Based on the decision minutes ago by the Fed to lower the discount rate by half a percent instead of the expected quarter of a percent, rates on short term CDs and savings accounts will most likely drop. The drop may start as early as tomorrow.
With the Fed dicount rate now at 5.25%, banks have no incentive to lend money out above that rate. A quick glance at the BestCashCow CD Rate Table and BestCashCow Savings Rate Table shows that quite a few banks have CDs and Savings accounts in excess of 5.35% APY.
Consumers who want to be sure they receive these rates may want to lock-in quickly.
Comments
Herman Kline
September 20, 2007
This is right. CD rates need to drop below the rate at which the Fed is lending to banks. It may not happen immediately and any delay is an opportunity for savers.
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