Author Topic: American Express CDs  (Read 2602 times)

daverobev

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American Express CDs
« on: September 29, 2023, 11:53:16 AM »
I was just messing about on their site, and noticed they offer CDs and savings accounts - so I thought I'd check the rates.

11 month - 5%, not too bad
24 month - 4.75%, all right
...
36 month - 1.15%

Hold on.

12 months is 4.25%... which gives less interest than 11 months. 18 months is 1%, wow.

48 months gives $489 total, while 11 months gives $446, on $10k. Uhhhh.

I just wonder how many applications they have for 36 month ones!! You get almost $100 more on $10k for not keeping your money with them for an extra two years!

Scandium

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Re: American Express CDs
« Reply #1 on: September 29, 2023, 02:45:06 PM »
I suppose Amex has use for short term cash, but not so much long term?

Discover offers 4.3% on 36 month
https://www.discover.com/online-banking/cd/

aasdfadsf

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Re: American Express CDs
« Reply #2 on: September 30, 2023, 01:38:25 AM »
You get close to 5% on a savings account. I have never understood CDs. If you're worried about interest rates going down, then buy bonds. 

snic

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Re: American Express CDs
« Reply #3 on: October 04, 2023, 08:26:58 PM »
You get close to 5% on a savings account. I have never understood CDs. If you're worried about interest rates going down, then buy bonds.

Savings account rates are around 5.0 to 5.25%. One year CDs currently pay 5.65% and higher. CDs are federally insured. Bonds are not. Those are the reasons for buying CDs.

BTW, the OP's observation of wildly disparate interest rates on products from the same bank isn't limited to American Express. Any number of banks offer reasonably high rates on one or two CD terms, and crap rates on everything else. Makes little sense from math perspective, but maybe more sense from a marketing perspective. It's the same reason why supermarkets advertise a few very inexpensive sale items every week: these are teasers to get you to walk in the door. Similarly, move some of your money to an 11 month Amex CD, and surprise surprise, when it rolls over in 11 months, the rate will be around 1%. They are banking on a not insignificant fraction of people just not bothering to move it out at maturity.
« Last Edit: October 04, 2023, 08:32:02 PM by snic »

ixtap

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Re: American Express CDs
« Reply #4 on: October 04, 2023, 08:56:40 PM »
You get close to 5% on a savings account. I have never understood CDs. If you're worried about interest rates going down, then buy bonds.

Before HYSA, CDs were generally a good deal. Now HYSA mostly fill that role without the limitations of CDs

TheGrimSqueaker

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Re: American Express CDs
« Reply #5 on: October 05, 2023, 03:24:40 PM »
You get close to 5% on a savings account. I have never understood CDs. If you're worried about interest rates going down, then buy bonds.

Before HYSA, CDs were generally a good deal. Now HYSA mostly fill that role without the limitations of CDs

CDs have one other advantage: relative illiquidity until the maturity date. You can't just dip into them when the mood strikes. That can be useful for people early in the Mustachian process, or who have overly dependent or parasitic people in their lives. Those aren't as easy to cut as cable.

eyesonthehorizon

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Re: American Express CDs
« Reply #6 on: January 04, 2024, 09:57:11 AM »
You get close to 5% on a savings account. I have never understood CDs. If you're worried about interest rates going down, then buy bonds.

Before HYSA, CDs were generally a good deal. Now HYSA mostly fill that role without the limitations of CDs

CDs have one other advantage: relative illiquidity until the maturity date. You can't just dip into them when the mood strikes. That can be useful for people early in the Mustachian process, or who have overly dependent or parasitic people in their lives. Those aren't as easy to cut as cable.
I keep seeing penalty-free CDs & havenít been able to figure out how those work as a business model - is the rate bump just on the assumption that most people choosing one wonít withdraw, even without a penalty?

Zamboni

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Re: American Express CDs
« Reply #7 on: January 18, 2024, 05:46:00 AM »
I have one "penalty free" CD at an online bank, and I can't for the life of me figure out how to get the money out of it early. So I guess no penalties for me because they've got an iron grip on the money for a year.