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CD Maturing - Where To Move?

I have a $12k cd that is maturing, and the new rate is not going to be as attractive as what I enjoy now. Looking around for alternatives, I see the page below:

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Obviously, this appears interesting at first blush, but one assumes it won't entail a free lunch. Is anyone here familiar with such options and what their downsides are?

Thanks!

Hugh

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Reply to
Hugh Clary
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are you sure you want to buy a 10 year CD?

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Reply to
Gil Faver

On first reading their minimum is $25,000.

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Reply to
PeterL

The callability is a big negative to me. IF:

  1. Future rates remain the same - no problem.
  2. Future rates fall - The company will call the bond... uh, I meant "CD". They can issue CDs at the new, lower rates and therefore decide that it is not in their best interest to keep paying you an above market rate.
  3. Future rates rise - The company will not call the bond. They are tickled pink that they can pay you less than market rates. You attempt to sell the CD but find that you have to sell at a principal discount to entice buyers into accepting the lower than market interest rate.

The callability and the lack of liquidity essentially makes this a bond, regardless of the "CD" title.

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Reply to
kastnna

Try this SEC link - those guys are very good. You may well want to browse around other government agencies (U.S. Treasury, Federal Reserve) dealing with investments, money, deposits, and so on to get a broad perspective. The sites will include "things to watch out for" that the guys have noticed floating around.

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-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.

Reply to
dapperdobbs

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