bank rates

This Was Another Bad Month For CD Rates

CD rates fell for the 22nd straight month in August.

The average return on all five of the certificates of deposit we track will finish the month at record lows.The average return on all five of the certificates of deposit we track finished the month lower than they were at the end of July.

Every new sign the recovery is stalling makes it more likely that the Federal Reserve will hold interest rates at these punishing levels for the rest of this and maybe even all of next year.

“We’re now fast approaching the point where the implied move for the Fed is pushing out to 2012,” Michael Gregory, a fixed-income analyst at BMO Capital Markets told Dow Jones Newswire, this week.

The Fed’s interest rate policy will be a major topic of discussion when the central bank’s annual symposium begins today in Jackson Hole, Wyo.

But we expect our nation’s financial leaders will spend the next couple of days telling each other that the economy is in such perilous shape that it couldn’t endure even a small increase in interest rates.

So we’ll have more months like this one.

Bankrate’s weekly survey of large banks and thrifts taken Aug. 25, found the average annual yield for a:

3-month CD is ending the month at 0.24%, down from 0.27% in July and 0.36% at the start of the year. It’s the lowest average since the survey began tracking 3-month CD rates in March 1989.

6-month CD has fallen to 0.36%, down from 0.38% last month and 0.50% at the start of the year. It’s the lowest average since the survey began tracking 6-month CD rates in January 1984.

1-year CD has fallen to 0.63%, down from 0.67% last month and 0.82% at the start of the year. It’s the lowest average since the survey began tracking 12-month CD rates in October 1983.

2-year CD has fallen to 0.96%, down from 1.04% last month and 1.24% at the start of the year and is the lowest average since the survey began tracking 24-month CD rates in March 1989.

5-year CD declined to 1.81%, down from 1.99% last month and 2.10% at the start of the year. That’s the lowest average rate since the survey began tracking 60-month CDs in January 1984.

With average returns this low, you’ve got to take advantage of any better-than-average CD rates you can find in our database.

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