Skip to main content
42 votes
Accepted

Which mortgage should I pay off first? Same interest rate and mortgage length

You haven't accounted for what happens when the small loan is completely paid off. Seven years into the aggressive payoff schedule you need to shift all original principal and interest payment and the ...
mhoran_psprep's user avatar
31 votes
Accepted

Is there any advantage to a longer term CD that has a lower interest rate than a shorter term CD?

Taking a longer-term CD with a lower interest rate could make sense if you expect CD interest rates to drop in the near future. Suppose you could get a 6-month CD with a 5.1% interest rate, or a 12-...
Nuclear Hoagie's user avatar
23 votes
Accepted

0 APR Promotional Offer For Credit Cards

Would you be able to get the same promotional offer again? You can't get the promotional offers on the same card immediately, and some are once in a lifetime. You might be able to string together ...
Hart CO's user avatar
  • 70.5k
14 votes
Accepted

How to compare loan interest rate to savings account interest rate?

The question boils down to the taxes. If your loan is tax deductible (e.g.: mortgage loan or investment interest, and you're itemizing the deductions), then the tax benefit reduces the loan cost. Your ...
littleadv's user avatar
  • 177k
11 votes

Which mortgage should I pay off first? Same interest rate and mortgage length

However, I just started thinking, and because of the nature of amortized loans, I'm obviously paying quite a lot of interest in the beginning.... This is a common point of confusion, the portion of ...
Hart CO's user avatar
  • 70.5k
10 votes

0 APR Promotional Offer For Credit Cards

There is already a great answer here, but I'd like to add something that is slightly more than a comment. You wrote: what happens if you cancel the card later (with no remaining balance) and would ...
Tashus's user avatar
  • 201
5 votes

How to compare loan interest rate to savings account interest rate?

Loan interest is front-loaded. Savings interest is compounded. Use an amortization calculator/table and a savings calculator to visualize the interest and decide which one makes more sense. Loan - ...
MonkeyZeus's user avatar
  • 8,473
5 votes

How to compare loan interest rate to savings account interest rate?

Should I put excess income towards the loan or savings? Depending on tax rates, and if are going to deduct the interest , you can calculate which is better mathematically. But what is the savings for?...
mhoran_psprep's user avatar
5 votes

Interest rates effect on bank jobs and junk funds from the book intelligent investor

If I work in a bank and interest rates are rising then how can it put me in a job security risk since banks will have more profits with higher interest rates and there is not need for employee layoff. ...
littleadv's user avatar
  • 177k
5 votes

Is there any advantage to a longer term CD that has a lower interest rate than a shorter term CD?

Note that many high-rate short term CDs are promotional offers, not renewable at that rate, and only available if you deposit "new money" (from another bank) to open them. The goal is to ...
keshlam's user avatar
  • 48.2k
4 votes

0 APR Promotional Offer For Credit Cards

I previously managed several credit cards, often getting one with a 0 APR ahead of big expenses. Some banks offered cash rewards for meeting spending targets in the initial 3 months, allowing me to ...
Parvez's user avatar
  • 347
4 votes
Accepted

For this I-bond calculation there's a tiny adjustment to the rate (fixed rate x semiannual inflation rate) it barely changes the rate.Why is it there?

The last term of the formula makes up for the loss of value of the fixed rate interest due to inflation. The thread you linked to actually already contained that information, but probably not clear ...
Solarflare's user avatar
  • 2,648
4 votes

Is it worth refinancing? Original lender claims they missed getting income documents at time of closing and want to make loan "servisable" at no cost

6%+ is common for 30-year fixed rates currently, so I doubt 3.15% fixed is possible at the moment. Ignoring the improbable rate offer, they are adding about $5k to your loan principal to drop your ...
Hart CO's user avatar
  • 70.5k
3 votes

Is it worth refinancing? Original lender claims they missed getting income documents at time of closing and want to make loan "servisable" at no cost

First of all, that rate seems "too good to be true" given current 30-year rates, which are near or over 8%... It seems like either a "teaser" promotion that will end up being a ...
D Stanley's user avatar
  • 137k
3 votes

For this I-bond calculation there's a tiny adjustment to the rate (fixed rate x semiannual inflation rate) it barely changes the rate.Why is it there?

The composite rate is reported as an annual rate, but the interest is actually compounded semiannually. Thus at the end of the first half of the year, you get to collect interest on the amount at the ...
Brian Borchers's user avatar
3 votes

Optimizing between Mortgage and Bonds

it seems like because mortages are simple interest and GICs are compound, No, mortgages are compound interest. If you were to not make any payments, then the amount owed would grow at an exponential ...
Acccumulation's user avatar
3 votes
Accepted

Monthly Rate vs Continuously Compounded Rate

(a) 100,000 * (1+1%)^36 = 143,076.878 I am not sure if I get (a) correctly because I see that some people calculate it as 100,000 * (1+1%*36) If you are earning 1% each month on your balance, and the ...
mhoran_psprep's user avatar
3 votes

I-Bond Interest Rate Projection in the US

The composite I-bond rate depends on two rates: 1) the fixed interest rate set at the time of purchase, and 2) the variable semi-annual inflation rate. The composite rate is calculated as: [rfix + (2*...
Stan H's user avatar
  • 7,551
3 votes
Accepted

Confusion with payment calculation for fixed payments on fixed interest loan

It's simply how interest rates are quoted - they're quoted as an annualized rate but they are applied monthly, hence the X/12%. It does not mean that you accrue exactly X% over the year if you do not ...
D Stanley's user avatar
  • 137k
2 votes

How do I determine Interest Rate of 4-Week Treasury Bill

A good resource appears to be this link: https://www.treasurydirect.gov/instit/annceresult/press/preanre/2004/ofcalc6decbill.pdf which contains formulas that I will use in the answer. Because of ...
Mark H's user avatar
  • 121
2 votes

How do I calculate the interest rate on my Treasury bill given an evaluated price?

I've seen some formulas use 366 days instead of 365. How do I know which to use? You can use either, or use 360, which is common for annualizing yield based purely on a discounted purchase price - as ...
D Stanley's user avatar
  • 137k
2 votes

What happens if the volatility in the equity market increases? Does interest rates move up or down?

Anything can happen... Historical correlations occasionally break down. In general, I would expect yields to go down in a risk-off/flight-to-safety situation. At the same time, short-term yields might ...
0xFEE1DEAD's user avatar
  • 8,498
2 votes
Accepted

If APY factors compounding (while APR doesn't), shouldn't APY always be higher than APR?

Why is this lower? Does the APY for amortization schedules work differently (because interest is front-loaded or whatever)? But since the loan only lasts one year, how would that even make a ...
Hart CO's user avatar
  • 70.5k
2 votes

Is it worth refinancing? Original lender claims they missed getting income documents at time of closing and want to make loan "servisable" at no cost

In the first place, if "no cost" is interpreted to mean "no cash required at closing" then the bank is probably telling you the truth. You're looking at only part of the deal. The ...
John Bollinger's user avatar
2 votes
Accepted

Loan: calculate number of monthly payments with fixed annual interest, fixed montly payment, and 1 additional payment per year

There may not be a closed-form formula to determine the length due to the extra periodic payment, but the algorithm can be done fairly easily in a spreadsheet: You need 5 columns: Month, Payment, ...
D Stanley's user avatar
  • 137k
2 votes

Why it's best to buy fixed-rate annuities when long-term interest rates are significantly higher than short-term interest rates?

I would not use the term "best" as it implies that you should time the market, but if short-term rates are higher than long-term rates, it's usually a temporary condition, and the market ...
D Stanley's user avatar
  • 137k
1 vote

Market Reactions to Federal Reserve's Rate Decisions

What is the intuition behind the market's reaction to the Fed's decision, and why might my intuition be incorrect? Some people thought the Fed would do A Some people thought the Fed would do M Some ...
mhoran_psprep's user avatar
1 vote

Is it worth refinancing? Original lender claims they missed getting income documents at time of closing and want to make loan "servisable" at no cost

Original loan was for 480k at 3.25% fixed rate for $2,088 monthly payments for 30yrs. We currently owe 458k and have 28 yrs left. We have been paying an additional $100 towards principal each month. ...
mhoran_psprep's user avatar
1 vote
Accepted

How do I hedge against continued rate hikes for a mostly bond portifolio?

Sounds like you're suggesting substituting in short term rate exposure (presumably so you're not trapped further on the longer end of the yield curve). Here are some other points to contrast or ...
OurNewestMember's user avatar
1 vote

Optimizing between Mortgage and Bonds

Not knowing the tax implication of cashing in your investment, if it were me, I would pay of the mortgage and invest the $56k per year I am saving. If you feel you need a larger investment or a bigger ...
LoztInSpace's user avatar

Only top scored, non community-wiki answers of a minimum length are eligible