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."
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November 07, 2008
November 02, 2008
Fed Drops Rates to 1% But Banks Not Responding
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.
