Comments on: UFBDirect 2.90% 12-month CD

By: Pete

Pete — Thu, 19 Mar 2009 11:14:44 +0000

Mike M: Thanks for the tip. You should get your own blog! I don’t know too much about bonds, though. How do you know that it will be at 0 percent after 6 months? Thanks in advance.

By: Mike M

Mike M — Wed, 18 Mar 2009 11:25:21 +0000

2.9% for a 12 month CD? Not worth it.

You can buy an I bond from the federal government that is paying 5.64% for the next six months. Because of deflation, you can expect the six months after that to pay 0%. They say you have to hold for a minimum of 1 year before selling.

But you don’t!

If you buy on March 31, you can sell on March 1 of next year. You’ll earn about $27.81 in interest for that period on a $1000 bond – all of it in the first six months. When you sell, you’ll lose the most recent 3 months interest – or $0, $0, and $0. So for holding the bond for 335 days, you get the full $27.81….

That is equivalent to an 11 month, 1 day CD paying 3.03% APY. And unlike a CD, that interest is not taxable by your state government.

By: BloggingBanks

BloggingBanks — Mon, 16 Mar 2009 07:37:50 +0000

Larry,

What happens when your rewards checking account lowers the APY to 4%? A CD is a good alternative for your cash..
I do agree however that rewards checking is the best yield alternative right now..

By: Larry Hopkins

Larry Hopkins — Mon, 16 Mar 2009 02:13:38 +0000

Looks to me that the best place to park your money is in a “Rewards Checking” at 5% plus for 25K an account.