Certificate of Deposit

Archive for November, 2007

Question: Why did my CD value drop in Scottrade account? help?

I purchased a Certificate Of Deposit through scottrade. (CD) the amount was for $30,000. Just a regular old fashioned CD, not on margin either. The CD pays 3.05% in one lump sum at the end of 3 months. My balance showed $30,000 for three days after the purchase. Today I log in and it shows the value of the CD at $29,953. A $47.50 loss???????? How can this happen? There is no indication of where the $47.50 went in my account history. Is this the fee from scottrade or an error? Anyone know?

Answer: Gee. Does Scott Trade charge a fee for CD’s?

I’d call and complain.

1-800-619-SAVE (7283)

http://www.scottrade.com/contact_brokerage_house/

CD Rates

Question: Taking out a mortgage on a rental property secured by a Certificate Of Deposit?

Since CD interest rates are so low we were thinking of securing a mortgage with one to buy rental property-the cd would still earn interest, and (hopefully) the rent would pay for the mortgage.
We have someone knowledgeable about property who could manage it for us, but I have qualms about people who don’t pay their rent/and or destroy property.
Any suggestions?

Answer: You will not find a lender willing to take the CD as collateral. The mortgage is secured by the property, itself. You need a greater downpayment for a non-owner occupied rental property, and the interest rate is higher on a mortgage for a rental property, if you don’t live in it. A Lender is not going to allow you to use the CD as collateral, and then dip into the proceeds if the unit is vacant. It just doesn’t work that way. Additionally, you must budget money for inspections, settlement costs such as insurance and title insurance, repairs, and to pay the mortgage when the unit is empty. No unit is rented all of the time. Talk to a reputable mortgage broker to see what you qualify for– once you have been qualified by the mortgage broker, you can call a realtor and find a property. After you buy a property, you must pull credit on your tenants, and confirm they are working. It is not hard to find good tenants, but it sure is easy to get stuck with a bad one. Some states are very pro-tenant, and it is hard to evict –can be a long and expensive process. I hope this explanation helps.

Personal Finance & Money Management : About Certificate Of Deposit Rates

Question: Savings or Certificate Of Deposit?

I received a check for $2,000 and want to put it away either in a savings account or CD. I am a bit unsure where to put it. I know that a CD offers better rates than a regular savings account; but a savings account offers the flexibility of withdrawing the money at any given time. I am not very disciplined with money and know that if I have easy access to it I will spend it. That’s why I am leaning to a CD (limited access); with rates lowering though, would it be a good idea?

Suggestions/opinions, please!

Answer: A Money Market might also be a good option for you. It would definitely pay better than a savings account, but be more liquid than a CD. The risk you run with a Money Market is that interest rates may be cut again, lowering the amount you’d be making. If you get into a CD you are locked in (unless you buy it at a brokerage and then try to sell it in the secondary market, which would possibly be at a loss) but you don’t have the risk of interest rate fluctuation. What is more important to you-a set rate that won’t change, or the ability to access your money?

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