CD Rates and Savings Account rates have held up admirably even as the stock market has tanked and the Fed has cut. But the data seems to suggest that rates are now headed down. Read the full article "Savings Account and Certificate of Deposit (CD) Rate Analysis."
The Fed last week dropped rates by 50 basis points to 1%, the lowest level since 2003. Banks though, are not following the Fed's move in lockstep. While banks have lowered some of their rates, bank rates have not fallen as fast or as far as either the Fed Funds Rate or treasuries. The chart below, taken from the BestCashCow article, Savings Rates Holding Up During Banking Crisis tells the story.
Today, despite the Fed rate cut, the top savings rate still stands at 4% APY, the same top rate before the rate cut. The top five year CD is well above 5% APY and the top 3 month cd is above 3.5% APY.
This is an indication of the new power that depositors have since the collapse of the real estate financial model. Savings is coming back en vogue and banks need access to those funds in order to survive, and grow. The game has changed.
It's great watching all of the stories come in because we get a great sense for what's happening in the market. This week has been especially interesting. Problems in the mortgage market created by the near collapse of Fannie and Freddie, the shutdown of Indymac, a bank we have covered on the site, changes in housing legislation, the continued decline in the dollar, and Chairman Bernanke's testimony that he's pretty much helpless to steer this economy.
It was a week with a lot of problems. And yet, there is a sense that maybe we are approaching bottom. After all, can it get any worse than the near insolvency of Fannie and Freddie? Maybe it can, but let's hope not. The financials were up 20% today and while it's way to much to think that we are coming out of this crisis anytime soon, perhaps we're reaching a point where we can say we've taken our best shots, are still standing, and can look ahead to better days.
The Federal Reserve made an "emergency" 75 bps cut in the Fed Funds rate on January 22, then followed it with a 50 bps cut at its scheduled meeting on January 30 - its largest decline of the Fed Funds rate in 8 days in more than 20 years and leading to a Fed Funds rate of 3.00%. As a result, Treasury rates and all short term products have had dramatically declining yields. Savings rates are falling dramatically and CD rates are being withdrawn constantly. Against the backdrop of significant inflation and a diminution in the real value of the dollar, Americans are increasingly pressed to try to figure out where to stash cash that preserves its value. No - this is not an endorsement of Ron Paul - it is just the facts.
Short term treasuries yields has their single biggest 1-day move in 19 years on August 20 with 3 month Treasuries falling under 3%. The yield curve has now steepened dramatically. While savings accounts and short term CDs are still offered well above 5%, cash and cash equivalent securities may soon become less attractive.
The Fed cut the discount rate by 50 basis points after markets reeled yesterday and treasury yields fell dramatically. In spite of the fall in treasuries, Countrywide increased its offering on 3-month, 6-month and 1-year CDs above those offered by its competitors. E-Loan now has the most compelling 2-year and 3-year CD rates. Countrywide rates are now just below the Fed discount rate.
It looks like Indymac just raised the rates on its CD and Money Market accounts. BankMan on the main BestCashCow site reported that Indymac is offering a 5.55% APY on a 1 year and 5 month CD with a $5,000 minimum balance. According to our rates charts, these are top rates (BestCashCow does not cover 5 month CDs). In addition, they have a competitive money market rate of 5.75% APY on balances of $25,000 or more.
CD rates came down dramatically over the weekend following Thursday and Friday's sharp fall in short term Treasury yields. Some of the banks that have been quickest to drop their CD offers and savings rates have been very closely tied to the mortgage lending risks - including Countrywide, GMAC and IndyMac. As always, please visit BestCashCow.com to see the best current offerings.
The Federal Reserve has left interest rates unchanged and indicated that inflation may be moderating. While inflation risk is no longer described as elevated, the Fed's statement indicated that there is some risk that inflation may not moderate as expected.
Today we are very pleased to announce the launch of the new BestCashCow site. The new site provides you, our users with even more financial information. But more than that, it gives you the opportunity to participate in making financial news.
The new site allows you to share links to financial information anywhere on the web and to publish your original content directly on the site. You can leave comments on content others have posted and rate which submissions you think are the most valuable. Every member gets their own Profile page which lets others know a bit more about you and your background.
Some detailed information about these features is available here.
If you're looking for the rate and product information from the old site, it's still there under the Products and Rates tab.
We hope you like the new site and look forward to your feedback.
BestCashCow
