My First CD
I bought my first certificate of deposit today. The local credit union was running a pretty remarkable promotion - one-year CD's were advertised with a 10% APY. This was too good of an offer to pass up. So I went into my nearest branch and plunked down $5k -- the max that was allowable under the promotion.
Not bad for my first time. Must be beginner's luck. ;)
The funds were drawn from my emergency account. I explicitly reserve $10,000 in my savings account for emergencies. Now I'll reserve $5k in cash and keep the other half in the CD. When I lock up "emergency dollars" in a one-year CD, I'm making the implicit bet that I won't need to raid that portion of my emergency fund in the next twelve months. Otherwise, I risk forfeiting all the accrued interest.
For a $250 boost in interest income, that's a bet I'm willing to take.
Not bad for my first time. Must be beginner's luck. ;)
The funds were drawn from my emergency account. I explicitly reserve $10,000 in my savings account for emergencies. Now I'll reserve $5k in cash and keep the other half in the CD. When I lock up "emergency dollars" in a one-year CD, I'm making the implicit bet that I won't need to raid that portion of my emergency fund in the next twelve months. Otherwise, I risk forfeiting all the accrued interest.
For a $250 boost in interest income, that's a bet I'm willing to take.
posted by Matthew at
8:40 PM
3 Comments:
what bank?
By
Anonymous, at 9:41 PM
The promotion has already expired.
By
Matthew, at 8:04 AM
Wow. 10%. That's huge. Assuming that you'd make 5% in an online savings account, I think you made the right bet... After all, if you don't have an emergency that costs you over $5k, then you'll have double your interest.
By
fivecentnickel.com, at 5:59 PM
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