Can your credit union do this

[mrjuggalo9er]

Offer you a personal loan at 4.5% while offering 5.5% on their cd

 

Literally pay you to borrow their money....

Aren't credit unions the best

[Burgerwars]

9 hours ago, mrjuggalo9er said:

Offer you a personal loan at 4.5% while offering 5.5% on their cd

 

Literally pay you to borrow their money....

Aren't credit unions the best

 

Which credit union? There's also income tax liability on your CD interest (the whole 5.5%). If you were able to get a huge $10 million personal loan and then open a $10 million CD, that's earning $100,000 interest on the 1%. But the real problem is you'll be taxed on $550,000 of CD interest. That's a net loss if your tax bracket is about 20% or more (state and federal). It will likely be more than that just with that $550,000 in interest income.  Even with $50,000 or $5,000 it may not be worth it. Anyway, give us a report if you do this.  

[MarvBear]

10 hours ago, mrjuggalo9er said:

Aren't credit unions the best

 

In my opinion, No.

[greendeh]

10 million CD at 5.5% ayp accrued monthly would gross $564,079 interest in one year.
Federal taxes only on that would be $169,322.15

 

But regardless of the tax consequence on the CD interest, it is interesting how a financial institution could offer a 4.5% loan and a 5.5% CD

[mrjuggalo9er]

5 hours ago, greendeh said:

10 million CD at 5.5% ayp accrued monthly would gross $564,079 interest in one year.
Federal taxes only on that would be $169,322.15

 

But regardless of the tax consequence on the CD interest, it is interesting how a financial institution could offer a 4.5% loan and a 5.5% CD

What's even more interesting is the look they gave when I asked about it

[swimmingwithsharks]

On 8/20/2023 at 12:22 AM, mrjuggalo9er said:

What's even more interesting is the look they gave when I asked about it

I'm just guessing here, but YOU may be smarter than the average member! 

 

Is this a small CU that is looking to be acquired? Because that kind of  financial errors doesn't sound like the team is managing with a full deck.

[hdporter]

On 8/18/2023 at 10:53 PM, mrjuggalo9er said:

Offer you a personal loan at 4.5% while offering 5.5% on their cd

 

Literally pay you to borrow their money....

Aren't credit unions the best

 

Just spitballing, but a difference in term might permit this:  1 year cap on personal loan, CD rate for 3 years.