banktime.com

It’s more bad news for consumers, as certificate of deposit rates continued their steady decline this week. CD rates have been descending continuously for a year, reflecting the crisis in the banking industry as a whole. About a year ago, smart shoppers could score a one-year CD rate of around five percent, if they hit the right bank. Four percent was the average, This week, mean CD rates closed at just 1.45 percent, a dip from last week’s 1.48. Even long-term certificates are faring badly: five-year CDs have been holding steady at two and a half percent for a few weeks. Financial experts have been cautioning consumers against investing in long-term CDs right now, since the rates are so lackluster. Three- and four- year certificates are averaging a bit above two percent, which is also a poor choice for a lock at this time.

 Lending industry experts foresee CD rates staying low for months to come, with no end in sight for this discouraging trend. At the very least, lockable rates will remain poor until the U.S. is officially out of recession.  On the other hand, if inflation starts becoming an issue the Federal Reserve Bank might raise interest rates to bring inflation under control. In other words, don’t look for higher CD rates until at least next year. That’s frustrating news for consumers who have heard nothing but bad news from the banking industry in past weeks. Those with CDs coming up on maturation will undoubtedly be wondering what they should do with their money at this difficult time.