Bank CD rates continue to make new lows this week with no end in sight to the declines. CD rates have been going down practically all year. In the summer/fall of 2008 one could find special promotional one year bank CD rates that were paying between 4% and 5%.

Unfortunately those days are gone for now, hopefully by the spring of 2010 rates will start heading up again, the key factor being the economic recovery. Economists expect GDP to grow this quarter and next but if the recovery isn’t sustainable and doesn’t continue into next year the Fed won’t raise the Fed funds rate because inflation won’t be a concern.

A low Fed funds rate which currently has a targeted range of zero percent to 1/4 percent will keep a cap on CD rates. If the opposite happens and the recovery has legs, the Fed will be concerned about inflation and possibly will raise interest rates which will drive banks to increase interest rates on deposit accounts like certificate of deposit accounts and savings accounts. Unfortunately a higher Fed funds rate will also drive mortgage rates higher as well.  

CD Rates & CD Yields

• 3 month CD rates are averaging 0.616 percent this week, down from last week’s average CD rate of 0.682 percent. UFB Direct has one of the best CD rates for a 3 month CD, the bank’s current CD yield is 1.35% for balances of at least $8,000.
• The average 6 month CD rate is at 0.892 percent this week, down from the prior week’s average CD rate of 1.017 percent. Ally Bank is offering one of the highest CD rates for a 6 month CD, the bank’s current CD yield is 1.65 percent.
• 1 year certificate of deposit rates are averaging 1.173 percent this week, down from last week’s average CD rate of 1.372 percent. CD rates best -  ING Direct is offering a 1 year certificate of deposit that currently has a CD yield of 2.10 percent.

Longer Term Bank CD Rates & Bank CD Yields

• 18 month certificate of deposit rates are down to 1.335 percent this week, down from the prior week’s average CD rate of 1.561 percent. Nationwide Bank is offering a 18 month bank CD yield of 2.20 percent.
• 2 year CD rates are averaging 1.640 percent this week, down from last week’s average CD rate of 1.833 percent. CD Rates at Banks: E-Loan is offering a 2 year CD yield of 2.37 percent.
• The average 3 year CD rate is currently at 1.941 percent this week, down from the previous week’s average rate of 2.136 percent.
• 4 year certificate of deposit rates are averaging 2.173 percent this week, down from last week’s average CD rate of 2.406 percent.
• 5 year CD rates are averaging 2.437 percent this week, down from the prior week’s average CD rate of 2.650 percent.

Find the best bank CD rates in your zip code my searching our CD rate tables: Best CD Rates