Have You Recently Checked Bank CD Rates as a Retiree?

Since 2008/2009, when there was economic meltdown in the US, it has been a constant challenge and struggle to be able to find low-risk yields. Now interest rates are close to zero and this has made most retirees nervous about buying bonds because there might be a sudden jump in the rates. This leads us to asking the most important question: How about sticking with the old-fashioned certificate of deposit instead of bond?

Most retirees, who are keen to have reasonable deals on certificate of deposits, can find them. Even if they may not seem as attractive as expected, they come with hardly any serious risks to the principle. In addition, the Federal Deposit Insurance Corporation (FDIC) protects accounts that sum up to $250,000.

However, there is nothing new in terms of the rates of CDs, as they are no higher than those of bonds are. Banks have been offering a generous rate on CDs for a while now, and they are available online, because this is an inexpensive approach. Moreover, this serves as a way for most banks to win over retail clients that can easily buy products with higher margins.

Nonetheless, in the present environment where the rates are too unfavorable, CDs can offer a better and compelling case.

For retirees, it can be an opportunity to make an additional return without taking higher risks. An aggressive ban will sell a 2-year CD and also offer a 1.25% APY (Annual Percentage Yield) as compared to treasuries that have 2-year rates with a percentage as low as 0.48 for APY. Likewise, a 3-year CD comes with 1.45% APY as compared to a 3-year treasury that comes with an APY percentage of 0.92. For a CD of five years, the percentage may be as much as 2.0%.

However, 5-10 years back, banks that were smaller and not as reputable were the ones that offered better and higher rates, unlike now. At present, only big names (like Barclays, CIT Bank and Bank Rate) offer a reasonable percentage, and allow people to compare it with others online.

If you have concerns regarding opportunity cost, then it is worth knowing that some banks that offer aggressive CD rates also offer interesting packages for savings accounts, and you can move them at anytime. However, it is worth mentioning that it may require a minimum amount of deposit in order to qualify for the improved rates.

For retires, no matter what the retiree believes, or how back they go with the bank, there will always be implications. This is why using CDs can be the best option for a risk-free investment. Equities will help keep the returns substantial and above inflation.