Agriculture FCU offers something called an Asset Builder CD which has a 2 year term and no initial deposit. An unlimited amount of money can be added at any time but not withdrawn until the end of the term. So what you can do is open it with a $0 initial deposit and then if interest rates go down you put your money in for the remainder of the term.
For example, I have one I opened with a zero balance in 7/2008 at a rate of 2.58% which matures 7/2010. So if I put money in now it's like getting a 6 month CD with 2.58% interest, which is pretty good in the current environment.
I keep two of these open with maturities one year apart and let them continually renew so I always have the option of opening a ~1 year CD at last year's rates.
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posted: Jan. 14, 2010 @ 8:04a
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posted: Jan. 14, 2010 @ 10:44a
Is there a minimum that you have to eventually fund it with before maturity, or can you just basically use it as a free option to invest and let it expire?
posted: Jan. 14, 2010 @ 11:22a
mrteeth said: I have one I opened with a zero balance in 7/2008 at a rate of 2.58% which matures 7/2010. So if I put money in now it's like getting a 6 month CD with 2.58% interest, which is pretty good in the current environment. I'm sure this was a great deal to open back then. Now that the rate is 1.09%, I highly doubt that this is worth the hassle to open. What are the odds of rates going down so low that we can't get more than that in a liquid account?
posted: Jan. 14, 2010 @ 12:58p
cclyde said: Is there a minimum that you have to eventually fund it with before maturity, or can you just basically use it as a free option to invest and let it expire?
There's a $100 minimum in the share savings to avoid a monthly fee, which is higher than most CUs.
There's no minimum or requirement to fund the CD, however. So you can just open it and let it expire if the rate never becomes appealing.
ThePessimist said: I'm sure this was a great deal to open back then. Now that the rate is 1.09%, I highly doubt that this is worth the hassle to open. What are the odds of rates going down so low that we can't get more than that in a liquid account?
At the time I opened the account 2.58% was a terrible rate (fed was 5.25% at the time) and you probably would have also said it's not worth the hassle to open. So sure it's not instant gratification. You have to open it when rates are high and you get the benefit when rates are low.
I mean, even now that rates have crashed 2.58% is nothing to go gaga over. So I agree it's not worth jumping through a lot of hoops, but it's a no brainer once you set it up. IMO, the best use is to just open one or two and let them automatically renew with the hope that interest rates are peaking when they reset. Like I said I have two of them staggered one year apart and I just let them keep renewing. That way I get a freeze on the rates at least once a year.
posted: Jan. 14, 2010 @ 3:37p
FYI it looks like the Fed funds rate is historically highest in August. So that's probably the best time of year to open the Asset Builders for those who are interested:
posted: Jan. 15, 2010 @ 5:10p
Except that the rate is 1.09% right now. Doesn't seem worth bothering with. It is hard to imagine rates dropping below 1%.
posted: Jan. 15, 2010 @ 6:40p
snipeman said: Except that the rate is 1.09% right now. Doesn't seem worth bothering with. It is hard to imagine rates dropping below 1%.
IMO it's worth it because once you have it open it stays open renewing at the current rate every two years. So you don't have to go through the trouble 2 years from now when you're too busy rate chasing to remember this post.
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