Here come the 5% CDs

[mahatmakanejeeves]

I was in a bricks and mortar branch of a bank last week to cash a check. There were flyers on a desk saying that the bank would be paying 2.96% or on CDs, depending on the amount and the time period. I hadn't seen such a flyer in quite some time.

Brett Arends's ROI

Here come the 5% CDs

Last Updated: Feb. 18, 2023 at 10:52 a.m. ET
First Published: Feb. 14, 2023 at 1:58 p.m. ET
By Brett Arends

Don’t touch that dial. If you’re looking for certificates of deposit, the interest rates on offer should be—here’s hoping—heading higher following the latest inflation numbers out Tuesday morning. ... You can already get 5% on a one-year CD if you shop around, and there should be more—and maybe better—on offer soon following the latest economic news, which has sent the money markets jumping around.

January’s inflation data came in higher than expected, and the markets were surprised by the news, even though Federal Reserve Chairman Jay Powell had basically told them this was going to happen at his press conference a couple of weeks ago. ... In response, the money markets now see the Fed hiking short term rates by a further 0.75% percentage points by the fall, and maybe by as much as a full point. That’s according to the market data tracked by the CME. ... That could take short term rates, currently 4.6%, over 5.5%.

Meanwhile, according to Bankrate.com, the national average at the moment for a one-year certificate of deposit is just 1.44%. ... No, really.

In America, it seems, it’s illegal for you to rob a bank, but not the other way around. ... As a result you need to shop around to get the best deals.

{snip}/div]

[OilemFirchen]

1. Discover is offering 4.25% 12-month CDs.

Current savings rate is 3.4%. My CU is paying 0.26%.

[underpants]

2. 💰💰💰

I need to look into this.

[Quakerfriend]

4. Just got one - thru Republic Bank-breakable, for 12 mo.

@ 4.3%. 😉

[multigraincracker]

5. 3 month Treasury bonds

At 4.695.

[Scrivener7]

6. I snagged a couple from Vanguard recently at 4.8 and 4.85%.

One year.

[sprinkleeninow]

7. I weighed tying up a few k's for 13 months at a great rate. But decided against

that bc I just opened a special savings account for 4.05 % and transferred funds from a money market paying much less.

[msongs]

9. just got 4.5 on 8 months at the credit union. nt

[SharonClark]

10. 4.65% at two credit union I use is so much better than the .80% they were paying just

13 months ago. Capitol One is advertising a CD for 5%.

[mahatmakanejeeves]

11. I was surprised. I hadn't known that the rates had gone up so much. NT

[kelly1mm]

12. Capital One was offering 5% 11-month CDs in early February. nt

[modrepub]

13. My Schwab

Had a 1 year CD pop up today @ 5%. Some shorter term ones coming in the upper 4s. Trying to be patient because they're bound to continue to inch upwards.

[progree]

14. "they're bound to continue to inch upwards". Yes, with metaphyical certainty

EDIT: this is old now: https://www.democraticunderground.com/111695370

Updated for the PCE inflation report that came out February 24:
https://www.democraticunderground.com/10143038482#post12

GRAPHS - Core PCE - Rolling 3 month, 6 month, and 12 month averages thru January 2023
https://www.democraticunderground.com/10143038482#post23

Definitely not a good time to "lock in" today's rates by going long term.

The next Fed meeting is March 21-22.

[mahatmakanejeeves]

15. 8 places you can now get a guaranteed 5% -- or more -- on CDs or savings accounts

8 places you can now get a guaranteed 5% — or more — on CDs or savings accounts

or

8 places you can now get a guaranteed 5% — or more — on CDs or savings accounts

Updated: March 2, 2023 at 11:08 a.m. ET
By Andrew ShillingFollow

Some banks and credit unions now offer rates 4x higher than the industry average. But will you meet the requirements?

{snip}

[wishstar]

16. Historically very unusual for short term CD's to pay more than long term

No doubt the "experts" are banking on a steep recession that will cause quick drop down from this year's higher interest rates so they don't want customers to lock in a high rate for very long.

None of my local banks are offering decent rates on any accounts other than just one short term CD. But for many years I have used online banks for savings instead to get better rates but they have also recently reduced long term rates in favor of short term.

Customers need to be very careful on these short term CD's and stay alert as to maturity dates since banks could drop interest rates drastically at maturity and customers are stuck if they miss the short grace period to change term or withdraw.

[progree]

17. Yes, I read yesterday the inversion between the 2 year and 10 year Treasuries is the

highest it's been since 1981 at 1.03 percentage points (the 2 year yield is 1.03 percentage points higher than the 10 year). And that's reflected in inversion in CD rates with shorter term paying higher rates than the longer term ones.

I look at this for current Treasury yields (scroll half way down, on the right)
https://www.cnn.com/business/markets/premarkets

And yes, 8 out of the last 8 recessions has been preceded by an inversion in the yield curve. (But not every inversion in the yield curve leads to a recession).