We just transfered out CD's to our regular Savings account. We too were offered a better rate for longer than I wanted to tie the money up. Unless you know you won't need this money for 10 years, it might be ok. Is it with a bank--FDIC insurance? The way banks are going I sure would not put it anywhere unless it was insured. One suggestion to me by a friend was to buy CENEX stocks. That company seems pretty stable, anyway in ND it is. Of course we have so much oil people here have to be real careful with oil stocks/businesses. Here today, gone tomarrow. Like I said, at this time I am not opening any CD's with any bank. But you might check credit unions.
Good luck
By the way, is this bank on line? If so, is it insured and will the money stay here or go ????

Went to this bank, and in the fine print they mentioned fees? But did not clarify them. Personally I would not feel confortable with any bank that is online only. I like printed stuff, in my hands from a person.

mariend.....I have "many" cd's. I tie them up because I don't need them. BUT.....if I ever wanted to withdraw early they charge a small penalty. Yes, I bank long distance for CD rates, just not "out of the country". Yes, FDIC is important. Discover, is the Discover credit card company. Even State Farm insurance has a bank with cd's. Capitol One has cd's.

Right now I would break it up into multiple lenth CD's. Although you can get a bigger rate for the longer,larger, amount sooner or later hopefully the rates will go up. I made an error when I rolled two separate retirement benefits and tied one up for too long of a period.

Be very carefully to look at the penalties because some if you need to take the money out early can reduce the amount below the original. When I was looking to change rates on my CD's I came accross one bank that kept any income for the first 5 years plus an additional fee. This was one of the nation wide banks and not just a local one.

There is no way I would lock up money for 10 years at 3.7%. You may as well just pay down your mortgage at that rate.

Personally, I would just suck it up for a year and keep rolling it into 6 month cd's. The the rate is pathetic, but you are better off having 1 pathetic year and 9 good ones than committing to 10 bad years.

billl.......We have no debt. :0) DINKS = double income no kids

My cd's are divided up. This isn't my only one.

I'm not greedy, just looking for a higher rate if it's out there. Any help in that area is appreciated. I haven't checked with investment brokerages, yet. Anybody know what Merrill Lych is offering? Thx.

My point was that there are no good rates on CD's right now. All you are doing is choosing between bad rates. There is almost no chance that interest rates stay this low for the next 10 years, so CD rates will get better. The "best" rate in the country right now is still going to look like a stinker when that happens. Your best bet is just to park your money in short term investments so you can take advantage of the higher rates when they come back.

A link:

Here is a link that might be useful: Here you go

dc_pilgrim.....thanks.....I saw that & bankrates.com. Neither list 3.7% so I've already beat those rates. Still looking.

billl.....a 10 yr cd is my idea of a short term investment, because it's easy to get out of. :0) AND interest rates have been "this" bad for 2 years now, good thing I locked in for 10yrs back then. :0)

maifleur.... The Discover CD charges 9mo simple interest for early withdrawal & no other fees associated with having a CD there, unless U want the money wired to U.

So I'm really only committing to 9months. The penalty for early withdrawal.

Besides cds, do you own other types of investments? Just curious.

I'm with bill - I wouldn't tie my money up in a cd for 10 years....just about ever. But then I believe in the relationship between risk and reward.

I'm going to call this place tomorrow. 4% would be nice.

Here is a link that might be useful: Apple Federal Credit Union 4%

I've never withdrawn early, but understand that incurring the penalty could be justifiable. Is the penalty subtracted from the interest earned, so that the interest less the penalty is the total amount reported on the 1099?

Usually, the penalty represents a number of months of interest. Example cited above is a 9 month penalty for an early withdrawal.

So, if you withdraw at month 9, they simply take away all the interest you earned as the penalty; however, if you withdraw the funds at month 2, they will take the 2 months of interest they have paid you plus 7 months worth of interest out of your initial deposit.

Penalties should be shown on 1099-INT in Box 2 (Box 1 is the gross interest income).

There are times when breaking a CD early might make financial sense to the depositor. Banks sometimes waive penalties for clients depending on the circumstances.

Thanks, cindyb, that was helpful. Many taxpayers might not be able to deduct the penalty. That would be an important part of the calculation when considering whether to incur the penalty. You could pay tax on more income than you actually netted from the CD.

Update: I called Apple Federal Credit Union, offering the 4%. They have a 3.75 year interest penalty on their 10 yr cd.....PLUS....you have to be a member which will cost $20 to join a group that will be my sponsor. :0) "IF" I leave my money in for 10 years the .03% more interest I earn(calculated as simple interest) is $4500. So the gain is worth it, maybe....but "what a hassle"! :0)

Nicole, if you leave the money in for ten years, you would not be paying a penalty at all. The term is ten years. If you left it in you would have pretax income of about $45,000 on an initial investment of $100,000. That is a pretax income number.

You only have to pay the penalty if you withdraw before the 120 month term. The APY, net of the penalty would be 0.250%, not 0.030%

The risk you are taking is that deposit rates are currently about as low as they can get and will likely increase before the end of the term. Let's say this happens in two years, that means you will have invested your money for two years in an instrument with an APY of essentially 0.250%.

I think it's a pretty safe bet that rates will rise, so if it were my money, I'd park it in a money market account (same bank has one for 1.10%) until I thought that deposit rates were stable and then I would buy a long term CD. Putting the money in a liquid account will allow you to maximize your earnings on the cash both now and later.

But, YMMV.

cindyb.....thanks for the advice! I like hearing your point of view....it's a thought. I've had cd's since I was 22 years old. 4% is really pretty good!

You might consider individual bonds and/or bond funds. I agree with the posters who caution you to keep your investment horizon short-term. Just because interest rates are historically low right now doesn't mean that trend will continue, depending on your view of inflationary pressures.

A quick look at some Fidelity funds shows:

Fidelity Strategic Income Fund (FSICX) 1-year return 32.06%
Fidelity Government Income Fund (FGOVX) 1-year return 4.38%
Fidelity U.S. Bond Index Fund(FBIDX) 1-year return 8.50%

Not that I'm pushing Fidelity; there are thousands of funds to choose from.

In the chart below, look at what happened to interest rates in the 80s. I was there; my money market funds were earning around 15%. If you believe that inflation rates will soar in the next 3-5 years, as I do, then you're going to want to keep your cash relatively liquid in the meantime.

Here is a link that might be useful: Inflation vs interest rates

Just so you know - the reason bond funds are showing double-digit returns is because they, along with equities, were beaten down so badly in the Great Recession last year. These are NOT typical bond returns.

The 'easy money' has been made in bonds. Be very careful to examine the bonds that the fund is holding. High return bond funds are loading up on junk bonds, and if there's a double-dip coming, the risk of default increases.

I mention this even though our current portfolio is heavily weighted in two bond funds - in this environment I wouldn't invest in anything but short or medium-term bond funds. PIMCO just came out with an Unrestricted Bond Fund which is an interesting investment concept, but PIMCO's fees tend on the high side, so you need to make sure you're investing at the lowest fee rate possible.

I'm only looking at cd rates......right now.But....thank you....

Your input is appreciated. "IF" you buy low and sell high, stock and funds "will" outperform a fixed rate cd.

absolutely right, nicole. That's a very big "IF", and many people unfortunately end up investing the reverse of the way they should!

Actually, the "if" is that "if" you buy stocks/mutual funds and hold them for an extended period of time, you will outperform a fixed rate cd. The question is how long that "extended period of time" is. Nobody knows that for sure, but a 10 years is a pretty safe bet for stocks. On a truly long term investment (like a 30 yr old planning for retirement) stocks will win by a mile.

Update: I put $30K into the Discover cd @ 3.7apy. I'm applying to Apple for the 4% account.

DH works construction. Says he won't work out of town, no need....we have cash saved up and could retire "now". So I'm only investing a small amount of our cash savings long term. AND yes I want a guarenteed rate on money that was that hard to come by. It's not inherited money....or given money. The time line for when we'll "need" the money is unknown.