Joe Cotton: Now is time to lock in high interest rates; buy bank CDs sold by stockbrokers


My wife has had a savings account with PNC Bank for over 5 years. She is currently receiving 2/10 of 1% on her money. So, if she had $100,000 in her account she would get paid $200 in a year.

She also has an American Express Credit card and on her last statement she noticed that they said they were paying 2.75% interest on savings accounts. She asked me to look into it to see if they were FDIC insured. I checked it out and found out that they were. So on a $100,000 account she would receive $2,750 per year at that current rate.

I have an Ameritrade brokerage account (they have been bought out by Charles Schwab) and I called them to ask about buying 1-Year Treasury Bills. During the conversation I found out that they also sold Bank CDs. They directed me to the Bank CDs section of my account and I found that Key Bank (Ohio) had a 1-Year CD at 4.858%. So, on a $100,000 account she would receive $4,858 per year at that Locked-In Rate. Minimum Purchase is $1,000 per CD. The interest is paid in February and August. WOW!

Joe Cotton

You can bet that this week my wife will moving most of her savings account money at PNC Bank to her Ameritrade account, to take advantage of that great rate.

Ameritrade also quotes a Silvergate Bank 6-Month CD with a rate of 4.4%.

If your broker doesn’t offer Bank CDs, you can open an Ameritrade account at their website, www.tdameritrade.com. There you can open an account, with no money required, and get an account number. Once your account is set up, you will be able to transfer money from your bank account to your Ameritrade brokerage account. Another great feature of your Ameritrade account is that no commissions are charged for buying and selling stocks.

One strategy would be to put half your money in a 1-year CD and half in a 6-month CD, because we expect rates to keep moving higher….maybe to 7% or more. And, if they do, you want to be able to keep locking in those higher rates.

At the end of 6 months, you would then redeem your 6-Month CD and use that money to buy a 1-Year CD at that high rate, and in 6 more months your 1-Year CD will mature, and you would then buy another 6-Month CD…etc.. etc., and maybe eventually lock in a really high rate with a 5-Year CD.

The added income you can now receive because of high interest rates is one of the few means you now have to offset runaway inflation, because it gives you more personal income to spend, hence more Buying Power.

Joe Cotton has won three National Stock Picking Contests with yearly percentage gains in excess of 96%. His 2020 Wall Street’s Best stock contest winner was Inovio Pharmaceuticals (Symbol INO) with a 742% 1-Year return.

This article is not investment advice, nor is it in any way to be construed as investment advice. For Investment Advice consult a Registered Investment Advisor or a Certified Financial Planner. Joe Cotton’s website is www.cottonstocks.net. NKY’s Joseph W. Cotton is publisher of the market newsletter, Cotton’s Technically Speaking. He is a graduate of Xavier University, a former bank manager and credit analyst, and a former Fidelity Investments registered investment representative. Contact him at cottonstocks@hotmail.com


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