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3.00% APY - for two year CD -

For those of you that are laddering Cd's -
3.00% APY - for two year CD
https://www.salliemae.com/banking/certificates-of-deposit/
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Comments

  • edited April 10
    Glad to bump this one over to the Discussions + side. For many here there’s some significance / importance in current C/D rates. Personally, I view cash more as ballast and take whatever short and ultra-short funds will pay. Not something I pay a lot of attention to.

    Breaking the latest cardinal rule here, I moments ago glanced at the Bloomberg television screen. Yikes - folks are willing to lock-up money in 10 year Treasuries for only 2.47%? This in a smokin’ hot economy? If you’re paying a half-percent ER to a fund manager so invested, that leaves you a paltry 2% return.

    Other markets of interest: Gold up $5 today to a recent high of $1309. Brent Crude nearing $72 - nearly 3X where it bottomed in early 2016.
  • With regard to oil, here are excerpts from an interesting article from Monday's Wall Street Journal:

    Frackers, Chasing Fast Oil Output, Are on a Treadmill

    With more oil wells front-loaded to boost output, many companies will have to drill again soon—and find new capital to keep production up

    Shale companies from Texas to North Dakota have been managing their wells to maximize short-term oil production. That has long-term consequences for the future of the American energy boom. By front-loading the wells to boost early oil output, many companies have been able to accelerate growth. But these newer wells peter out more quickly, so companies have to drill new ones sooner to sustain their production.

    In effect, frackers have jumped on a treadmill and ratcheted up the speed, becoming ever more dependent on new capital to keep oil production humming, even as Wall Street is becoming more skeptical of funding the industry.

    The emphasis on maximizing early oil output, largely by small and midsize shale drillers, contrasts sharply with how big oil companies such as Chevron Corp. and Exxon Mobil Corp. are seeking to develop some of the same areas.

    Though most shale companies have yet to consistently generate more cash than they spend, their rapid expansion has turned the U.S. into the world’s largest oil producer. That growth has begun to slow, however. U.S. production fell slightly to 11.87 million barrels a day in January, from 11.96 million barrels a day in December, after rising steadily for much of last year, according to the Energy Information Administration.


  • edited April 10
    newgirl said:

    For those of you that are laddering Cd's -
    3.00% APY - for two year CD
    https://www.salliemae.com/banking/certificates-of-deposit/

    News to me that Sallie Mae runs a bank, a retail bank.
  • edited April 10
    @Crash- Read the small print:

    "SLM Corporation and its subsidiaries, including Sallie Mae Bank are not sponsored by or agencies of the United States of America."

    More, from Wickipedia:

    SLM Corporation (commonly known as Sallie Mae; originally the Student Loan Marketing Association) is a publicly traded U.S. corporation that provides consumer banking. Its nature has changed dramatically since it was set up in 1973. At first, it was a government entity that serviced federal education loans. It then became private and started offering private student loans, although at one point it had a contract to service federal loans.

    The company's primary business is originating, servicing, and collecting private education loans. The company also provides college savings tools such as its Upromise Rewards business and online planning for college tools and resources. Sallie Mae previously originated federally guaranteed student loans originated under the Federal Family Education Loan Program and worked as a servicer and collector of federal student loans on behalf of the Department of Education. The company now offers private education loans and manages more than $12.97 billion in assets. Sallie Mae employs 1,400 individuals at offices across the U.S.
  • @Old_Joe And some pig-capitalist doinkbrain thought it would be a good idea to deliberately confuse people, eh? Oldest trick in the book. Words mean what we WANT them to mean, whenever we can make %[email protected]@#**&!!! money." This is not a case where something might simply be misunderstood. This is intentional deception. And our elected "leaders" are doing precisely WHAT about this sort of thing? Nothing.
  • The Sallie Mae website states that accounts are "FDIC insured," for whatever that's worth.
  • Yes, it's just another bank, but no direct connection to the Federal Government, as Crash was apparently believing.
  • @newgirl: Thank you. Picked up my 3% 2 year CD today. Local deal not Sallie Mae.
    Derf
  • @Derf
    What is the minimum amount needed to obtain a 3% APY, 2 year CD?
    Not a buyer; but curious.
    Thanks,
    Catch
  • @Catch22 ... I see a $2,500.00 minimum there. Have to just scroll down further.
  • Sweet. Better than Schwab today ...

    image
  • @Crash
    I see that info at the bottom, but the heading is account balance and fees. I don't believe this is expressing the minimum CD purchase. I may be incorrect.
    This is why I asked Derf about his purchase, to get the info directly from a customer.
    Thanks.
  • @catch22: $500 minimum, no max deposit amount ! 2.75% 1 year-2.85 18 month
    Derf
  • Old_Joe said:

    Yes, it's just another bank, but no direct connection to the Federal Government, as Crash was apparently believing.

    No, just the reverse: they are misrepresenting themselves with that name, as if an arm of the REAL Sallie Mae. @Derf, hi. Where did you uncover that $500 minimum from where it's buried on the website? I can find nothing of the sort... Thanks.
  • @ Crash; Brother told me he saw it posted in local newspaper. Southern WI. bank. Wisconsin River Bank.
    Crash , as long as I have you on the line, have you been doing any fishing?
    Derf
  • edited April 11
    Hi @Derf, If you want FDIC Insurance to cover your deposit then coverage is limited to $250,000 per depositor per FDIC bank.
  • @Derf, not yet. Saturday will be my first day. But whatever I catch will be leftover from last year. In May, my fav. pond will be stocked with brown trout. Around Memorial Day, they'll throw in the channel catfish. Northern Connecticut. The out of State price for the license has been worth it. What about yourself?
  • @Old_Skeet : Ten Four on the 250k,not even close. Currently doing the new money thing. They want your money & will pay up to get it ,but very little to keep it in place !!
  • edited April 12
    @Derf,

    My thoughts.

    I guess where I was going with this is that many investors have built sizeable portfolios through their life times. And, some have been known to go to, or to build, a large cash position form time-to-time. That is why many brokerage firms have a bank deposit program, in place, so when your cash level reaches a certain mark within your portfolio (say $100k) a new deposit is automatically opened at another FDIC insured bank in your behalf.

    Also, know, student loan portfolios are carrying high default rates. Seems, form my perspective, this bank is having to make it real attractive interest rate wise to lure depositors thus their willingness to pay above average yields to secure deposits.

    In the past, I've had some high interest rate CD's where the banks closed or were taken over by another. Thank goodness I had these CD's in my brokerage account as the brokerage house did all the FDIC claim filing paper work (in my behalf); and, I was usually made whole within just a few days of receiving a default notice.

    I did not look into all the details about this CD offer because I buy my CD's through my brokerage house; and, this was not an offer that they were carrying. Also ... an advantage of buying broker sold CD's is that they can be sold before maturity without penalty. I'm thinking these can't.

    FWIW

    I'd never hold something like this unless it was broker sold and held within the confines of my brokerage account.

    Old_Skeet

  • edited April 12
    @Old_Skeet: Never thought about this side of the story. Earlier in year I bought a few small CD's through broker's. With that said I'm wondering why CD's show values rising from less than original value. Would that be the broker fee taking effect.

    I do recall banks being sold & a few take over in this neck of the woods, so may take a deeper look at CD. I do recall a penalty if sold (cashed out) within in 90 days.

    O_S is .4 % worth fishing for on a CD ? What do others think ?

    @Crash: I did some pier fishing while in Texas,Jan.Feb. Two or three meals ,so as by that comment the bit wasn't on. Will be purchasing WI. license soon.

    Have a good weekend, Derf
  • edited April 13
    @Derf: Broker sold CD's are priced based upon their market value. If held to maturity then full principal is returned. Currently, since interest rates have fallen the CD's that I hold in my brokerage account are carrying a premium value. So, I'd make some money if they were sold ... but, I'd loose future interest that they would pay me. So, yes ... broker sold CD's valuations generally vary based upon the prevailing CD market ... but, they can be sold at anytime without penalty where as usually CD's bought through a local bank have a lock up period until maturity with a good penality attached for an early exit. Often times, the penalty is, six months worth of interest. And, if you are buying a CD with the thought this money might be needed before its maturity then perhaps a money market fund might be a better choice.

    Still, a 3% yield for a two year FDIC Insured CD is very strong considering most banks are paying in the 2.5% range, or less.

  • "they are misrepresenting themselves with that name, as if an arm of the REAL Sallie Mae"

    @Crash: Once again, from above:

    "At first, it was a government entity that serviced federal education loans. It then became private and started offering private student loans"

    There is no "REAL Sallie Mae" other than this bank.
  • edited April 12
    @Derf: FWIW, we had a number of direct (non-brokerage) accounts at Washington Mutual when it went bust back in 08. When the FDIC transferred that bank to JP Morgan-Chase there were absolutely no issues or problems, other than having to use a new checkbook. I wouldn't worry about the bank as long as your account is FDIC insured.

  • @MFO Members: Sallie Mae Bank is a financial institution affiliated with Sallie Mae, the company widely known for its student loan business. ... The bank offers three different types of savings products on its personal banking side, including Money Market and savings accounts, and Certificates of Deposit (CDs). The Linkster own's this CD:
    2.450%, 6/5/19/
    Regards,
    Ted
  • edited April 12
    Ted is correct on this. Evidently some confusion is due to the fact that the "Sallie Mae" company was once a quasi-governmental agency associated with issuing and servicing student loans.

    If memory serves, there was a major push by the private financial sector (as in "enhanced contributions" to congressional re-election campaigns) to "get the government out of unfair competition" in the student loan business, resulting in the privatization of Sallie Mae.

    From Wickipedia:

    The Student Loan Marketing Association was originally created in 1972 as a government-sponsored enterprise (GSE) and began privatizing its operations in 1997, a process it completed at the end of 2004 when Congress terminated its federal charter, ending its ties to the government. The company remains the country's largest originator of federally insured student loans.

  • Congress originally established the Student Loan Marketing Association, or SLMA, in 1972. The SLMA acronym was pronounced “Sallie Mae,” a nickname that stuck, became widely recognized and therefore had value. Ownership of the right to the Sallie Mae name was the source of some debate during the privatization negotiations. In August 1997, SLMA’s successor, SLM Holding Corporation, paid a licensing fee relating to its ongoing use of the “Sallie Mae” name, with certain statutory restrictions on its use.
    https://www.treasury.gov/about/organizational-structure/offices/Documents/SallieMaePrivatizationReport.pdf

    Had a company other than its successor bought the name, there would have been a rather obvious intent to mislead. But here, the company retained the name as the business evolved. Contrast that with a name like like Bell and Howell, which " has ... been turned over to a licensing company that lets third parties slap it on pretty much everything except for the products it was once associated with."
    https://www.technologizer.com/2009/12/30/tarnished-brands/
  • Thanks. One will always keep some cash, and if some of them can get 3% albeit at 2 year lock, not too bad.
  • Just found this, Saturday afternoon, 13 April, '19: promotional rate: Navy Federal. 3% for a SIX MONTH CERTIFICATE. There's a $1,000.00 minimum, no maximum. https://www.navyfederal.org/products-services/checking-savings/certificates.php
  • The issue with your bank going under while you hold your CDs is both opportunity cost (can't reinvest money until it comes back to you via FDIC) and needing the money for expenses etc. We had some CDs go bust in the S and L crisis and it took several months as I remember to be made whole. It may be quicker now. Unlikely either of these banks will go belly up in two years but who knows? You pay for convenience at Brokers. 0.05% is a large fraction of 3% but $500 of $100,000. Obviously it adds up. If you are investing more than that in the Navy Federal, I guess you know what you are doing.
  • TedTed
    edited April 14
    @sma3 & MFO Members: The only SURE THINGS in life are death and taxes.
    Regards,
    Ted
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