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Author: folgore Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35387  
Subject: Penfed CDs Date: 12/31/2013 1:23 AM
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My 6.25% CD finally matures in two weeks and I have to figure out what I want to do with the proceeds. Penfed's current CDs appear to be the highest around: 3 years - 2%, 4 years - 2.22%, and 5 years and beyond - 3%. Certainly not as good as what we had five years, but not ridiculously low either.

Given the coming change of policy at the Fed, better to stick with the 3 year certificate? Or should I go with the 5-year CD?

I hope you all have a Happy New Year!
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Author: Bobcatkitty Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 35148 of 35387
Subject: Re: Penfed CDs Date: 12/31/2013 2:55 PM
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We have some PedFed CDs maturing 2-4-14. We have decided to go for the 5yr. maybe PenFed will up the interest a little more by then. We will opt for the 5 yr. at least that is the plan for now.

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Author: folgore Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 35149 of 35387
Subject: Re: Penfed CDs Date: 1/1/2014 11:46 AM
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I went for the five-year 3% CD finally. I figure it will be at least a year before Penfed or anyone else goes higher than that.

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Author: brewer12345 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 35150 of 35387
Subject: Re: Penfed CDs Date: 1/1/2014 6:54 PM
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If you do the math, if you take the 5 year and surrender at 3 years the effective earnings are at least as high as the rate Pen Fed offers for a 3 year CD.

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Author: MarkR Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 35151 of 35387
Subject: Re: Penfed CDs Date: 1/1/2014 7:54 PM
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If you do the math, if you take the 5 year and surrender at 3 years the effective earnings are at least as high as the rate Pen Fed offers for a 3 year CD.

If this is the case, why would anyone ever opt for a 3 over a 5?

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Author: brewer12345 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 35152 of 35387
Subject: Re: Penfed CDs Date: 1/1/2014 8:31 PM
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Because they are bad at math?

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Author: folgore Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 35153 of 35387
Subject: Re: Penfed CDs Date: 1/1/2014 10:17 PM
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If you do the math, if you take the 5 year and surrender at 3 years the effective earnings are at least as high as the rate Pen Fed offers for a 3 year CD.

Very good point! The five year CD does appear to be the wisest choice. I don't see rates sinking again any time soon, so seven years is unnecessary. Nor do I see rates going up rapidly, though credit unions like Penfed will gradually raise CD rates. Five years appears the ideal compromise.

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Author: MarkR Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 35154 of 35387
Subject: Re: Penfed CDs Date: 1/2/2014 2:25 PM
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Basically, the 5 year CD includes a free "put" at 3 years (or at any other time beyond 6 months, but for this comparison it is at 3 years).

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