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When 5-Year CDs Aren’t Long Enough

I recently wrote that it was getting harder and harder to limit my CD maturities to five years or less.

The Fed’s most recent monetary policy statement hasn’t helped.

It has me looking at long-dated CDs again.

In olden days (c. 2009), I defined “long-dated” as CDs having terms greater than 24 months.

Back then, you could find 2-year CDs yielding above 2% APY.

Now, long-dated, for me, signifies CDs with terms sufficient to yield at least 2% — which, with limited exceptions, means those maturing in more than five years.

On June 21, for example, Patelco Credit Union offered a 2.50% APY 84-month CD.

This is competitive with other instruments in the tiny long-dated CD universe.

Patelco membership also seems open to anyone willing to join a charitable organization named Community Association for Engaging Youth.

But do I really want to sign up with another credit union — or open an account at another bank?

Do I really want to go through the new account rigmarole, including interest option selection, funding account verification and identity, credit and Patriot Act checks?

Plus, I already belong to five credit unions, and have deposit accounts at 20-plus banks.

I mean, how many depositary institutions are too many?

Among those at which I already have accounts, the best 7-year deal around is 2% APY, at Discover Bank.

The next best is 1.75% at USAA Bank (it’s 1.86% if I can round up $175,000).

Ten-year CDs offered by my existing banks and credit unions aren’t all that attractive, either.

The best is 2.25% APY, again at Discover Bank.

Although I’m not interested currently, I’ll keep the Discover 7- and 10-year CDs in mind for the future. Among other things, each has an early withdrawal penalty of but nine months’ interest (about 1.5% and 1.7%, respectively, of principal).

Today, though, I can do better with brokered CDs.

My online brokers (Vanguard and Fidelity) are serving up non-callable 7-year GS Bank and GE Capital Retail Bank CDs with a 2.15% yield, and non-callable 7-year CIT Bank CDs at 2.10%.

Ten-year non-callable CDs offered include 2.70% for GS Bank, 2.65% for GE Capital and 2.60% for CIT.

(Before today, Vanguard was offering a 20-year GS Bank CD at 3%, but it was callable by the bank after only six months.)

For now, I’ll keep my powder dry on long-dated CDs.

But can I afford to do so much longer?

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