bank rates

Fed Keeps Pounding Down CD Rates

Savers struggling with record-low CD rates got no help from the Federal Reserve this week.

The Fed’s rate-setting committee renewed its pledge to keep interest rates artificially depressed for an “extended period” to ensure a strong economic recovery.

There was no encouraging news for savers who depend on CD rates out of the Federal Reserve this week.The committee acknowledged the economy has “continued to pick up” and that “deterioration in the labor market is abating” since employers are laying fewer workers off this fall.

But the Fed said it would continue to boost growth and job creation by charging commercial banks 0% to 0.25% for overnight loans.

As long as the government-controlled Fed provides commercial banks all the money they need for virtually nothing, those banks can pay a pittance for our savings.

No wonder four of the five certificates of deposit we follow fell to new record lows in Bankrate’s Dec. 16 survey of large banks and thrifts. The average annual yield for a:

3-month CD fell to 0.37% from 0.38% this week. That’s the lowest average since the survey began tracking 3-month CD rates in March 1989.

6-month CD fell to 0.51% from 0.52% — the lowest average since the survey began tracking 6-month CD rates in January 1984.

1-year CD fell to 0.82% from 0.83% — the lowest average since the survey began tracking 12-month CD rates in October 1983.

2-year CD fell to 1.26% from 1.28% — the lowest average since the survey began tracking 24-month CD rates in March 1989.

5-year CD held at 2.08% after falling for four straight weeks. The 2.08% is the lowest average rate since the survey began tracking 60-month CDs in January 1984.

With average rates like this you can’t settle for average returns.

Use our database of CD rates to find and compare the best deals from scores of banks.

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  1. basicmoneytips said:
    on December 18th at 07:10 am

    CDs are not favorable at present, the prime rate is just too low. Traditionally inflation is about 3% so you are really not even keeping with inflation.

    There are other options out there if you look, but you may need a financial advisor to help you. For example, I have a private REIT for multi-family homes (apartments) that pays 7%