bank rates

Grab The Best CD Rates Now Before Banks Start Charging Us To Deposit Our Money

A research firm is predicting the unthinkable.

Banks eventually could charge us for the privilege of depositing our money — called negative interest — because we’re putting too much cash in and not enough is going out in the form of loans, according to Market Rates Insight.

In its “Special Analysis — Cash Is King But At A Cost,” the firm ( says the Fed’s move to hold interest rates at record lows until at least mid-2013 means loan rates will fall further while more of us flee to the safety of insured deposits due to economic uncertainty.

This is an unsustainable trend for banks, according to the analysis, which have seen interest income from loans decline even as deposits have increased.

There is recent precedent for this prediction of negative interest.

The Bank of New York Mellon this summer began charging large depositors ($50 million or more) for parking their cash.

If the economy doesn’t improve, it’s just a matter of time before banks start charging consumers, the firm said:

“Are U.S. consumers going to ‘accept’ the new reality of paying for the safety and security of
their deposits? Chances are they will — not because they want to but due to a lack of alternatives. Most
other investment options, such as mutual funds, stocks, bonds and commodities, involve risk to the
principle. So the question facing the public becomes: how much is it worth knowing that your principal
is safe no matter what?”

Again, this is just a prediction based on current conditions. But even the thought is scary.

What we know for certain is CD rates continue to fall. The average yield in four of the six terms we track set or tied record lows last week.

What’s more, since the beginning of the year, the average yield for 36-month CD rates has fallen by more than a quarter of a percentage point to 0.77% APY.

Since May, average 60-month CD rates have fallen by more than a third of a percentage point to 1.34% APY.

The best nationally available CD rates have declined as well.

Still, there are plenty of offers out there that beat the average by more than a full percentage point.

Tomorrow, we’ll go over some of the best 5-year CD rates available.

These beat even to top 60-month deal on our CD Rates Leaderboard, which pays 2.50% APY.

In the meantime, don’t forget to check out our strategy for finding the longest term available.

And, as always, you can compare the best CD rates in our extensive database.

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Comments (2)
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2 Existing Comments
  1. Lightrider said:
    on September 14th at 12:01 am

    Well if that’s the case, I will buy a very good safe. Screw the banks!!!!

    There is a way to skin a bankcat.

  2. A.Bundy said:
    on September 15th at 02:56 pm

    lol, people will be pulling their money on a massive scale and the economy will completely collapse into a deep depression. I know i will. i always tell people, buy bricks of gold and a safe. banks are useless as it is.