CD Rate Averages Continue to Slide Despite Economic Developments

The past few days have brought on a smattering of welcome news, not only for the US economy, but also for consumers and businesses which need good news the most. First, after months-long debate, the Senate finally passed the bill on jobless benefits extension and expansion of tax breaks for homebuyers.

Then, the latest economic data released shows that new jobless claims drop to the lowest level for this year, while the retail industry saw its second straight monthly sales gain after a year-long decline. Could consumers perhaps be opening their wallets again, finally ushering in much anticipated economic activity?

Increased economic activity is certainly something that we hope will come soon enough. Because only then would we be able to expect deposit interest rates to rise again. And this is the bit of not-so-pleasant news that prudent savers will have to deal with: the Federal Reserve announced after its policy meeting last Wednesday that it is standing by its decision to keep benchmark interest rates at near-zero levels while the economy remains weak. Nothing surprising in that, but still disappointing for those who are hoping to get more out of their extra funds.

Let’s check out how much further down banks cut their CD rates in response to the Fed’s pronouncement:

6-month CDs

CD rate averages for 6-month CDs dropped the lowest this week, although fortunately not that substantially. Inching down from 0.95% to 0.93%, the 6-month CD rate fell by 2 basis points and slid farther from the 1.00% mark.

12-month, 36-month, 48-month, and 60-month CDs

Averages for 1-year, 2-year, 4-year, and 5-year CD rates also fell, each by a single basis point. If you think that a 0.01% decrease in CD rate average isn’t that much, you are quite right in that, but bear in mind too that these are some of the lowest rate levels seen in years.

24-month CDs

Only the 2-year CD rate was able to hold its own this week with the average maintained at 1.72% APY.

Bank CD Rate Cuts

In response to the recent flurry of developments, not too few banks made CD rate cuts this week and while banks lowering their CD yields are not uncommon, what could be cause for worry for savers looking to maximize their deposit yields is that the banks that made substantial rate cuts this week are those banks which offer some of the most competitive, if not the top, CD rates such as Ascencia (best 6-month CD rate), UmbrellaBank.com (best 1-year CD rate), Discover Bank, Ally, and American Express Bank.

To check if your bank has perhaps bucked the trend and instead, raised their CD yields for this week, visit our CD rates page.

About the banks

 

Ally

Banking starts over here and now. Built on the foundation of GMAC, Ally is an online bank with no monthly fees, no minimum balances and no minimum deposits. Our rates are always among the most competitive and we offer live 24/7 Customer Care Support. Member FDIC.

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Discover Bank

Since 1911, Discover Bank has been providing superior banking products with service designed to help customers achieve their financial goals.

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UmbrellaBank.com

UmbrellaBank.com is the Internet banking division of New South Federal Savings Bank. New South Federal is a member of the Collateral Family of Companies, which has been in the financial services industry since 1933. UmbrellaBank.com offers a wide range of banking products to meet all of your financial needs. Our products are available with online access so you can do your banking when it is convenient for you, 24 hours a day, 7 days a week.

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