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14 Month No Penalty CD @ 4.40% APY - Sallie Mae Bank by Savebetter
January 3, 2023 at
05:30 PM
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Last Edited by jersharocks | Staff January 4, 2023 at 01:10 PM
I've posted this before when the rate was lower, but Savebetter.com increased their no penalty Sallie Mae CD to 4.40%. I cancelled my old one and opened a new one.
Savebetter.com has a No penalty CD @ 4.40% APY. You can break this CD anytime after 30 days. With Fed Reserve increasing rates, CDs in the near future will pay better. So lock in 4.4% for now; if you find a better higher earning CD in the future, break it and lock in. There's no minimum and FDIC insured to $250,000. For the bond heads that prefer treasury bonds, the comparable 1 month fed treasury yield is 4.17%, so this yields higher and offers a guaranteed return for longer if you choose to keep it. I haven't found a better rate out there that doesn't lock in your money for a longer period.
For people that want a higher earning CD they also offer a regular 27 mo CD @ 5% APY.
https://www.savebetter.
Savebetter.com has a No penalty CD @ 4.40% APY. You can break this CD anytime after 30 days. With Fed Reserve increasing rates, CDs in the near future will pay better. So lock in 4.4% for now; if you find a better higher earning CD in the future, break it and lock in. There's no minimum and FDIC insured to $250,000. For the bond heads that prefer treasury bonds, the comparable 1 month fed treasury yield is 4.17%, so this yields higher and offers a guaranteed return for longer if you choose to keep it. I haven't found a better rate out there that doesn't lock in your money for a longer period.
For people that want a higher earning CD they also offer a regular 27 mo CD @ 5% APY.
https://www.savebetter.
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Our community has rated this post as helpful. If you agree, why not thank whodiini
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edit : I see some people have answered by buying them through Fidelity.
so there's really no penalty to trading treasuries before maturity through a broker ??
For starters, don't think of Treasuries like a CD. They don't pay interest (they do, in a way).
Treasuries are bonds. If a treasury pays X% interest you would get (for example) $20 in interest on $1000 after 12 weeks.
How a treasury works is you actually pay $980 for the Bond that is worth $1000. After 12 weeks you are eligible to redeem that for $1000. But you only pay them $980.
Selling a Treasury is really just agreeing on a price that that Treasury is worth. It's not worth $980, because time has passed to collect that interest. In theory after 6 weeks it's worth $990 (a tiny bit less, because of compounding power of interest).
The catch is with Bonds, they're only worth what the buyer is willing to pay. The issue with Bonds is in a rising rate environment, you might buy a 1 year bond today for 4% and maybe in 6 months it's 5% (20% higher).
Now suddenly a buyer of your bond is faced with a choice to buy your bond at 4% that has 6 months left, or just go buy a new 1 year bond at 5%.
This is how a bond can lose value in the resale market. It's still worth $1000. But it's worth less to someone else because they can get a better deal.
Now, the bond will never go below the original value of the bond (unless there becomes a belief the payer can't pay). But your "penalty" is that, for a 1 year bond, after 6 months it might not be worth exactly half of the expected interest accrued. If rates go up from 4% to 5% (20%) you'd expect the value of your bond to go own by exactly that, 20%, adjusted for the bond maturity (so 10% since you're halfway through the bond).
For starters, don't think of Treasuries like a CD. They don't pay interest (they do, in a way).
Treasuries are bonds. If a treasury pays X% interest you would get (for example) $20 in interest on $1000 after 12 weeks.
How a treasury works is you actually pay $980 for the Bond that is worth $1000. After 12 weeks you are eligible to redeem that for $1000. But you only pay them $980.
Selling a Treasury is really just agreeing on a price that that Treasury is worth. It's not worth $980, because time has passed to collect that interest. In theory after 6 weeks it's worth $990 (a tiny bit less, because of compounding power of interest).
The catch is with Bonds, they're only worth what the buyer is willing to pay. The issue with Bonds is in a rising rate environment, you might buy a 1 year bond today for 4% and maybe in 6 months it's 5% (20% higher).
Now suddenly a buyer of your bond is faced with a choice to buy your bond at 4% that has 6 months left, or just go buy a new 1 year bond at 5%.
This is how a bond can lose value in the resale market. It's still worth $1000. But it's worth less to someone else because they can get a better deal.
Now, the bond will never go below the original value of the bond (unless there becomes a belief the payer can't pay). But your "penalty" is that, for a 1 year bond, after 6 months it might not be worth exactly half of the expected interest accrued. If rates go up from 4% to 5% (20%) you'd expect the value of your bond to go own by exactly that, 20%, adjusted for the bond maturity (so 10% since you're halfway through the bond).
Just hold to maturity to get Par. 26 week T-Bill is paying 4.6% and local tax free.
Moving funds to a new Fidelity brokerage account from my savings so I can take advantage of the higher rates of Treasury bills...
they will try (forget try, it is their only option, they can not raise taxes, and they can not stop the fed cheese gravy train, no politician would even dare speak of that) to print their way out. wise man once said in a social democracy, all roads lead to inflation.
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https://www.schwabasset
Keep in mind that there's a bid and an ask. You'll probably pay the ask to buy and sell for the bid. Usually these numbers are very close together. $986 for 3 months seems too low, is that the bid or the ask? That would be better than 5% interest multiplied out to 12 months.
And I'll do the similar as you, stop rolling into new t bills once rates drop.
I've also been DCA'ing into the stock market to cover all my bases.
Found where to buy the new treasuries directly on Schwab.
My old broker had recommended MM funds like SWVXX but wanted to charge me an advisory fee of 1% so that made no sense. He ranted on about this being just as safe as money in an fdic bank account. He might be right about that but it's not insured. However very stable, supposedly never going below $1 and as others have said and all invested in safe instruments. His words were it's like buying a CD everyday.
It's hard to tell the current return on the fund page. It says the 7 day return was 3.76% as of November 2022. Any way to see the current 7 day return? Thank you!
Also, on Schwab there is no charge to buy Treasuries on the secondary market. There might be a charge to sell, not sure. When you buy, you pay the prorated interest to the seller. Found it easy to figure out the returns from zero coupon bonds and the math seems to work. Missed the auction this week but will buy next week. Can someone pleas post the rates they got on todays auctions when they settle?
Really appreciate everybody posting.
Found where to buy the new treasuries directly on Schwab.
My old broker had recommended MM funds like SWVXX but wanted to charge me an advisory fee of 1% so that made no sense. He ranted on about this being just as safe as money in an fdic bank account. He might be right about that but it's not insured. However very stable, supposedly never going below $1 and as others have said and all invested in safe instruments. His words were it's like buying a CD everyday.
It's hard to tell the current return on the fund page. It says the 7 day return was 3.76% as of November 2022. Any way to see the current 7 day return? Thank you!
Also, on Schwab there is no charge to buy Treasuries on the secondary market. There might be a charge to sell, not sure. When you buy, you pay the prorated interest to the seller. Found it easy to figure out the returns from zero coupon bonds and the math seems to work. Missed the auction this week but will buy next week. Can someone pleas post the rates they got on todays auctions when they settle?
Really appreciate everybody posting.
https://finance.yahoo.c
Don't understand why not on schwab site.
Not easy to find this thread anymore if not bookmarked. Had to google it and then link from there.
Found where to buy the new treasuries directly on Schwab.
My old broker had recommended MM funds like SWVXX but wanted to charge me an advisory fee of 1% so that made no sense. He ranted on about this being just as safe as money in an fdic bank account. He might be right about that but it's not insured. However very stable, supposedly never going below $1 and as others have said and all invested in safe instruments. His words were it's like buying a CD everyday.
It's hard to tell the current return on the fund page. It says the 7 day return was 3.76% as of November 2022. Any way to see the current 7 day return? Thank you!
Also, on Schwab there is no charge to buy Treasuries on the secondary market. There might be a charge to sell, not sure. When you buy, you pay the prorated interest to the seller. Found it easy to figure out the returns from zero coupon bonds and the math seems to work. Missed the auction this week but will buy next week. Can someone pleas post the rates they got on todays auctions when they settle?
Really appreciate everybody posting.
I checked Fidelity and Schwab MM. Fidelity seem to have more tbills/t-bonds while schwab seem to have commercial bonds also in there. My suggestion is to review the portfolio holdings and make a decision based on the risk that you are comfortable with.
Today you can buy 8 week t-bills - around the same yield as swvxx and no state tax. Not sure if next week will have 13/26 week which may offer upto 4.7%. Also, if fed increases rates by 0.25-0.5% in the next meeting, it may make sense to ladder the t-bills based on maturity/yield. You can review the tbill rate trend using treasury link [treasury.gov].
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You are correct:
https://www.fidelity.co
Fidelity charges $1 per bond, except for treasuries in hte secondary market, where the commission is $0.