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Savings Account and Certificate of Deposit (CD) Rate Analysis

Series Submitted by: Sol Nasisi
Savings - Checking - CDs


Analysis of how savings account rates and certificate of deposit rates (cds) are trending base on current and historical data.

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Submitted: Jan 16, 2009    Views: 349    Comments: 1    Likes: 2   


January 16, 2008 Update

Continuing the trend from last week, rates on savings accounts, money market accounts, and cetificates of deposit (CD) continue to fall. While were hopeful that the rate of decline was slowing, over the past week it picked up again, with the notable exception of 12 month Certificates of Deposit. The average rate for this term increased with the entry of First Command Bank at 4% APY, currently the top 12 month cd rate on the BestCashCow rate table.

The changes from the pervious week are:

  • Savings Accounts: 5 basis point drop from 3.11% to 3.06% APY
  • 1 Year CD: 7 basis point gain from 3.25% to 3.32% APY
  • 3 Year CD: 16 basis point drop from 3.42 to 3.26% APY
  • 5 Year CD: 17 basis point drop from 3.90 to 3.821% APY

Note: 100 basis points represents 1%. Thus a drop by 100 basis points would be a drop from 4% to 3%.

Here are the rate of drops for the past five weeks since the Fed dropped rate, in percentage points.

  • Savings Accounts: -.07, -.05, -.11, -.04, -.05
  • 1 Year CD: -.14, -.24, -.16, -.11 , +.08
  • 3 Year CD: -0.0, -.33, -.13, -.09, -.16
  • 5 Year CD: -.01, -.36, -.08, -.01 ,- .17

While savings accounts have dropped by an average of 27 basis points since the Fed cut, there are banks that are holding the line. The champ for this is DollarSavingsDirect with a savings account rate that leads the nation at 4% APY. They've held that rate since September 11, 2008 when it was raised from 3.75% APY. Kudos also go to Bank of Internet. They have actually increased their savings account rate from 3.46% APY on 9/11/08 to 3.51% APY today.

Here's a question for readers. Would you deposit your money in an online bank if it only paid 2% APY? Leave your thoughts and comments below.

  CDandSavingsRateTracker

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Comments Received:

artv

If online banks were paying only 2%, brick-and-mortar banks would likely be paying less than 1%. So online banks would still be worth it.

Posted: Jan 17, 2009

Author/Submitter Response:

Yup. But would people put money in a CD versus a Muni or Treasury?



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