CIT Bank 6-Month CD: Earn Expired

At the end of last month I locked in a 5-year 5.45% APY CD

This, I moved over to bask because CIT notoriously does this. Create some new account flavor with a better rate and don't notify you proactively, of course as a customer I could care less what title of the month you call my online savings account, just give me the one with the best rate. Happier with bask bank no games.

I'm locked into a 5% CD for 27 months, think the best rate I've seen since was 5.35% (& it was callable which = not guaranteed to last to term). At some point you just take the rate & stop holding out for more.

& before someone says "you could get close to that in HYSA without having your money tied up"…I wanted the rate guaranteed for 27 months in case HYSA rates eventually fall during that window.

I also didn't want to go the i-bond route because I had way more than $10k to invest. You also have to forfeit 3 months of interest to cash out I-bonds. 3 months of no interest effectively lowers the I-bond rate down closer to 5%.

That was premature. Rates are getting a 25 bps hike tomorrow.

This is one of the highest rates currently available, however, there may be better options depending on your financial situation. Also, you will have to consider what it is worth setting up accounts at a new bank, which may or may not have good customer service. There are several high yield savings accounts in the low to mid 4% range with no lock up. However, if the rates go down (pretty unlikely for the next months) you would earn the going rate. They also increase if rates increase.

Another thing to consider is that you are taxed both federally and at the state level for interest. If you live in a high tax state and are in the middle class income brackets, you are probably better off buying treasuries or T-bills, which are not subject to income tax at the state level. So in California, assuming a > $66,296 income, you pay 9.3% in state tax and 22% in federal tax. If you buy a T-bill, you would earn 4.5% or so depending on the going rate and term, which is only taxed at the federal level. This is essentially equivalent to the 5% being taxed at the state and federal level. While not FDIC insured, if US treasuries fail, you probably can't rely on FDIC insurance. You can sell a treasury at any time, just at the market rate, which may go up or down.

There are number of things to consider other than rate, so do your homework. This is a very low risk way to earn 5% APY for the next 6 months, but there may be better options depending on the accounts you already have and your financial situation.

Not a slick deal. 3 months @5.25% and 6 months @5.30% here:
https://fixedincome.fidelity.com/.../FILanding

good to
invest now?

I can't say yes or no to that since it depends on your finances. But for those who want to invest in a 6-month CD, this deal is bad compared to the 5.3% available from the Fidelity link I provided.

The original post is a few months old