Which Direction are Bank CD Rates Headed?

Some of our readers have been asking which direction CD rates and deposit account rates are headed. Deposit accounts include bank accounts and certificate of deposit accounts. 

Even though the Federal Reserve Bank has been lowering rates recently, CD rates have remained relatively stable the past 6 months, the rate for a one year certificate of deposit is still about 3.25%, the same as it was six months ago. Why do you ask? One word, competition.

The credit crunch is also affecting banks, the market for commercial paper is pretty much dead right now so banks have to turn to other sources for funds. There is even talk of the investment bank Goldman Sachs opening an online bank to raise more funds.

The credit crunch is good news for depositors, banks are raising rates because they are competing for the same pool of deposit funds. You can even find promotional CD rates online, Dime Bank is offering a 1 year CD that has a 4.10% APY ( the APY was recently as high as 5.00%, E-loan's promo 1 year CD yield 4.36%.  You can also find money market accounts, High Internet Savings Accounts and checking accounts that have yields between 3.00% to 4.00% or higher. Though with a checking account you might have to meet certain transactional criteria to receive a promo checking rate.

You will have to do some research to find the best bank rates, Monitor Bank Rates (MBR) has tons of promotional rates listed, all you have to do is browse or search through our bank reviews to find the Best Bank Rates.