Rates are still moving up, especially in the shorter maturities. Even the rates quoted below may become outdated quickly, but so here is a mid-month update for June 2022. As of 6/21/2022:
- Brokered CD rates: 3-month CD at 2% APY, 2-Year CDs at 3.15% APY at Vanguard and Fidelity fixed income desks (non-callable).
- Online bank rates: 1.61%-1.65% APY liquid, 3.05% APY for 3-year CD at Bask Bank, First Foundation and Rising Bank. Expect a lot of movement in this area.
- US Treasury Bonds: 3-month at 1.85%, 2-Year CDs at 3.21% yield to maturity, secondary market. Interest from Treasury bills and bonds are exempt from state and local income taxes.
- Fixed Annuity: 4% rate on 3-year MYGA from American Life (B++ Rating) on via Blueprint Income and Stan the Annuity Man (varies by state). Learn more about MYGAs here and here.
As always, be very careful with any app or website that does not clearly indicate FDIC and/or NCUA insurance. Verify yourself at FDIC.gov and NCUA.gov.
Just as the terms “natural” and “superfood” and not regulated in the food industry, the terms “asset-backed” and “stable” mean very little in the financial industry. An app called “Stablegains” promised reliable interest from “overcollaterized” and “100% asset-backed” loans… up on the day until your money disappeared forever.
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Marcus referral link for savings account bonus interest rate if anyone would like to use:
http://www.marcus.com/share/PAU-N49-DE8Q
(+0.50% extra APY for 3 months and can extend by referring others.)
Hey Jonathan, Thanks for the update on these. I’ve never purchased these before and just wanted to double check that the only risk would be if you sell them before maturity. If you keep them until maturity, you get all your principal and the interest back. Is this correct or is there a catch I’m missing.
Nerisaa,
You are correct if you keep to maturity, no issues. For treasuries, don’t think you can sell early but . I buy CDs through brokers and short term bonds with treasury direct. I’ve never had a problem
Hi Steve,
Sorry to interject, but you are saying that it is not possible to sell Ibonds earlier?
We were talking about short term notes and CDs, not iBonds. But you can sell your iBonds after the 1 year hold.
Thanks. I’m going to buy the 3 month cds at vanguard and keep rolling them until banks get more competitive with their offerings. Seems like a no brainer. Am sitting on cash waiting for the worst of the downturn to get here. I personally don’t think we are there yet, but that’s the chance we all take.
They were very very easy to buy at Vanguard if anyone is interested.
Great tip. Thanks again. This blog has made me a fair bit of change over the years. I am very grateful.
I guess this is the statement that concerns me at Vanguard:
“The CDs purchased are FDIC insured (up to $250,000 per bank per person). This investment is subject to interest rate risk. The value can decline due to rising interest rates. Longer maturities have higher interest rate risk.”
I wanted to double check that if you hold these until maturity, you can not lose principle? You’d only lose if selling your CD early. It would be insane to buy these because we know the fed is raising interest rates.
Also note, the 2.0% CD is gone at VG. It’s down to 1.8. But a rolling menu of these seems to come up almost daily.
Thank you, Jonathan, for your posts.
I have never heard about CDs offered on the secondary market on US Treasury Bonds (your 4th bullet point). Do these work like ordinary Treasury Bonds/Bills? That would be nice and having them be exempt from State taxes is even better.
Like Nerissa above, what if you sell the US Treasury CDs before maturity?
Also, do you see any promos on 5-6 yrs CDs from Banks?
Thank you
Just get more iBonds (using loopholes), inflation is gonna stay high for sometime.
That is a good point, there is active de-valuation of our currency.
Would you mind laying out the loopholes.
I know you can buy them as gifts. I’m a little confused as to how that works.
Setting up llc’s to buy these and filing taxes on those entities seems complicated.
Should CDs be callable or non callable….i find it confusing which is the best?
If they are callable, you risk your interest rate being canceled. So if you bought one at 4 and rates fall to 2, you are in danger of it being called because the bank says…hmmm we don’t have to pay that on money anymore because interest rates have fallen. So you CD gets called and then you’re left in a falling rate market trying to find a replacement for that rate.
Unlikely a cd would be called right now with interest rates going up. You are most in danger of a long dated cd being called. While you can somewhat predict what interest rates will be in three months, you really don’t know what the fed will do in 7 years. So if interest rates get high…seriously in the 80’s you could get 15% on a CD. Australia had some at 18%…you want to get a fixed cd for the longest term possible and make sure it’s not callable.
Here is more information on brokered cds.
https://www.bankrate.com/banking/cds/what-are-brokered-cds/#lose-money
I had opened a TreasuryDirect account but forgot to add a middle initial to my account. I know, it is not a super critical issue, but does anyone know how to add a middle initial to your TreasuryDirect account? I tried updating personal info, but that field for the middle name/initial is not editable.
Thank you