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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 30, 2009    Views: 286    Comments: 0    Likes: 2   


January 30, 2008 Update

For the first time since early October, the average of the top 10 CD rates on the BestCashCow rate tables for 12 month, 36 month, and 60 month CDs went up from the previous week. The average savings and money market account rates as shown on BestCashCow also showed their smallest week-over-week decrease since the rate drops began. Much of the increase in CD rates was due to H&R Block Bank which has aggressively priced its CD rates and at the moment site atop the 3 month, 1 year, 3 year and 5 year rate tables.

Is this the end of rate cuts? Probably not. We already know of several that are scheduled for next week. But last week's numbers are a hopeful indication that maybe we are approaching a bottom in rates.

It does mean that consumers should think twice before locking into long-term CDs. With the government's stimulus package working its way through Congress, many analysts and economists expect a pick-up in inflation in the next two to three years that will lead to higher deposit rates. Staying with short to mid-duration certificates of deposit (1-2 years) may be the most prudent course at this point.

The changes from the pervious week are:

  • Savings Accounts: 3 basis point drop from 2.99% to 2.96% APY
  • 1 Year CD: 2 basis point gain from 2.93% to 2.95% APY
  • 3 Year CD: 6 basis point gain from 3.13% to 3.19% APY
  • 5 Year CD: 8 basis point gain from 3.64% to 3.73% 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 , -0.07, -.03
  • 1 Year CD: -.14, -.24, -.16, -.11 , +.08 , -.40, +.02
  • 3 Year CD: -0.0, -.33, -.13, -.09, -.16 , -.13, +.06
  • 5 Year CD: -.01, -.36, -.08, -.01 ,- .17 , -.18, +.08

 

  CDandSavingsRateTracker

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