So, two “WHEN” questions: WHEN am I going to get a REAL rate on my certificate, and WHEN will the economy around here get back to normal? The UN-clever and UN-funny answer we need to consider is that for practical considerations, this is the new Reality.
I have to consider things like this when planning for the credit union and reluctantly, I’m forced to look at things in Northern Nevada, the nation and the effects of the current international economic situation. Though the unemployment rate in Nevada is easing, the US rate is actually up. The Euro market is teetering (technical term) and may face the loss of some members. The 10-year T-Bill is at historical lows; currently around 1.5%, with possibilities of going lower and few expectations of going materially higher. The relative magic of the 10-year T-Bill is that mortgage loan rates are generally tied to it and it is telling us, “Stop worrying about inflation for the next five to ten years.” Ergo, nothing is going up for at least five years, if not longer.
Kind of a downer, especially for us Boomers dependent upon savings rates, but there are some rays-of-light and positive perspectives to consider. First, we are actually in a recovery. Not an exciting one but things are going in the right direction, albeit slowly. Second, things around here are relatively stable and that’s good because you should be able to make some decisions to help you optimize the circumstances instead of waiting for a complete collapse.
I hate saying this, but you should be looking to pay down or payoff your borrowings. Yes, at the credit union, but look at the other loans you have at that “other place” and see if the credit union can get you a better rate. We refinance vehicles, mortgages and personal loans. Are you paying fees on your checking account? You should be talking to our branch staff to see if you can close that second checking account at the “other place” and take advantage of Great Basin’s CORE relationship advantages that not only provide you with free services, but interest rate bumps on loans and certificates too. You should consider moving some of your extra money back into certificates to get any type of rate advantage. Many members have let maturing certificate drop into their regular savings or money market account. Even if it is only a five or ten basis point advantage, why wouldn’t you grab it? Get your CORE account bump. Consider longer and multiple terms on your certificates and “laddering” multiple certificates maturities to increase the overall yield while preserving liquidity. Remember to keep a six month cushion in liquidity for tires, insurance and the little emergencies. Consider letting our Financial Advisor look at your longer term alternatives.
We have a ways to go, but remember that you belong to a NOT-FOR-PROFIT credit union that is established for the benefit of its members – not a bank where the goal is to maximize how much they can get out of you. Take advantage of every opportunity your credit union offers. We’re with you for life, and all its realities.