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How One Saver Planned For Poor CD Rates

One thing that didn't change: He looked only at federally-insured accounts.A new year is always a time for reflection.

So, I’ve done some reflecting on my CD portfolio.

That portfolio underwent major changes in 2011 — some expected, many not.

With Ben Bernanke at the Fed helm, I anticipated CD rates would continue to drop.

Consequently, I wasn’t shocked that my average yield declined while my average maturity lengthened.

And, as planned, I closed all my maturing CDs at Citibank, Bank of America, Wells Fargo and Chase, each of which started 2011 offering awful rates and only made them worse.

And, along the way, I picked up a few new banks:

Salem Five (, for example. It offered a 1.75% APY 24-month CD promotion early in 2011.

Also noteworthy, Virginia-based MainStreet Bank (, which offered 2.00% APY 36-month and 2.50% APY 48-month CDs last summer.

I was surprised I closed so many CDs at Discover Bank and Nationwide Bank. Although both consistently offered competitive rates, when my CDs matured, someone else was offering better.

Which brings me to the most unexpected change in my portfolio — the addition of five credit unions to the mix.

At year-end 2011, credit union CDs represented approximately 20% of my deposit balances.

The comparable percentage 12 months earlier had been zero.

I began by joining Chicago-based Alliant Credit Union, which, for several months, offered 24-month, 36-month and 48-month CDs at 1.70%, 1.90% and 2.45% APY, respectively.

Even when it dropped its rates, I continued loading up on 36-month (1.70% APY) and 48-month (2.00% APY) CDs there.

Other credit unions I joined were Melrose, Firstmark, Velocity and RAFE Federal.

All except RAFE have easy membership restrictions and offer CDs nationwide. (RAFE, a micro credit union serving Southern California’s “Inland Empire,” was available to me as a local licensed attorney.)

I signed on to these credit unions because of their favorable rates. It wasn’t a matter of principle — or of sentiment.

In fact, with CD rates at rock-bottom levels in 2011, I had to throw all principle and sentiment completely out the window in making decisions.

All, that is, except my predilection for 100% federal deposit insurance protection.

Now, I guess I should make a prediction of some sort for 2012.

I therefore predict my CD portfolio will undergo further changes in the coming year.

That’s a no-brainer.

And it won’t get me in trouble with anyone.

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