Anyone ever have a CD called?

[Pablo]

First for me. I assume I get the interest on the call date??

"Fidelity has been notified that the following security has been called:Cusip: 46656MHP9 Desc: JPMORGAN CHASE BK N Rate: 5.5 Maturity Date: 08/07/2024 Call Date: 04/08/2024"

 

[Wrenchturner44]

Personally I don't like CDs. Your money is tied up in a contract and is less liquid. I use money market accounts instead. Yes, I know they are not FDIC insured. But if you have concerns about that then use several accounts from different providers. Bankrate.com is a good source for providers paying high rates. The Fidelity MM ticker FZDXX is currrently paying 5.19%.

 

[Pablo]

Personally I don't like CDs. Your money is tied up in a contract and is less liquid. I use money market accounts instead. Yes, I know they are not FDIC insured. But if you have concerns about that then use several accounts from different providers. Bankrate.com is a good source for providers paying high rates. The Fidelity MM ticker FZDXX is currrently paying 5.19%.

BITOG to the rescue. Thanks for the advice!!

 

[SC Maintenance]

I never have but I don't use CD's. Not surprised, there paying 5.5 short term but SOFR is 5.31, so that's a decent spread.

T-bills are not callable and generally state income tax free if you hold to maturity.

 

[Pablo]

I never have but I don't use CD's. Not surprised, there paying 5.5 short term but SOFR is 5.31, so that's a decent spread.

T-bills are not callable and generally state income tax free if you hold to maturity.

I use CD's sometimes obviously, MM's and T-Bills. Plus arrays of bonds and bond funds. Tbills are a pain for what they are and pay.

Back on topic: People expecting a CD to lock-in a rate, watch out.

Now I assume I get interest to call date, right?

 

[Zee09]

I like Robinhood
5% but liquid and FDIC insured to $2.25M and you can trade with it too from the same account.
No hassle.

 

[Zee09]

 

[SC Maintenance]

Tbills are a pain for what they are and pay.

CD's are a pain because you have to read the fine print. There is no standard. I don't like fine print.

T-bills have no fine print. 26 week T-bill pays a investor rate of 5.34 at last auction. My state income tax rate is 7% so in my case the 5.34% is comparable to a 5.7% APR on a CD that gets taxed. (0.0534/.93). Will depend on your state tax rate.

My broker will liquidate my T-bill with the click of a mouse at any time - and I get the market determined interest gain at that point - ie essentially no early sale penalty, except now my gain is a capital gain not state income tax free interest.

I assume I get the interest on the call date??

I would also Assume - but you have to read the fine print.

 

[JHZR2]

Let me get this straight, if you pulled the money out early they would penalize you. But they can call the cd and at best give you interest to the call day?

I’d expect penalty payments the equivalent of if you redeemed early.

This sort of garbage, unless it was actually written plainly in the contract, and even if it was… is what the corporate overlords are training people to be sheep.

I’d be looking to take my money elsewhere if this wasn’t specifically in the terms…

 

[Pablo]

View attachment 209913

I love a man who answers questions. Thank you!

 

[Pablo]

Let me get this straight, if you pulled the money out early they would penalize you. But they can call the cd and at best give you interest to the call day?

I’d expect penalty payments the equivalent of if you redeemed early.

This sort of garbage, unless it was actually written plainly in the contract, and even if it was… is what the corporate overlords are training people to be sheep.

I’d be looking to take my money elsewhere if this wasn’t specifically in the terms…

The penalty is you don’t get interest

 

[SC Maintenance]

Let me get this straight, if you pulled the money out early they would penalize you. But they can call the cd and at best give you interest to the call day?

I’d expect penalty payments the equivalent of if you redeemed early.

This sort of garbage, unless it was actually written plainly in the contract, and even if it was… is what the corporate overlords are training people to be sheep.

I’d be looking to take my money elsewhere if this wasn’t specifically in the terms…

That is what callable means.

The upside is OP likely got higher interest up front - looks like 5.5%. Don't know that term - but that is nice and high on a guaranteed insured return. Probably higher than a non-callable of the same term.

There is also usually a first call date - ie they can't call it before then.

So now its called. Way it works. I don't like CD's. This is one more reason.

Call Protection is listed if you buy from a broker. If your buying directly from the bank its usually less clear.

 

[JHZR2]

That is what callable means.

The upside is OP likely got higher interest up front - looks like 5.5%. Don't know that term - but that is nice and high on a guaranteed insured return.

There is also usually a first call date - ie they can't call it before then.

So now its called. Way it works. I don't like CD's. This is one more reason.

Call Protection is listed if you buy from a broker. If your buying directly from the bank its usually less clear.

View attachment 209917

I understand what callable means. I’m not sure it was stated in the OP that it was or was not. Thus why I asked about terms.

With these “too big to fail” banks that can do whatever they want with no real ramifications, it wouldn’t surprise me in any case.

 

[Pablo]

CD's are a pain because you have to read the fine print. There is no standard. I don't like fine print.

T-bills have no fine print. 26 week T-bill pays a investor rate of 5.34 at last auction. My state income tax rate is 7% so in my case the 5.34% is comparable to a 5.7% APR on a CD that gets taxed. (0.0534/.93). Will depend on your state tax rate.

My broker will liquidate my T-bill with the click of a mouse at any time - and I get the market determined interest gain at that point - ie essentially no early sale penalty, except now my gain is a capital gain not state income tax free interest.


I would also Assume - but you have to read the fine print.

OK let's discuss the fine print.

Yes you are right, there is no standard. When I buy a BOND, there is a place (mod deleted my link) that shows CALLABLE with a YES or NO. With a CD there is no binary space - I do like that Fidelity shows NEXT call date.

No personal data here:

Fidelity.com is Temporarily Unavailable

This is in a Fidelity IRA. Not worried about taxes. T bills are good for some reasons, not good for rates. But as I stated, I own all of the above.

 

[Warstud]

It sounds like they can cancel the agreement to give you X.xx % on the CD if interest rates drop .

 

[Pablo]

It sounds like they can cancel the agreement to give you X.xx % on the CD if interest rates drop .

Well they can if the CD is callable, but not before that first date. Somewhat of a caveat today, for sure.

Now it's highly probable now that I stew on it and got you guys all stirred up - I did see that April call date and it didn't bug me. Maybe!

No worries, really. I'll follow up when I get my cash 4/8

 

[SC Maintenance]

OK let's discuss the fine print.

Yes you are right, there is no standard. When I buy a BOND, there is a place (mod deleted my link) that shows CALLABLE with a YES or NO. With a CD there is no binary space - I do like that Fidelity shows NEXT call date.

No personal data here:

Fidelity.com is Temporarily Unavailable

This is in a Fidelity IRA. Not worried about taxes. T bills are good for some reasons, not good for rates. But as I stated, I own all of the above.

I agree with all of that, and figured you already knew as well.

I posted more for the forum. Seems everyone rush's to CD's because you can get them at your local bank. They might be good and that is fine. But it seems most people avoid T-bills like the plague because there afraid of them, when in fact other than opening a brokerage account, there the simplest form of fixed income, and guaranteed by the US treasury - so there also the safest.

 

[SC Maintenance]

I understand what callable means. I’m not sure it was stated in the OP that it was or was not. Thus why I asked about terms.

With these “too big to fail” banks that can do whatever they want with no real ramifications, it wouldn’t surprise me in any case.

I posted his exact CUSIP. Call protection is not listed.

I agree with the rest of your statement.

 

[Warstud]

Well they can if the CD is callable, but not before that first date. Somewhat of a caveat today, for sure.

Now it's highly probable now that I stew on it and got you guys all stirred up - I did see that April call date and it didn't bug me. Maybe!

No worries, really. I'll follow up when I get my cash 4/8

So the "Call Date" is the day the Bank will / may terminate the CD agreement but you get that interest rate up to that day .?

Did you contact the Better Business Burea ?

 

[Pablo]

I posted his exact CUSIP. Call protection is not listed.

I agree with the rest of your statement.

That's it. NO CALL PROTECTION = CALLABLE.