bank rates

CD Rates Fall This Week, Adding To Gloom

Bankaholic.comCD rates continued to fall this week, contributing to a growing sense of gloom.

Bankrate’s weekly survey of large banks and thrifts taken July 8 found the average annual yield for a:

Three-month CD declined to 0.55% from 0.57% the previous week. That’s the lowest average since Bankrate began tracking 3-month CD rates in March 1989.

Six-month CD fell to 0.84% from 0.85% — the lowest average since Bankrate began tracking 6-month CD rates in January 1984.

One-year CD fell to 1.14% from 1.15% — the lowest it’s been since April 2004.

Two-year CD fell to 1.52% from 1.53%. Last month it fell to 1.46%, the lowest 24-month CDs have been since August 2003.

Five-year CD fell to 2.18% from 2.19%. Last month the average fell to 2.17%, the lowest rate since Bankrate began tracking 5-year CDs in January 1984.

Of course you can earn more than that if you use our extensive database of CD rates to search for better-than-average deals.

But from Wall Street to Main Street, everyone’s starting to realize this recession will drag on much longer than we had hoped.

As unemployment keeps rising and foreclosures continue unabated, the stock market rally has stalled and public opinion is wavering.

That doesn’t mean everything the government is doing is wrong. Or not working. This crisis was just bigger and more serious than we wanted to believe.

Finding the bottom of the worst economic downturn since the Great Depression is a more reasonable expectation for the summer, setting the stage for a recovery to begin late this year or in early 2010.

That’s probably the best we can hope for with CD rates, too.

The Federal Reserve is pushing interest rates artificially low to boost spending and rescue the financial industry from its reckless lending binge of the early 2000s.

To do that, the government-controlled bank has dropped what it charges commercial banks to borrow money to rock-bottom levels — 0% to 0.25% for overnight loans.

With the government providing so much cheap money, the banks can pay next to nothing for our deposits.

Like much of the economy, CD rates are declining more slowly than they were last winter. A bottom could be in sight.

But the Fed won’t allow interest rates to start rising again until it knows a recovery is underway, and most economists don’t think that will be until next summer.

At the earliest.

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Comments (2)
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  1. Jerry said:
    on July 17th at 09:54 am

    I went into my bank to renew a $100,000.00 cd I asked what the rate was and they said I owe them 2%

  2. Pat said:
    on July 19th at 06:00 am

    Buy groceries and fagetaboutit!