12 Month CD Rates Higher Than Inflation Rate
For the past decade, if you invested in certificates of deposit, you were probably getting a CD rate lower than the rate of inflation. You actually lost money by investing in either short term or long term certificates of deposit.
For example, back in 2012, the highest 12 month CD rates were around 1.00 percent. The inflation rate in 2012 was 2.10 percent, giving you a negative return of 1.10 percent. Looking at it another way, for every $10,000 invested you actually lost $110.00.
You didn't fare any better investing in long term CDs. On May, 23, 2012, we reported the top 5 year CD rates were at 1.77 percent, still 0.33 percent below the inflation rate at the time. Investing in 5 year CDs, you lost $33.00 for every $10,000 invested. Thankfully, those very low CD rates are a thing of the past and you can now make money investing in CDs.
The Consumer Price Index (CPI) for the past 12 months was reported at 2.3 percent by The Bureau of Labor Statistics. You can actually get a higher CD rate on both short term and long term CDs. In fact, CDs with terms as short as 6 months have a higher rate than the current CPI. Below is a short list of banks offering CD rates higher than the inflation rate.
CD Rates Higher Than Inflation Rate
CD rates will continue to move higher in 2018 and into 2019. The Federal Reserve is expected to increase the fed funds rate o.25 percent in December, which will put more upward pressure on CD rates. The Fed is also expected to increase the rate 2 to 3 times in 2019.
By the end of 2019, we could see 12 month CD rates nearing 4.00 percent. That is a level we haven't seen since the financial crisis and recession 10 years ago.