Certificate Of Deposit Rates Predicted To Fall Throughout the Year

For the last year, CD (Certificate of Deposit) rates seem to be in good shape. But early this year these rates seem to drop significantly every month. From 3-month CDs to 5-year CDs they seem to drop several basis points down. According to a survey done by a company which monitors average rates in the market, 3-year and 4-year CD rates have gone down 3 hundredths of a percentage just last week. For 5-year CD rates, it has also gone down 2 points.

The rate falls does not only affect regular CD rates but also special CD rates, the higher rates banks usually offer to get more consumers. These rates are significantly higher than regular ones because they only last for a period of time. The survey noticed that there is also a big drop in these numbers. For example, 5-year special CD rates dropped 19 points down and 3-year CD rates 6 hundredths of a percentage.

These changes in the rates are prevalent throughout the country so most definitely these rates will affect most of the banks who are offering certificate of deposits. This will also affect consumers who have certificate of deposits whose rates are subject to change depending on the rates’ performance in the market like variable rates. With the crisis our economy is experiencing, joblessness, trouble in real estate including mortgages, plus investors leaning towards other financial means and the limitations in the financial regulation system, it is difficult to pick up rates for CDs.

This crisis seems to continue at a slow pace and this dramatic fall in CD rates will seem to continue to go on until 2011.

For people who are relying on certificate of deposits for their savings, and have variable rates, this is bad for them since this will bring them less profit. But most CD rates are given as fixed so most people will not have to worry about the decline in the rates. If consumers were able to get a good rate even before the decline happened than it is a good thing since their rates won’t change until they transfer it to a new CD. But, if consumers are planning to get CDs at this time, it will not be a good decision since rates are low right now and will go on to be for another couple of months. It would be very difficult to get good rates at this time but if need be, people will need to deal with the current rates and hope for the best in the future.