Put EF in CD

[disneysteve]

I know no one knows the future but how long do you think we will be able to get 5 year cd rates like 4.40%? I got an offer from Chase to open a checking and savings account for a $900 bonus. Just have to put $15k in for 90 days. Would you do that or just put money in a cd now?

Long term rates have already come down from a few weeks ago. I think we’ve seen the peak. Now is the time to lock in those long durations before they drop even more. Inflation has fallen sharply. The Fed may still bump rates up a bit but the big jumps are done and CD and T bill rates already reflect that.

[scfr]

I would put some but not all of it in CDs or I-Bonds. You could do something like keep $5K in cash (plus keep adding that $900 per month), $5K in I-Bonds, and $5K each in CDs with terms of 2, 3, and 4 years. Go for what seems like the best combination of highest rate + lowest EWP (early withdrawal penalty) that you can find. Check the Deposit Accounts web site and make sure you enter your local area. If you live on in a town bordering a state line, enter the info for both your nearest big city and your state. Consider using a credit union if they offer a better rate than the banks - especially if they participate in the Shared Branch network.

When I was a personal finance newbie, CDs worked really well for me as a savings vehicle because the money was there if I really needed it, but the penalty for cashing out served as a deterrent to using the money for anything other than a true emergency.

Edit to add: Only you know your risk factors are and what the odds are that you'll actually need your EF. If I had teen drivers who liked to speed and drove sports cars, and my house was in a flood plain, I'd keep it all in cash. I'm exaggerating of course, but I think you get the idea.

[disneysteve]

$5K each in CDs with terms of 2, 3, and 4 years. Go for what seems like the best combination of highest rate + lowest EWP (early withdrawal penalty) that you can find. Check the Deposit Accounts web site and make sure you enter your local area. If you live on in a town bordering a state line, enter the info for both your nearest big city and your state. Consider using a credit union if they offer a better rate than the banks - especially if they participate in the Shared Branch network.

Also look at brokered CDs through your brokerage like Vanguard, Schwab, Fidelity, or whoever. Brokered CDs work slightly differently than buying direct from the bank but are essentially the same and FDIC insured and they often pay higher rates. We currently have 4 brokered CDs at Vanguard totaling 105K maturing between 9/23 and 12/25.

[docstudent]

At the moment, Robinhood has a 4% rate for uninvested funds. There is a small fee of $5 per month, and you get immediate access to funds if needed. I’m earning about $120, it’s something to consider.

[disneysteve]

At the moment, Robinhood has a 4% rate for uninvested funds. There is a small fee of $5 per month, and you get immediate access to funds if needed. I’m earning about $120, it’s something to consider.

I wouldn’t pay $5/mo for that. You can earn that much or more elsewhere without the fee.

[docstudent]

It comes with access to other stock related information and it’s a good deal if you have a Robinhood account. There are several other perks if you invest…

[terri77]

Capita One has an 11 month CD for 5.00%. Rate is good until 3/14/23.