The average yield for a 1 year CD in the US is .89% and 2.19% for a 5 year CD. Certificates of deposit have seen better days.
All indications point to the Federal Reserve raising rates in early 2010, but that doesn’t necessarily mean that’s how it will go down. The Fed is very unpredictable and could really raise rates at any point. Bank depositors are anxious to get rates up so their savings account and certificates of deposit can return to higher rates. It’s been a while since we’ve seen high cd rates.
The Federal Reserve didn’t raise interest rates until 2-2.5 years after the end of the last 2 recessions according to Bromoney. If you assume the recession ended at the end of the summer this year, then we could be looking at a couple more years of low interest rates unfortunately.
There have been criticism of Alan Greenspan, the former Fed Chairman, leaving interest rates too low for too long and Bernanke is not the same person that Greenspan is.
The current situation is not good for savers whatever the future may hold. CD rates have been at rock bottom levels and still sliding over the course of this year.
The average 1 year and 5 year CD rates fell this week again and who knows how long they’ll keep falling if the Fed doesn’t raise interest rates. It’s more important now than ever before to take bank CD rates comparison into account when looking at rates.
The average yield on savings accounts and money market accounts is no different.
What you can do is make sure you find the best rates, which is important now more than ever, and always keep your money in a FDIC insured institution.