|
☕ DrinkCoffeeAndProfit
Smart money moves before breakfast
|
|
Inspiration Quote for the Day
“Time is what we want most, but what we use worst.”
William Penn
|
|
|
The Morning Ritual
Vern’s CD Matured on Friday and Renewed Itself at Less Than Half the Rate
|
My brother-in-law did everything right. Vern shopped around, found a good `12` month rate, put the money in and stopped thinking about it. That last part is the expensive one.
A promotional rate does not renew as a promotional rate. When the term ends the bank rolls you into its standard offer, and the standard offer is a different number entirely.
|
|
· · · Partner Message · · ·
After taking SpaceX public in the biggest IPO ever… Elon Musk is already working with a NEW startup that’s growing faster than Tesla… Faster than SpaceX… And faster than any of Elon Musk’s previous ventures.
The Wall Street Journal called this startup “the front-runner in the race for artificial-intelligence supremacy.” So if you didn’t get a chance to get into SpaceX before it went public… This could be your next big opportunity.
This startup is moving towards “a blockbuster IPO.”
Jeff Brown, Founder & CEO, Brownstone Research
This is an advertisement.
|
|
|
In One Sip
► When a CD matures, most banks open a grace period of about `7` to `10` days. Chase and Wells Fargo both use `10`. Source: Chase and Wells Fargo disclosures.
► Inside that window you can withdraw principal and accrued interest with no early withdrawal penalty. Outside it, the penalty applies. Source: Chase CD maturity terms.
► Do nothing and it renews at the standard rate in effect on the maturity date, for the same or a similar term. Source: Wells Fargo CD terms.
► In July the national average on a one year CD was `2.00%` while competitive offers ran `4.00%` to `4.30%`. Source: Bankrate, July `15`.
► The quiet part: federal rules require the bank to disclose whether a grace period exists and how long it lasts. The bank picks the length. Source: Regulation DD, Truth in Savings Act.
|
|
|
Why It Matters for Your Money
Put `$25,000` against those two rates. At `4.15%` that is about `$1,037` in a year. At `2.00%` it is `$500`.
The gap is roughly `$537`, and it turns on one phone call made inside a `10` day window. Miss the window and the money is locked again, at the lower number, for another full term.
There is a second detail that goes unchecked. Some banks pay no interest at all during the grace period, and others pay a low default rate. The `10` free days are not free for everyone.
The maturity notice does arrive. It goes out weeks ahead, it looks like every other statement, and it is the only warning the system owes you.
|
|
|
Partner Message
This is an advertisement.
|
|
|
The Wealth Angle
Two things can be true. Automatic renewal keeps savers from accidentally leaving money in a non-earning account, which is a real service. It also moves the shopping work from the bank to you. Once a year, on a date you chose months ago and then forgot.
Every product in a household that renews by default works this way. The renewal is never the offer. The offer is what they use to win new money.
My own version takes `30` seconds. Every maturity date goes in the calendar the day the account opens. The reminder is set two weeks early, not on the day.
Two weeks is the useful part. It gives you time to call, compare and decide before the clock that matters even starts.
|
|
|
Partner Message
This is an advertisement.
|
|
|
☕ Key Insight:
A fixed rate is a promise with an end date attached. The promise is kept, the end date arrives, and what happens next is decided by whoever is still paying attention.
|
|
|
Coffee Break Move
If you are comfortable: Pull every CD you hold and write two things next to each one. The maturity date, and the length of the grace period. Then set a calendar alert two weeks before each date. That is the whole job, and it is the only part that has a deadline.
If you are stretched: Call the bank and ask one question. What is your best current rate on this term, not the default renewal rate. They are often two different numbers, and the better one is usually the one you have to ask for.
Vern got his money moved in the end. It took a call, no apology from anyone, and a rate he could have had by opening one envelope in August.
|
|