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Consumer Confidence and Home Prices are Up, Are Higher CD Rates on the Way?

A series of positive economic reports have been released over the past couple months which point to a stronger economy and possibly higher CD rates sooner than the expected time frame of mid-2015 the Fed plans to keep the Fed Funds rate at near zero percent. Just this morning two more positive reports were released that add credence to higher interest rates.

The Conference Board Consumer Confidence Index, which is a measure of consumer attitudes, rose to 73.7, higher than the expected 73.0 percent in a Reuters poll of economists. Consumer confidence is now at the highest the highest level in four and a half years. The second positive report this morning was the S&P/Case-Shiller Home Price Index which show home prices increasing 3.6 percent in the third quarter.

The Federal Reserve has stated their need to keep the Fed Funds rate at exceptionally low levels until mid-2015, to lower the unemployment rate. Unfortunately a very low Federal funds rate also means low very interest rates on all interest bearing investments. The last factor dampening economic activity and as a result keeping a lid on higher interest rates is the pending fiscal cliff. Many economists believe the U.S. economy will boom once Congress and the President can come to an agreement of tax increases and automatic spending cuts to avoid the fiscal cliff.

Current bank CD rates, savings rates and money market rates are all at record lows. 1 year CD rates this week are averaging 0.25 percent in the Federal Deposit Insurance Corporation's rate survey. The average savings rate is at 0.08 percent and the average money market rate is at 0.12 percent. Deposit rates are not the only pathetic rates these days. U.S. Treasury yields are just as low. The U.S. Treasury Daily Yield Curve Rates for 1 year Treasuries were at 0.17 percent yesterday.

Thankfully there are CD rates at banks and credit unions that are higher than the average rates. The best CD rates on our 1 year certificate of deposit rate list are more than 4 times the FDIC average. The highest CD rates on our rate tables are around 1.10 percent. You can search for the top rates on our lists for any type of certificate of deposit term to help you get the best return during these low interest rate times.
Author: Jason P. Jones
November 27th, 2012