Quote:
Originally Posted by Boomer
But I think that means that because the interest is paid at the end of the term, in total, there is no interest upon early withdrawal, even though there is no penalty.
I have yet to do anything over 3 or 6 months. Lately, I saw that it’s hitting more above 5% in available new CDs and I am getting ready to buy again.
Still though……..weird and scary times we are in……..
I realize Fidelity’s money market is grazing 5 sometimes, but I think they collect basis points. Is that right?
Boomer
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I don't know how the interest is paid on a brokered CD, but I assume that the market price, if you sell it before maturity, would reflect the value of any future interest payments that will be due. With a bank CD, you never pay a penalty on the interest you withdraw. The penalty only applies to the early withdrawal of principal. You can ask the bank to allow you to withdraw interest only to avoid paying a penalty.
Note that the Vanguard Federal money market fund current yield is 5.31 percent. The Fidelity Federal money market fund has a current yield of 5.02 percent. I think that advertised yields are calculated after any fees have been applied. I always buy the "Federal" money market funds because they pay a slightly higher interest rate than the regular MM fund.