By: Revanche

Basic liquidity error

July 11, 2008

Wachovia has a 7 month CD at 4% APY and a 12 month CD for 4.25%. That’s a good percent above my highest earning savings account, so I was about to commit to the 7 month CD last night.

Then I realized:

1. It’s a minimum $5000 deposit.
2. You must have a Wachovia checking account.
3. My E-fund is 5 months’ worth of expenses. If I lock up a third of it for a maturity date of 7 months from now, I’ve got a rather large gap of time that’s not covered by cash in hand. It’s not that I couldn’t break the CD, but I would lose at least half of the interest earned. That would completely defeat the purpose of having it in there to earn more money.

It’s best that I hold off on this until the job situation is settled one way or another. But perhaps this CD will be helpful for someone else!

6 Responses to “Basic liquidity error”

  1. Hedy says:

    Too much tie up for the reward, I agree.

  2. Revanche says:

    Hedy: Glad I stopped just in time!

  3. Sense says:

    hmmm, speaking of CD’s…sorry to bug, but do you still want my extra onetouch mini cd? like i said, it’s just the backup CD for your computer.
    anyway, it’s sitting in my room at my parent’s house, ready to go out whenever you need it–my mom will just write the address in and put it in the mailbox. If you decide you don’t need it, she’ll pack it away. email me @ sensetodollars at yahoo dot com whatever your decision. thanks!

  4. Revanche says:

    sense: Not a worry! I’ve emailed you back.

  5. They also have something called “Way2Save,” which still requires a checking account, but they will transfer $1 into the savings account every time you make a purchase. You can also set up a transfer of up to $100/month. They pay 5% interest for the first year (2% after), plus up to 5% as a cash bonus the first year (and 2% for the next 2 after that). Link.

  6. Revanche says:

    paranoidasteroid: I did see that earlier, but skipped it because my eyes fogged over at the prospect of yet another checking account. I’ll revisit it later, when my brain’s back in gear. Thanks for the link!

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