Author Topic: I did a stupid thing buying the wrong CD. Advice?  (Read 725 times)

Unionville

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I did a stupid thing buying the wrong CD. Advice?
« on: March 21, 2023, 02:01:43 PM »
Dave Ramsey calls it an stupid tax when you do something stupid and end up paying money you shouldn't have.

I recently did that. I bought (too much) of a 25 month CD for 3.69 from my credit union - before I realized rates these days on the market are in the mid 5's. It will cost me $90 to get out of it (the original gain would have been $780)

I can't decide if make sense for me to just keep it and get a low rate or pay the $90 stupid tax and get the cash out and invest it in a higher paying CD.

The difference in gain would probably only be about $230 ($320 - $90 fee)  from my rough estimate, which seems like not enough worth fretting over.  The biggest disadvantage is locking up the money for that long.

Any opinions on these kinds of stupid taxes? 

I think I was so impressed that CD's at my bank had gone from about nothing up into the 3's - I bought it immediately - without doing research or knowing much about CDs.
« Last Edit: March 21, 2023, 02:18:46 PM by TodayOhBoy »

cincystache

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Re: I did a stupid thing buying the wrong CD. Advice?
« Reply #1 on: March 21, 2023, 04:53:03 PM »
Don't beat yourself up. Do whatever leads to the best outcome from your current situation. I would probably cash it out and put it into something more attractive and/or more liquid.

Ally has a penalty free 11 month CD at 4.75%
T-bills on treasurydirect.gov are paying 4-5% depending on term
i-bonds are around 6.9%
longer term (2-5 year) CDs can pay around 5.25% through the brokerage of your choice (still FDIC insured)

Sounds like you have already done the calculations. If I could spend $90 to make an extra $230 and it only took me a few minutes of online "paperwork" why wouldn't you make the change? That's a pretty attractive hourly rate.


Unionville

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Re: I did a stupid thing buying the wrong CD. Advice?
« Reply #2 on: March 21, 2023, 05:15:46 PM »
Don't beat yourself up. Do whatever leads to the best outcome from your current situation. I would probably cash it out and put it into something more attractive and/or more liquid.

Ally has a penalty free 11 month CD at 4.75%
T-bills on treasurydirect.gov are paying 4-5% depending on term
i-bonds are around 6.9%
longer term (2-5 year) CDs can pay around 5.25% through the brokerage of your choice (still FDIC insured) 

Sounds like you have already done the calculations. If I could spend $90 to make an extra $230 and it only took me a few minutes of online "paperwork" why wouldn't you make the change? That's a pretty attractive hourly rate.

Really appreciate your advice!
« Last Edit: March 21, 2023, 05:17:51 PM by TodayOhBoy »