Here at BestCashCow, we’ve been inundated by people thanking us for the work that we are providing in organizing and displaying bank rates over the last several weeks. We are grateful that we can continue to provide everyone with the ability to find the best savings rates,CD rates, mortgage rates and home equity rates during this difficult and unprecedented times.
Yet, some folks still aren’t getting the message. Just two weeks ago, before the markets’ latest fall, BestCashCow was attacked on Twitter by someone operating the Market Rebellion twitter handle. (Market Rebellion is the latest branding effort of Jon Najarian and Pete Najarian). The criticism read “Whatever with BestCashCow. We hope your followers enjoy their 2% CDs!”.
So, let’s make this clear. First, the stock market goes in all sorts of difficult directions. In spite of what we have been conditioned to believe over the last 11 years, it goes down too, sometimes dramatically. Over the last month, it has lost a third of its value and if you are blinded to that reality by screamers on CNBC on up days, you need to outline your assets on an Excel Spreadsheet to see how much you have lost. And, even now, you need to consider how much more you can tolerate, because all doctors and medical professionals are saying that our Coronavirus problems have not peaked. In fact, it may be many months or years, before this crisis in under control.
Second, there is always somebody of the other side of your trade. And, in the case of the buying that you were doing in February, we now know that among the people who were selling to you were North Carolina Senator Richard Burr and Georgia Senator Kelly Loeffler. They had information that you didn't have and may still not have.
If these two realities don’t cause you to reconsider your allocation to savings and CDs, nothing will.
The Federal Reserve has made its second emergency rate cut in a little over a week, cutting the Fed Funds rate by a full 1% to a range of zero to 0.25%, in order to address the unprecedented economic slowdown caused by Coronavirus.
I get multiple inquiries every day from readers inquiring about long-term CD rates. Even though BestCashCow is the most comprehensive source of these rates, neither I nor anyone who works here would recommend the panicked move of locking into a 5-year CD here. At this point, it is the unanimous belief of even the most conservative medical professionals that Coronavirus will not be with us for more than another 18 months. We are likely to see inflation after it passes. Against that backdrop, a five-year CD seems like too far of a reach here. Plus, for comparison purposes, 5-year CDs were at 2.30% to 2.50% the last time that the Fed Funds rate was at zero, and you are not being rewarded with rates that high right now.
In fact, you are not getting any premium in 5-year CDs over 1-year CDs at the moment.
Since savings and money market rates are likely fall over the coming week to 10 days in response to today's cut, we’d continue to strongly recommend locking into 1-year products. It is just about securing the growth, however small, of your money for the next year.
If you think you may need to access your principal over the next 12 months, you should opt for No Penalty CDs. These products will not offer the same yields as one-year CDs, but they may still enable you to lock in a rate of return until we get to the other side of this challenging time.
Anyone who lived through 9-11 and the financial collapse in 2008 and 2009 remembers how extraordinarily painful were those periods for the airline industry and their employees. And, even the industry’s staunchest critics (hard core environmentalists, etc.) certainly recognize that a return to those difficult times is not in anyone’s interest. Yet, as a country, we are going to get through the Coronavirus and we are going to get through Trump, but somehow it is starting to seem that the three major airlines might not all get through 2020.
Without flying yourself, you can take steps to help the airlines out, and the easiest step is to accumulate frequent flier miles on those airlines that you will be inclined to fly in the future. This is a form of extending credit to the airlines, and it is a form of credit that has proven time and time again to survive bankruptcy.
If American Airlines is an airline that you fly, the easiest step you can take is to open a Bask Bank savings account. I’ve written about Bask Bank here. I believed in January that the prospect of getting AAdvantage® miles was very attractive in the low rate environment in January. I’ve noticed that many readers were engaging in a valuation exercise, valuing the miles they would receive against alternatives in the savings and CD market as if they were purchasing the miles (see the comments in this article). If that is your approach, the Fed’s most recent move makes the opportunity even more interesting.
If United is an airline that you fly, the easiest step you can take is to move your Chase Ultimate Rewards points to your United Mileage Plus account. Every time you convert your points, Chase is making a purchase of the miles from United.
And, if Delta is an airline that you fly, you can move your American Express Membership Rewards points to Delta Skymiles. Again, this action prompts a purchase of miles and a payment to Delta.
If you are not altruistic, you can even consider all of this to be completely in your self-interest. If history is any guide, when everything settles and people begin traveling again, you will find fantastic redemption values for your airline miles at all three of these airlines, especially for business class seats on long haul and international flights.
