bank rates

CD Rates Post Best Week Of The Year

For the first time this year, none of the five CD rates we track declined in this weeks survey.For the first time this year, none of the average CD rates we track declined in this week’s survey.

In fact, this is the first survey in which none of the five rates fell since Oct. 8, 2008, which is when the financial crisis struck and the government was just stepping in to save the banking industry from collapse.

Bankrate’s weekly survey of large banks and thrifts taken Aug. 5 found the average annual yield for a:

Three-month CD rose to 0.51% from 0.50% the previous week.

Six-month CD remained at 0.76% for the second week.

One-year CD remained at 1.07% for the second week.

Two-year CD remained at 1.51% for the second week.

Five-year CD rose to 2.18% from 2.16%.

Of course all of those rates remain just a few hundredths of a point above their record lows.

And it’s too early to think we’ve finally found the bottom of the broad and precipitous decline in CD rates that began two years ago. We’ll need at least a few more surveys like this to draw such a conclusion.

But these results should catch the attention of every investor who was wondering how much lower the returns on their savings could possibly go.

The Federal Reserve has been pushing interest rates artificially low as part of its effort to 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 on certificates of deposit, money market and savings accounts.

We shouldn’t expect the Fed to reverse that policy anytime soon based on what Fed Chairman Ben Bernanke told Congress last month.

But at some point CD rates should stop falling. Cross your fingers that August is that point.

If you’ve got money to invest, take advantage of our extensive database of CD rates to compare the best deals from scores of banks.

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