Not all CDs are created equal
TEXT OF STORY
Doug Krizner: The recent volitility in the stock market may have tempted you to keep your money in the bank. Well now, the rates on savings certificates of deposits are dropping — by one measure, the sharpest decline in more than four years. Jill Barshay reports.
Jill Barshay: The Federal Reserve’s rate cut may have been good for Wall Street. But savers — especially retirees and parents with kids in college — are losing out.
Laura Bruce tracks CD rates at Bankrate.com. She says the average one-year CD is now down to 3.71 percent.
Laura Bruce: Well, you never like it when you’re in a declining rate environment and you’re a saver.
But not all CDs are created equal. The average may be down, but some banks are still offering rates above 5 percent.
Bruce: Banks want those deposits. Depending upon how badly they want those deposits, they’re certainly not gonna be the first onesto drop their rates. And they’ll try to keep them up there as high as they can, for as long as they can.
That’s why CD rates haven’t moved in lockstep with the Fed’s rate cut.
But Bruce says banks won’t be able to pay high CD rates for long. She predicts those rates will fall. If you have some extra money to set aside, she says, lock in a rate while you can.
In New York, I’m Jill Barshay for Marketplace.
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