ladder. You could put most of the money in the money market (4.75%) and some in a CD every month until it's all laddered.

E*Trade's rates are very competitive too. 6-month is 5.21%. 1-year is 5.3%.

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I should buy a CD every month? How much should each one be? What intervals? 3mo, 6mo, 9mo, 12mo, 15mo, 18mon, etc. like that? That's what I thought. Correct me if I'm wrong. Any suggestions would be appreciated and considered from all, thanks.

[poundwise]

Re: Should I renew

Just FYI...

Bank Of Internet USA (www.bofi.com) also offers 5.31% APY on a 12 month CD.

This seems to be the current ceiliing for CD rates.

[sweeps]

Re: Should I renew

I should buy a CD every month? How much should each one be? What intervals? 3mo, 6mo, 9mo, 12mo, 15mo, 18mon, etc. like that? That's what I thought. Correct me if I'm wrong. Any suggestions would be appreciated and considered from all, thanks.

It depends on how quickly you might need the money. If there's a chance you'd need to access some of the money within 30 days, then you want a CD to mature every month. If you can hold out longer, then you could have one mature every 3 months.

There are lots of ways to get a ladder started. Here's one possibility. (For simplicity, I'm going to assume your balance is $18,500.)

May: Deposit $1,500 each in a 3-month, 6-month, 9-month, and 1-year CD, and the rest ($12,500) in the MMA.
June: Deposit $1,500 each in a 3-month, 6-month, 9-month, and 1-year CD. You now have $6,500 in the MMA.
July: Deposit $1,500 each in a 3-month, 6-month, 9-month, and 1-year CD. This leaves you $500 in the MMA (to meet the minimum balance).
August: Roll the 3-month CD from May into a 1-year CD.
September: Roll the 3-month CD from June into a 1-year CD.
October: Roll the 3-month CD from July into a 1-year CD.
November: Roll the 6-month CD from May into a 1-year CD.
December: Roll the 6-month CD from June into a 1-year CD.
January: Roll the 6-month CD from July into a 1-year CD.
February: Roll the 9-month CD from May into a 1-year CD.
March: Roll the 9-month CD from June into a 1-year CD.
April: Roll the 9-month CD from July into a 1-year CD.
Now you have 12 1-year CD's, with one maturing each month.

[poundwise]

Re: Should I renew

I'm not disputing anything, I just wonder, don't the higher rate CDs require minimums and aren't some of those $5K, $10K? If you buy multiple $1500 CDs won't that potentially cost you some interest earned?

[sweeps]

Re: Should I renew

Currently GMAC's CD rates are the same for a $500 deposit or a $5000 deposit. But your point is well-taken, that could change in the future.

[WellManicuredMan]

Re: Should I renew

CD laddering is a great way to protect yourself from changing interest rates and getting more interest by purchasing longer term CDs...

However... for those that have done this (I haven't), isn't it a pain to have to keep closing a matured CD and opening a new one? What's worse, don't you have a lot of time where you aren't making any money between waiting for the check to arrive from the closed CD and opening a new CD? I just closed a matured CD from E*trade and they told me on the phone it would be 7-10 days to get it in the mail! If you add that up over all your CDs that are maturing once a month, that is a lot of time you aren't making any money. You can do wire transfers from E*Trade but they charge you!

And to the original poster, you might want to consider investing in SPY (for conservative investors). Here is a two year chart. You will probably make 7-8% per year without much risk.

[sweeps]

Re: Should I renew

Most banks roll the CD over automatically. You have a window of time in which you can notify them you want to withdraw the money without penalty.

[poundwise]

Re: Should I renew

I linked to this from Jeffrey's PF Blog. This site has info on a 5+% savings account and 5.4+% CDs. Might be worth checking out.

http://bankdeals.blogspot.com/

[Duchesse]

Re: Should I renew

I want to thank all of you for your advice. I have visited all of the sites recommended and then some.

For anyone in the same boat as I am surf over to interest.com as well. They have a great calculator.

My funds mature on the 15th of May so I had better decide.

I already purchase SPY, DIA, and QQQQ monthly in my IRA.



GMAC and Pentagon Federal Credit Union are the clear winners.

Anyone here have any personal experience with their (Pentatgon's) online banking?

[WellManicuredMan]

Re: Should I renew

Most banks roll the CD over automatically. You have a window of time in which you can notify them you want to withdraw the money without penalty.

I didn't think it was possible to roll a CD into a different term length but I could be wrong. I thought you're only options were to do nothing and the CD would renew for the same term or withdraw the funds and close the CD.

[Ima saver]

Re: Should I renew

I think you are right!

[sweeps]

Re: Should I renew

For a CD of different term, you're right, more would be involved. But I would be very surprised if a bank like GMAC required you to close your CD, withdraw your money, wait for it to post, deposit the money back, wait for that to post, and then open another CD. I could be wrong, though, I've never done it.