CD is Free (that is, I closed my account)

Whether or not I keep an emergency fund is still TBD, but I did finally close my Bank of America CD that was earning a whopping .35% interest. I thought the cancellation penalty was 3 months interest, but, without doing the math it seemed to be more than it should have been — $230 fee on an $8k CD. In any case, I took the hit, figuring it’s better to have the money liquid in a high-interest checking account that probably pays a better rate than the CD with 12 months left on it.

So now, including a few other checks I cashed yesterday, I have $10k in my checking account. The question is — what to do with it?

$1.5k will go into my IRA for this year, so I max it out. That leaves $8.5k left. Since I have a 401k next year (no match) I’m tempted to try to max that out before thinking about an IRA, as I make slightly too much for a Roth and the traditional IRA tax benefits are available for an even smaller salary. I’m also tempted to take the $8.5k and put it into a high dividend ETF or split it up among dividend-bearing stocks. I’m further tempted to put a sizable chunk of it into AAPL, but that seems too risky vs diversifying across dividend paying stocks.

What would you do to invest or save $10k?

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2 thoughts on “CD is Free (that is, I closed my account)”

  1. Well, if the early withdrawal penalty WAS 3 months interest, something is fishy. By my calculation, .35% of $8000 is $28.00.
    That's what you should get every year.
    That's $2.33 per month. Sounds like
    about $7.00 for 3 months. I'd be on the phone to B of A right away……

  2. The more you put into the 401K, the more your income is lowered and the more likely you will be able to fund a Roth IRA. Have you checked out credit unions? Alliant Credit Union has app. 1% for checking and savings.

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