bank rates

CD Rates Fall More Slowly In August

CD rates fell more slowly in August, and the average return on 5-year CDs actually ticked up from July.

Long-term CD rates seem to have bottomed out, but shorter-term CD rates continue their long decline.With 2-year and 5-year CDs more or less holding their own for the past several months, it appears that long-term rates have bottomed out.

But the relentless decline that began with last autumn’s financial crisis continues to hurt shorter-term CDs.

The rate of decline is about half of what it was last winter and spring, but 3-month, 6-month and 12-month certificates of deposit all reached new record lows this week.

Bankrate’s weekly survey of large banks and thrifts taken Aug. 26 found the average annual yield for a:

3-month CD declined to 0.46% from 0.48% the previous week. That’s the lowest average since Bankrate began tracking 3-month CD rates in March 1989.

6-month CD fell to 0.71% from 0.74% — the lowest average since Bankrate began tracking 6-month CD rates in January 1984.

1-year CD fell to 1.01% from 1.05% — the lowest average since Bankrate began tracking 12-month CD rates in October 1983. The previous record low of 1.03% was set in July 2003.

2-year CD fell to 1.49% from 1.51%. The average rate declined to 1.46% in June, the lowest 24-month CDs have been since August 2003.

5-year CD rose to 2.23% from 2.17%. That’s slightly above the 2.15% reached in July, which was lowest average rate since Bankrate began tracking 60-month 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 the sorry fact is that the best rates you’ll find anywhere right now are lower than the average rates we were enjoying last summer and fall.

Average 36-Month CD Rates

Short-term rates have fallen further and faster than long-term rates, with the average rate for 12-month certificates of deposit declining the most.

Here’s how far the average rate for the five popular CD terms we track declined in August, and the first eight months of the year.

In discussing interest rates, economists refer to one-hundredth of a percentage point (0.01%) as a basis point, because it’s easier to discuss whole numbers. So we’ll use their terminology.

3-month CDs declined 4 basis points in August and have fallen 76 basis points so far this year, an average of 9 basis points a month.

6-month CDs declined 5 basis points in August and have fallen 79 basis points so far this year, an average of 10 basis points a month.

1-year CDs declined 6 basis points in August and have fallen 87 basis points so far this year, an average of 11 basis points a month.

2-year CDs declined 2 basis points in August and have fallen 61 basis points so far this year, an average of 8 basis points a month.

5-year CDs rose 1 basis point in August but have fallen 52 basis points so far this year, an average of 6 basis points a month.

During the winter and spring all types of CDs were declining at a rate of about 10 basis points a month.

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Comments (2)
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  1. Aleks said:
    on August 27th at 01:11 pm

    CD rates fall more slowly? I see the green shoot theory is alive and well. May as well say that “second derivative of the CD rates is positive!!!”. Rates are still falling, end of the story.

  2. Dragon said:
    on June 24th at 10:05 am

    I’ll try to put this to good use imemdiately.