PSA: Discover 12-month now 1.50%

[A1Credit]

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@Anonymous wrote:

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@A1Credit wrote:

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Do you guys just put a minimum 1K or more into a CD and then cash out after a certain time then do it all over again?

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Yeah, doing the rolling CD method requires quite a bit of cash but it's very useful for getting more interest back.

Basically, if your bank offers a $1000 CD minimum for 12 months at a decent interest rate, you would need $4000 total to do rolling 3-month, $6000 to do rolling 2-month (and $3000 to do rolling 4-month).

So basically, using the rolling 2-month as an example:

1. $1000 CD on 10/19/17 -- matures in 10/18 for you to use or roll over again.
2. $1000 CD on 12/19/17 -- matures in 12/18
3. $1000 CD on 2/19/18 -- matures in 2/19
4. $1000 CD on 4/19/18 -- matures in 4/19
5. $1000 CD on 6/19/18 -- matures in 6/19
6. $1000 CD on 8/19/18 -- matures in 8/19
7. Once you get to 10/18, you can roll over CD #1, or you can use it if an emergency happened.

Some banks offer odd term length CDs to help start the rollover today.  For example, if your bank offers an odd term length, you can actually get a 12-month, 14-month, 16-month, 18-month, 20-month and 22-month set of CDs each with $1000, and then roll them over into 12 month terms upon maturation.

If a CD offers 1.5% for 12months and you invest $1000, your maturation amount is $1015 (compounded annually) or $1015.11 (compounded daily).  So you would roll that amount over and add any new savings to it if desired.

I like 2 month roll overs because it is easier to manage, and because I have more than enough lower interest savings cash to cover me for 60 days to the next roll over.

My actual CD amounts total what I spend in 60 days (or close to that).

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Got it!  Thanks!

[Anonymous]

Thanks! I need to take advantage of this; especially since I am getting rid of my worthless Discover checking account now *eye roll*

Somewhat relevant question, does anyone know if Chase ever gives better rates for their CDs? I have most of my accounts with them and was hoping to keep it under the same umbrella, however most of the time their rates are borderline insulting compared to places like Discover, AMEX and Ally. 

[Anonymous]

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@Anonymous wrote:

Thanks! I need to take advantage of this; especially since I am getting rid of my worthless Discover checking account now *eye roll*

Somewhat relevant question, does anyone know if Chase ever gives better rates for their CDs? I have most of my accounts with them and was hoping to keep it under the same umbrella, however most of the time their rates are borderline insulting compared to places like Discover, AMEX and Ally. 

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I wish Chase gave better rates too; the only offers I've seen over 1.00% are only for CPC $1m+ balances. Disco is 1.50 and Cap1 is 1.65 for 12 months at the moment.

[Anonymous]

Nice increase.  I posted in another thread just now on my rolling CD plan -- I'm using 12 month CDs (6 of them, 2 months apart) but I think 36-month CDs make more sense for me but I'd need 18 of them (2 months apart) to get the best safety net if my income totally disappeared.  It's going to take me about 15 months of extra savings and planning to get there, but the rates on 36 month CDs are pretty awesome, I've seen a bunch around 2.4-2.5% out there and the difference over 1.5% is significant if your emergency savings is significant.

For me right now, the difference annually would be about $4500 more on a 2% 36-month CD versus a 1.5% 12-month CD!  That's pretty massive. Add an extra $1000 if I can find a decent 2.5% 36-month.

[iced]

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@Anonymous wrote:

Nice increase.  I posted in another thread just now on my rolling CD plan -- I'm using 12 month CDs (6 of them, 2 months apart) but I think 36-month CDs make more sense for me but I'd need 18 of them (2 months apart) to get the best safety net if my income totally disappeared.  It's going to take me about 15 months of extra savings and planning to get there, but the rates on 36 month CDs are pretty awesome, I've seen a bunch around 2.4-2.5% out there and the difference over 1.5% is significant if your emergency savings is significant.

For me right now, the difference annually would be about $4500 more on a 2% 36-month CD versus a 1.5% 12-month CD!  That's pretty massive. Add an extra $1000 if I can find a decent 2.5% 36-month.

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Why are you keeping so much in traditional vehicles such as savings/CDs? 2% is basically treading water with inflation.

I can see keeping 6-12 months income in CDs/savings, but beyond that, unless you are irrationally terrified of risk, that seems like a very poor investment of funds. Even for the risk averse, parking just $100,000 in a blue chip dividend stock that pays 5% will return $2500 more per year than a 2.5% rolling CD strategy. Even with no growth on the stock (and even some loss), the long-term return from the dividends will obliterate any losses and still come out ahead of CDs.