bank rates

Short-Term CD Rates Keep Falling

Short-term CD rates fell more quickly in September than in August, disappointing savers who hoped the relentless decline that began with last autumn’s financial crisis might be abating.

The average return for 3-month, 6-month and 12-month certificates of deposit all hit new record lows during the month.That pushed the average return for 3-month, 6-month and 12-month certificates of deposit to new record lows during the month.

The story is a little more encouraging for longer-term CDs.

Two-year and 5-year CDs have more or less held their own since July. In fact, the average return on 5-year CDs actually ticked up for the second consecutive month.

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 in reviewing the monthly results.

Bankrate’s weekly survey of large banks and thrifts taken Sept. 30 found the average annual yield for a:

3-month CD remained at 0.43% for the third week. It declined 3 basis points in September and has lost 79 basis points so far this year, an average of 9 basis points a month.

6-month CD fell to 0.62% from 0.63% the previous week. It declined 9 basis points in September and has lost 88 basis points so far this year, an average of 10 basis points a month.

1-year CD fell to 0.95% from 0.96% the previous week. It declined 6 basis points in September and has lost 93 basis points so far this year, an average of 10 basis points a month.

2-year CD remained at 1.46% for the second week. It declined 3 basis points in September and has lost 64 basis points so far this year, an average of 7 basis points a month.

5-year CD fell to 2.25% from 2.26% the previous week. It increased 2 basis points in September but has fallen 50 basis points for the year, an average loss of 6 basis points a month.

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