Monday, October 13, 2008

5 Cd Mistakes I've Made

Trent posted a great article on "building a cd ladder" last week. It made me rethink how I've been purchasing mine and what long-term plans I have for them. (Here is a great explanation of everything CD related.)

Here are some mistakes I've made with current cd purchases:

1. Buying too large a cd. Obviously the more money is locked in, the higher the savings rate will be. I received a large check this summer and immediately purchased a twelve month cd. In retrospect I should have purchased a 12 month and a 9 month or just waited to break up the money into smaller, consistently maturing savings.

2. Purchasing sporadically. Hopefully setting this as a monthly goal will force me to budget for new cds instead of just buying one for a random amount whenever my emergency fund looks overly plump or a freelance check rolls in.

3. Thinking in yearly terms. While my ultimate goal is to have cds maturing monthly I persist on opening 12 month cds. I can't decide if opening smaller $1000 accounts with shorter periods (like Trent) is the better option. My interest rates would decrease but my sense of accomplishment would increase.

4. Sticking with Wachovia. Their cd rates are comparable to other b&m banks but I could do much better on-line. While my emergency fund is at Emigrant Direct, everything else is with Wachovia. I am having a hard time releasing my hold on a physical bank even if it means saving more effectively.

5. Not keeping better track for my POD. I'm relatively young and healthy but that doesn't ensure a longevity. I should update my records at least every other month with new account numbers instead of risking my brother being overwhelmed by a plethora of tiny accounts - although a final jab at annoying him would be right up my alley ;)