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Author: jtmitch 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 35380  
Subject: "Bump-Up" CD's Date: 5/2/2002 10:40 AM
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What do the more experienced fixed income investors on this board think of bump-up CD's? I have a CD maturing in a couple of weeks and had been hoping the May I-Bond rates would have been more competitive. Since they are not, I'm looking at alternatives. One is a credit union Share Certificate, 5 years, with a dividend rate of 4.89%/APY of 5%. It has a provision to bump the rate up to the then prevailing rate once during the 5 years. I live in a MD, a fairly high state income tax state (7.5%) and am in the 27.5% federal bracket. Given the alternatives these days, this doesn't look too bad. The 4.89% is more or less in line with other 5 year CD's and the bump-up provision sounds good. What have I missed?

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