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I'm the treasurer for my church and we have $100K saved up to replace the roof of the sanctuary. It'll be a year before we need the money, so I thought I should probably take the money out of savings and buy a CD with it. The credit union with the church's checking and savings is offering 1 year CDs at 2.75%.

But there are other banks and bank-ish things out there, some in Austin, TX where I live and some online, offering 4% or more.

So my question is whether there are risks or hidden costs in taking the money to another bank, or any other considerations. I don't want to open an checking account at a second bank, so a sub-question is whether that's typically a requirement (so that's the sort of "other consideration" I mean.)

It seems straightforward that I could just go online and buy one from any online bank and in a year earn $4000. But I'm a little gun shy and would like to know if there are pitfalls to watch out for.

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    How much effort is it worth to earn $1,250 (the difference between $4000 and $2750), when opening a new business account at a different bank requires lots of people to agree? IOW, probably best to KISS and open a 2.75% CD at the CU.
    – RonJohn
    Jan 28, 2023 at 23:24
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    @RonJohn Hassle is a consideration. Being treasurer as a volunteer is a thankless job full of stupid hassles. About once a month I recall that Judas was the treasurer for the Disciples.
    – B. Goddard
    Jan 30, 2023 at 14:36
  • Having said that, it would behoove you to start the ball rolling on opening a business account at an online bank, so that next time you can more easily open a CD at the online bank. (I like Ally, but "only" have a bunch of individual accounts.)
    – RonJohn
    Jan 30, 2023 at 17:12
  • The bank officer might say that they need all of the accounts. The investor could insist on the CD offering only but it's easier to work with Treasury Direct than with banks that want to market services.
    – S Spring
    Jan 30, 2023 at 19:55
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    Maybe just a nit, but if you buy a CD from a bank, you do have an account with them.
    – Jim Mack
    Jan 30, 2023 at 20:53

3 Answers 3

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One issue with a CD is that it is all or nothing. If you need it early there may be a penalty. If you only need 75% of it you have to cash it all in and then buy another CD or move the rest someplace else.

You group probably is interested in 100% security: so you want FDIC or NCUA coverage. for that money. Talk to the bank to see if there are any special rules because it isn't a personal account, it is a business account. Sometimes the best rates are for new customers, or new money.

You could also look into investing in US treasury bills. They have rates that are competitive with CD rates, and they are 100% guaranteed. Again make sure there aren't complications due to it being business funds.

Moving money outside the regular bank may require approval of your board, or multiple signatures, so check with your organization regarding the proper procedures.

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  • Good point regarding personal vs business account, although there might be additional rules/exemptions for religious institutions/charities.
    – 0xFEE1DEAD
    Jan 28, 2023 at 18:56
  • Thanks for the answer. The T-bill thing is a good idea for us, I think. We already have a brokerage account which we hardly ever use (occasionally someone gives the church a gift of stock and we need a place for it to go.)
    – B. Goddard
    Jan 30, 2023 at 14:32
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One year treasuries and CDs are currently paying in the vicinity of of 4.75%. Both are guaranteed, the former by the US goverment and the latter by FDIC insurance. Ladder them if you think that you might need some of the money sooner - for example, 3, 6, 9, and 12 month maturities.

Treasuries require a brokerage account whereas CDs can be done in a brokerage account or in a money market account.

Some online banks offer no penalty CDs thought they tend to pay a lower rate. For example, one that I'm aware of is for 11 months at 4.10% and you can withdraw the money any time before maturity without penalty.

Google for "best rates CDs and Treasuries"

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As long as the funds are insured under FDIC, it shouldn't matter which bank issues the CD.

You could consider opening a brokerage account and investing the funds in (a ladder of) brokered CDs depending on where you get the best rate.

This has the advantage that the funds would all be in the same investment account, without needing to open new accounts at each bank whose CD you want to invest in.

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