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CD Rates and question

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CD Rates and question

Postby AEMRICH » Tue Sep 05, 2006 7:54 pm

Hey guys i have been at the cafe for a while now but i have a question and i knew that i needed smart people to answer so i figured i would come to the cafe. So i'm looking to take some money and put it into a cd. I found an offer where i can get a CD for 1 week at 2.5%. so say i took 10,000 and put it in their at the end of the week i would have made $250 right? so if i kept renewing that cd i would make about $1000 a month and over $12000 a year correct? is this how a cd actually works? because this is the way that i'm undertanding it. Because i have also seen a deal for 7% for 6-months so that would mean $700 for 6-months and 1400 for a year, so it would clearly be better to do the 1-week cd right? if i have this wrong could someone explain it to me thanks guys
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Postby free » Tue Sep 05, 2006 8:49 pm

i've never seen cd's for one week :-? usually the minimum is 6mths, but anyhow your theory would work as long as the interest rate never changes. if it goes up or down though during your cd period the interest rate would change on a new cd ;-D
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Postby acsguitar » Tue Sep 05, 2006 9:27 pm

You probably need to read the fine print


250$ in a cd for one week doesn't seem right
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Re: CD Rates and question

Postby The Big Stick » Tue Sep 05, 2006 9:48 pm

AEMRICH wrote:Hey guys i have been at the cafe for a while now but i have a question and i knew that i needed smart people to answer so i figured i would come to the cafe. So i'm looking to take some money and put it into a cd. I found an offer where i can get a CD for 1 week at 2.5%. so say i took 10,000 and put it in their at the end of the week i would have made $250 right? so if i kept renewing that cd i would make about $1000 a month and over $12000 a year correct? is this how a cd actually works? because this is the way that i'm undertanding it. Because i have also seen a deal for 7% for 6-months so that would mean $700 for 6-months and 1400 for a year, so it would clearly be better to do the 1-week cd right? if i have this wrong could someone explain it to me thanks guys


I happen to work for a financial institution. "A credit union". I am not an investor but I know about Cd's in my state which in PA. There is no such thing as a weekly CD. Typically they are a minim of 6 months. The rates are calculate base on that 6 or 12 month or whatever the term is. For example suppose your rate is 2.5 this means for every 200.00 you will earn 2.5% per month. 200 times .025 equal $5 per month. Which is $60 per year. Thus you would have earned 60 or 30 depending on the term 6 months or 12 months. I hope that helped. If you have further questions I can get more detailed information from our financial consultant for you.
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Postby bronxxbomber » Tue Sep 05, 2006 9:55 pm

CD's definitely don't work like that. I think they compounded monthly or yearly. Check http://www.bankrate.com for CD rates. I would just go with a high-yield savings account if I were you. HSBC Direct is one and offers 5.05% apy and they're very liquid too.
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Postby brewcrew4you » Tue Sep 05, 2006 10:01 pm

the rate is the yearly rate, NOT how much you make during the cd's term. The length of time refers to how much time your money is unavailable to you - a 7 month cd makes your money the bank's for 7 months each time you renew the cd.


Depending on how often they compute the interest (between annually and continua compound (which no-one does)), you will make a little bit more than the rate they advertise in the period of a year. If you don't need the money for anything soon, than take a long term cd at the highest rate you can find.
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Postby pokerplaya » Wed Sep 06, 2006 12:50 am

Yeah, everyone is correct, they don't work like that. I used to work at a bank, and my advice to you is to head down to the local bank you use and talk with a personal banker. They will be more than happy to advise you with your financial opportunities and answer any questions you have.
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Postby AEMRICH » Wed Sep 06, 2006 8:58 am

ok thanks guys, i guess that does make more sense unfotunately because if they worked how i thought that would have been a hell of a lot of money
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Postby Phatferd » Wed Sep 06, 2006 11:32 pm

This thread couldn't have come at a better time. I am really thinking of putting my money elsewhere.

Right now I have $4,000 in a checking account (I know). I have $6,000 in mutual funds.

I'm thinking of putting $3,500 (from my checking) into some kind of savings account. I am thinking of ING or Emigrant. ING is at 4.4% and Emigrant is at 5.15%, but people seem to prefer ING for some reason.

I also came across this site that has 3 month CD's that compound daily at 5.15% http://www.wfb.com/Personal_Banking/CDs_and_IRAs/cd_rates.htm

What do you guy's think I should do? I am also thinking about putting my mutual fund money into something like this. People tell me not to mess with my mutual funds, but in 4 years I have made like $300.
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