bank rates

CD Rate-Chasing Has Its Pitfalls

I sometimes feel like I’ve been chasing CD rates forever.

It’s exhausting. Plus, it has pitfalls, all of which I seem to have stumbled across.

Here are some that have vexed me:

I don’t act quickly enough, and the deal I’m chasing vanishes.

This happened recently with a 2% APY, 2-year jumbo CD promotion at Kinecta Federal Credit Union.

Its advertising stated “offer expires 10/31/14,” so I applied for membership in early October, confident the deal would still be around when the necessary funds arrived later that month.

But no sooner had I joined than Kinecta – relying on boilerplate language saying “rates subject to change at any time” – dropped the promotional rate to 1.75% APY.

By the time my funds became available, it had been slashed to 1% APY.

Consequently, I’m now a Kinecta member, but with no certificate of deposit to show for it.

I act too quickly and overlook some fine print.

As a retired lawyer, I’d like to think this never happens – but it does.

Usually, the oversight involves a minimum balance requirement, or service fee, for a savings or checking account I establish to capture CD interest.

Kinecta caught me short on this, too. To join – so I could get the promotional CD deal – I opened a savings account.

But I now find I have a $250 minimum savings balance requirement because I don’t have a CD.

I act with all deliberate speed but discover I can’t fund my CD the way I want to.

Sometimes, I spend considerable time completing an online CD application, only to find I can’t fund it electronically from the external account where I’ve parked my money.

That’s often because the CD can only be funded from money already on deposit or with a mailed-in check.

Or maybe there’s a limit on ACH transfers – like the $25,000 maximum at Pentagon Federal Credit Union or the $20,000 maximum at USAlliance Federal Credit Union.

Because my rate-chasing has generated multiple ChexSystems “inquiries,” I’m not permitted to open my CD.

I’ve opened so many CDs around the country that my ChexSystems report looks like the rap sheet of a hapless prowler.

And some institutions treat it that way.

Just recently, First Tech Federal Credit Union denied me membership on the ground that I had too many ChexSystems inquiries to be trusted.

After a series of email exchanges in which I tried to convince First Tech otherwise, I was informed that “management” was standing pat – no CD for this undesirable person!

Maybe all of this reflects my being a senior citizen, no longer at the top of my game.

But I don’t think it’s that.

I think my problems are the natural consequence of CD rate-chasing by any saver, whether young or old.

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