Consumers continue to be quite disappointed by the rates on certificates of deposits. Industry trade site bankrate.com showed this week that across the country the average six-month CD rate was still a pathetic 1.4 percent. That means that, in some places, the rates are actually as low as half of one percent. Financial experts suggest that consumers can do themselves a great favor by shopping around for the best deal if they are looking to invest, but nowadays that might mean turning away from certificates altogether in favor of a better deal from a savings account or a money market.
It hasn’t been the case in a very long time, but right now many savings account choices are actually paying out much better yields than certificates of deposit for six months. In fact, these savings accounts are actually competitive with many one year CD rates. Of course, you can still get a better deal on a five-year commitment… but many savers are understandably reluctant to lock their money into a certificate for so long when rates are low and might rebound in the near future. So what is the best bet for the smart saver? Those in the know advise consumers to stay flexible and not sign their money up for any long-term commitments right now, even if the rates are a bit higher that way.
The problem with five-year rates and the like is that inflation could spring up at any time and bump the rates significantly, and then your money could be trapped in a lower-yield commitment. Shop for the best rate possible on shorter-length commitments and suck it up for the time being, with an eye towards the future. Experts advise consumers to keep an eye on virtual banks, where rates might be slightly better than at their land-based counterparts.
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