Tax Part of Fiscal Cliff Deal Done, Bond Yields Higher, Will CD Rates Move Higher?

Hooray! A deal was finally done after we technically headed over the cliff, despite the nasty exchanges between Senator Harry Reid and House Leader John Boehner. The equity markets are rallying, bond yields are higher, will CD rates move higher as well? Unfortunately, not any time soon since Ben Bernanke and company at the Federal Reserve plan to keep the Fed funds rate at zero percent until mid-2015.

The only way bank CD rates will move higher before 2015 is if economic growth becomes a lot stronger, unemployment dips below 6.5 percent and inflation is more than 2.5 percent. Too many “ifs” to point to higher CD rates before 2015 but you never know, I honestly didn’t think going over the fiscal cliff could be avoided, so anything is possible.

Right now the best CD rates on our 12 month certificates of deposit rate list remain at 1.04 percent this week. The best CD rates on our 24 month certificate of deposit rate list remain at 1.19 percent this week. We still recommend staying invested in certificates of deposit with terms of 2 years or less since CD interest rates will eventually move higher. Locking your money in a certificate of deposit with a term longer than 2 years will mean you quite possibly will miss out on the higher initial rates.

Some CD rates at banks on certificates of deposit of less than 12 months are also really good deals for what you can get at the present time. Doral Bank has the highest 9 month bank CD rate on our rate list at 0.94 percent.

The best 6 month rates are also from Doral Bank at 0.90 percent. The best 3 month CD rates on our list are from E-Loan.com at 0.65 percent and the best 1 month rates are at 0.25 percent from Virtual Bank. Most of the CD rates listed on our rate tables are higher than the current FDIC average rates.

For example, the best 12 month rates on our list are at 1.04 percent while the average 12 month bank CD rate on the FDIC’s rate survey are at 0.23 percent. The best 24 month rate on our list is at 1.19 percent and the FDIC’s average 24 month rate is at 0.38 percent.

As you can see, the rates listed on our tables are considerably better than the FDIC average rates. You can compare the highest national CD rates or the highest regional CD rates by using our rate tables.

 
Author: Jason P. Jones
January 2nd, 2013