cd rates
Where are Interest Rates Going? Nowhere for Now
The Fed released its statement on the economy today and also revised projections for future GDP growth. Bernanke also had a press conference on the economy. What did we lean? Not much! What the Fed did say was the economy hit a soft patch but because of “damping effect of higher food and energy prices on consumer purchasing power and spending” as well as “supply chain disruptions associated with the tragic events in Japan”. For these reasons mortgage rates today and bank CD rates will remain low.
The Fed feels both events are temporary so the economy will pick up again later this year. When that happens CD rates, mortgage rates and other interest rates will move higher. The Fed also said the they today to keep the target range for the federal funds rate at 0 to 1/4 percent. They didn’t say they would keep the range at 0 to 1/4 percent for the foreseeable future which is a change in language.
The also lowered GDP growth for the rest of 2011 and 2012. All this will keep CD rates and savings account rates low for now. Don’t expect interest rates to move higher until the economy picks up and inflation picks up.
Getting the Best Bank CD Rates
The best bank CD rates you can find right now is usually online even though the “best CD rates” are that high at all. Most CD rates at banks are around 1.00% right now and the highest CD rates at smaller banks and credit unions can be found at high at 1.75%. Mortgage rates today are around 4.00% and will move higher when interest rates in general move higher.
A small bank in Little York, Illinois, Reynolds State Bank, has current 12 month CD rates that are some of the highest CD rates available right now. Current 12 month CD interest rates at this bank are 1.99 percent with a yield of 2.01 percent.
Another small bank in Illinois, Buffalo Prairie State Bank, has 1 year bank CD rates at 1.85 percent with an APY of 1.86 percent. That rate is another excellent CD bank rates available right now.
One national bank that has good CD rates but not as high as the banks mentioned above is Discover Bank. The bank is advertising 12 month rates at 1.19 percent with an APY of 1.20 percent.
CD Rates at AIG Bank: Highest CD Rates at AIG
Some of the highest CD rates can be found at the banking arm of AIG. Most people don’t realize one of the largest insurance companies in the world also has a bank in the United States. AIG Bank is one of the banks that always offers some of the best CD rates.
In addition to advertising certificate of deposit rates AIG bank also advertises money market accounts and home loan rates including mortgage rates and home equity line of credit rates.
AIG Bank is advertising certificates of deposit with CD deposit terms of 6 months to 60 months. The bank’s 6 bank CD rates go for 0.75% with a bank CD yield of 0.75%. That is one of the highest CD rates at banks available for a 6 month CD.
The bank’s longest term CD account, 5 year CDs, have a current CD interest rate of
Other high CD rates at AIG include their 5year certificate of deposit. The 5 year interest rate is 2.23% with an APY of 2.25%. The bank doesn’t offer 4 year CD rates so the next longest term certificate of deposit is 3 years. The 3 year rate is 1.69% with an APY of 1.70%. That is one of the better CD rates available.
| 6 Months | 0.75% | 0.75% |
| 12 Months | 1.14% | 1.15% |
| 18 Months | 1.24% | 1.25% |
| 24 Months | 1.39% | 1.40% |
| 36 Months | 1.69% | 1.70% |
| 60 Months | 2.23% | 2.25% |
AIG Bank also advertises their Signature Money Market Account which has tiered interest rates that are higher than most bank money market account rates and bank savings account rates. The best MMA rate is 1.07% with a yield of 1.08% for account balances of $250,000 or more.
Ceritifcates of Deposit Offer the Safest Investments in Turbulent Times
During these turbulent times the safest investment you can make is in a certificate of deposit. CD rates might not be the best rates around but at least you know your principal is 100% safe if you invest in a certificate of deposit in a bank that has their deposits insured by the Federal Deposit Insurance Corporation. Make sure to also keep the deposit amount under $250,000 in order to have your entire investment insured.
Have more than $250,000 to invest? You can recieve up to $50 million in FDIC deposit insurance coverage by opening a CDARS account. More information on CDARS accounts can be found at CDARS.com
Yes, savings accounts and insured money market accounts are also safe investments but interest rates on those accounts can fluctuate at any time so you won’t know what your actual return will be. With a certificates of deposit the CD rates are fixed for the entire CD term. There are also variable CD rates on accounts but I would recommend sticking with a fixed CD rate.
Bank CD rates and credit union CD rates on 12 month certificates of deposit are around 1.00 percent. 1% doesn’t sound like much but when you factor in the inflation rate which is near zero percent the rate of return isn’t that bad.
You can get higher CD rates at banks and credit unions if you invest in a longer term certificate of deposit but I wouldn’t recommend doing so at this time. Why? Inflation is expected to be higher in the coming years and interest rates on deposit accounts will also be higher.
Why lock your investment up in a long term certificate of deposit that is paying a low CD rate? 5 year CD rates are not much higher than 12 month rates, you would be lucky to find a 5 year CD rate higher than 2.50 percent right now.