Author Topic: When do CD rates go up?  (Read 1325 times)

jpdx

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When do CD rates go up?
« on: December 24, 2018, 11:24:04 PM »
The Fed raised interest rates last week, but I haven't seen CD or savings rates at Marcus go up at all. How long after a Fed rate hike does it usually take for banks to offer better CD rates?

DaveSch

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Re: When do CD rates go up?
« Reply #1 on: December 25, 2018, 07:41:08 PM »
Not sure that is a good guide. A bank will raise rates when they find they need more reserves to make the loans against and they aren't attracting enough money at their present rates. But right now, there are lots of people heading towards CD's. Perhaps a stampede. This tends to push rates down.

I watch the Vanguard brokered CD's and in the last week, the shorter CD maturity rates have gone down a little, and the longer term CD's (2 years and out) have stayed steady.

I'm interested in up to one year, but right now the Vanguard money market is paying 2.25% p.a. (Prime MM a little more) So I'm waiting until they notch up and buying another one.

Dave

TomTX

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Re: When do CD rates go up?
« Reply #2 on: December 26, 2018, 05:02:37 AM »
Why not just buy T-bills directly on Treasury.gov?

All the recent auctions have the 1 year (52 week) at an equivalent yield (coupon equivalent) of a 2.6%CD or higher. it is run slightly differently as you purchase at a discount to face value and get face value when it matures.

https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=billrates

MustacheAndaHalf

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Re: When do CD rates go up?
« Reply #3 on: December 26, 2018, 09:08:34 AM »
Why not just buy T-bills directly on Treasury.gov?
Because their interface is a PITA!  I just found it annoying using their randomized keyboard and personal cipher.  But if you're considering buying from TreasuryDirect, it's worth taking a look at I-bonds.

TomTX

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Re: When do CD rates go up?
« Reply #4 on: December 27, 2018, 06:17:10 AM »
Why not just buy T-bills directly on Treasury.gov?
Because their interface is a PITA!  I just found it annoying using their randomized keyboard and personal cipher.  But if you're considering buying from TreasuryDirect, it's worth taking a look at I-bonds.

I bought i-bonds a bit over 10 years ago, yield is currently a bit more than 3.5%. Not impressed with the current yield

chasesfish

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Re: When do CD rates go up?
« Reply #5 on: December 29, 2018, 06:55:57 AM »
The Fed raised interest rates last week, but I haven't seen CD or savings rates at Marcus go up at all. How long after a Fed rate hike does it usually take for banks to offer better CD rates?

Banker here.  CD rates are dependent on a bank's funding needs.  The best rates are going to be available through Vanguard and Fidelity's brokerage platforms via brokered CDs.  They're also nice in that they can be resold instead of terminated with a fixed prepayment fee.

MustacheAndaHalf

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Re: When do CD rates go up?
« Reply #6 on: December 30, 2018, 01:21:15 AM »
Why not just buy T-bills directly on Treasury.gov?
Because their interface is a PITA!  I just found it annoying using their randomized keyboard and personal cipher.  But if you're considering buying from TreasuryDirect, it's worth taking a look at I-bonds.

I bought i-bonds a bit over 10 years ago, yield is currently a bit more than 3.5%. Not impressed with the current yield
I guess the key question is "compared to what?"
Vanguard Total Bond Market pays 3.3% now, and it's subject to state tax (unlike I bonds)
10 year Treasury bonds are paying 3.0% now.

DreamFIRE

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Re: When do CD rates go up?
« Reply #7 on: December 30, 2018, 09:14:53 AM »
i-bonds are limited to $10K per person per year.   So, that's $10K total for my household.  That's too small of an amount, and they don't pay much over inflation, anyway.

TomTX

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Re: When do CD rates go up?
« Reply #8 on: December 30, 2018, 11:06:08 AM »
Why not just buy T-bills directly on Treasury.gov?
Because their interface is a PITA!  I just found it annoying using their randomized keyboard and personal cipher.  But if you're considering buying from TreasuryDirect, it's worth taking a look at I-bonds.

I bought i-bonds a bit over 10 years ago, yield is currently a bit more than 3.5%. Not impressed with the current yield
I guess the key question is "compared to what?"
Vanguard Total Bond Market pays 3.3% now, and it's subject to state tax (unlike I bonds)
10 year Treasury bonds are paying 3.0% now.

I should have been clearer. I'm fine with my I-bond.

I'm not impressed with the yield on an I-bond if I bought a new one today - it would be 2.83%.

TomTX

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Re: When do CD rates go up?
« Reply #9 on: December 30, 2018, 11:07:03 AM »
i-bonds are limited to $10K per person per year.   So, that's $10K total for my household.  That's too small of an amount, and they don't pay much over inflation, anyway.

There is a workaround for the limit: Buy the $10k in i-bonds, overpay your taxes and get your refund in the form of an i-bond.