Good Time to Lock in CD Rates
With many predicting that the Fed is going to lower the federal funds rate, now might be the time to lock-in a decent rate on a 1or 2 year CD. It’s possible the mortgage crisis could deepen and if it does that would force the Fed to cut further, leading banks to reduce the rates they pay on CDs and savings accounts.
When the stock market bubble popped in 2000, the Fed cut rates from 6.5% to a low of 1% and the yields on CDs and Savings Accounts went down with it. The average yield on a 1-year CD was only slightly above 1% four years ago, compared with yields of over 5.5% today.
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