Scramble for CD rates can be harrowing

White piggy bank on beach

I had big plans for the money I got back when I recently closed several CDs.

But they were hampered by the U.S. ratings downgrade, Bernanke’s virtual pledge to keep short-term interest rates near zero until mid-2013, the European debt debacle and the resulting flight to safety.

Timing has never been one of my strong points, but I can’t imagine a worse moment in American financial history for any CD investor to redeploy significant amounts of cash.

It was a classic case of trying to catch a financial falling knife.

I’d had visions, for example, of putting a large piece of my megabank CD proceeds into a ladder consisting of a 2.07% APY 3-year certificate, 2.32% APY 4-year certificate and 2.83% APY 5-year certificate at Melrose Credit Union.

Before I could do so, however, Melrose ( cut its 3-, 4- and 5-year CD rates to 1.81%, 2.07% and 2.57%, respectively. (It's since raised rates in those terms by about a tenth of a percentage point.)

I’d also planned to put some of the proceeds into a Kaiser Federal Bank 3-year CD at 1.75% APY and 5-year CD at 2.50% APY.

Again, before I could wire the money, Kaiser ( dropped its 3-year rate to 1.60% and 5-year rate to 2.25%. (It has since cut its rates again by two-tenths of a percentage point.) (MainStreet Bank’s online branch) also dropped CD rates somewhat, but allowed me, the day before, to open 3-year CDs at 2.00% APY and 4-year CDs at 2.50% APY based on my promise to have the funds there within 10 business days. (It's also cut rates since then. Ugh.)

I also managed to sock money into a 1.75% APY 3-year CD at Discover Bank ( shortly before it cut the rate to 1.70%.

Finally, although I didn’t particularly want to increase my Alliant Credit Union exposure at this time, Alliant ( stuck with its 4-year 2.45% CD rates, so I decided to put money there as well.

While I didn’t get every CD I wanted, all in all, I fared OK. I’m not feeling sorry for myself.

But the scramble for yield was harrowing.

My vascular surgeon wouldn’t have liked my blood pressure readings during the process.

And I expect to go through it again as other certificates of deposit continue to mature.

I’m not looking forward to it.

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