bank rates

You’ve Got To Go Longer To Find 3% CDs

Less than a month ago we noted that anyone who wanted to earn 3% on a certificate of deposit would have to lock their money up for at least two years.

Now you’ll have to commit your money for at least two-and-a-half years.

GMAC Bank, which continues to offer the some of the best nationally-available interest rates, has lowered the return on its 24-month CDs from 3.10% to 2.90%.

Intervest National Bank in New York City, is the last bank offering a 3.0% APY on 30-month CDs, and who knows how long that will last?

Soon, you’ll have to commit your savings for at least 36 months to earn 3.0% on a nationally available deal.

That’s why you should always watch for deals from your own bank or credit union.

In Atlanta, for example, One Georgia Bank is offering 3.0% APY on a 7-month CD — but only to its checking account customers.

The Pentagon Federal Credit Union in Alexandria, Va., is paying 3.5% on a 36-month CD, but you’ve got to be a member to buy one.

Savers shouldn’t have to work this hard to earn a lousy 3%, but interest rates are half what they were two yeas ago, falling to a pitiful average return of 1.6% on 24-month CDs and 1.8% on 36-month CDs.

With the Federal Reserve providing banks with all the money they need for next to nothing, they don’t have to compete for your deposits.

Of course the economy will eventually recover, the Fed will raise the rates it charges commercial banks for loans, and they’ll start paying more to attract your savings.

When will this happen? Most economists don’t expect this downward trend to reverse itself until early 2010, and then it will take months — maybe 18 months or more — to return to the reasonable CD rates we enjoyed in 2006 and 2007.

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Comments (3)
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3 Existing Comments
  1. Frank Schmidt said:
    on April 7th at 01:42 pm

    That is less than any of the inflation rates, how frustrating. I should take my money out and put it under my pillow…

  2. BloggingBanks said:
    on April 8th at 11:11 am

    The problem is that if inflation really picks up in 1-2 years, short-term rates might increase through the roof..
    On the other hand however, if we experience a Japan style scenario, then those long term CD rates that everyone thinks are too “low” would be seen as great deals.
    In the meantime I am wondering whether the winning strategy nowadays would be to get loans and buy income producing assets such as real estate or dividend stocks instead of putting the cash in CDs?

  3. Rita said:
    on April 8th at 11:32 pm

    I think the best strategy is a $10 trillion lawsuit against the Republican and Democratic parties for fraud, gross negligence and incompetence, violation of their sworn oath of office, plundering the Social Security Trust, financial terrorism, bankrupting America and about a dozen other crimes against The United States of America and its people.
    Any lawyers interesting in handling the case?