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CD Interest Rates Contiue to Soar

Posted in CD Rates by Jay Fitzpatrick
August 1, 2008 12:00 PM - 12 Comments

Although the Federal Discount Rate has remained unchanged at 2.00% for the last 3 months, banks have been steadily raising certificate of deposit rates. According to Bankrate data, national 1 year CDs are inching toward 3.30% and 5 year jumbo CDs have gained above 4.20%.

Why banks are offering increasingly attractive rates.

For instance, WaMu has ramped up 2 aggressive rates this week, a 4.25% APY 1 year CD and 3.75% APY savings account. These are hot rates, but be sure to stay within FDIC insurance limits.

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  1. Michael said:
    on August 1st at 11:30 pm

    I agree that the increasingly high CD rates are awesome but they’re also dangerous. Is it wise to tie up your money in a 7 year 5.4% CD when next year we could be up into 7% rates? Just because a rate is good in this low rate environment doesn’t mean that you should panic and choose the best of the worst.

  2. patm said:
    on August 2nd at 08:51 pm

    I have been laddering CDs for many years. In my opinion, the wisest approach is to place a portion of your money in the longer term CDs and the rest in shorter maturities or a money market fund if the rate looks good. If you set up a “ladder” where CDs are maturing every 3 months or so, you’ll always have some money available to take advantage of the changing rate environment.
    It’s basically the same strategy as dollar cost averaging into mutual funds. Trying to predict where rates are going is similar to trying to play the market.

  3. Dan Tanner said:
    on August 6th at 04:47 am

    Washington Mutual has declared a war.

    Its giving 4% money market rates for in- branch only. My branch offered me that rate today and I will take it. I am making sure I have FDIC’s full protection in case anyone goes under.

    But WO-HO is taking the lead nationwide. Always go into a branch and ask them. They DO NOT advertise them on the website!

  4. Concerned American said:
    on August 7th at 06:01 am

    Interesting dan……

  5. C.K. Wong said:
    on August 7th at 11:57 pm

    The only reason they are offering high rates is not because the economy is doing better, it is because the bank needs new funds to cover loan’s losses.

  6. J. Wu said:
    on August 13th at 06:38 am

    Yes

  7. rich said:
    on August 14th at 12:03 am

    depositing under the 100k FDIC insured limit is only safe as long as the FDIC is not overwhelmed by too many banks tanking…

  8. Noel said:
    on August 18th at 04:17 pm

    Here’s an interesting page to showing the history of CD rates over the last 15 years - http://www.jumbocdinvestments.com/historicalcdrates.htm

  9. Tom said:
    on August 19th at 10:44 pm

    Could anyone tell me what WO-HO is?

  10. Eric Pierson said:
    on September 6th at 12:25 pm

    Just received an offer at 18 percent net for a high interest cd
    abroad. Can anyone advice me on this? Is it safe?

  11. Benji said:
    on September 29th at 11:37 pm

    I’ve been investing in CD’s for over 2 decades… And the keys to success are timing (when the going rate is just right) and letting the interest rollover/compound in the account. I’m at the point now where the monthly interest accrued “PAYS’ for my monthly mortgage statement.

  12. Benji said:
    on September 30th at 12:00 am

    Hey Eric…
    Be careful about an 18% CD offer abroad. There’s a reason why it’s only offered abroad!

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