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CD rates nationally and in your area.
CDs
- 0.37% (1-year CD yields)
- 1.22% (5-year CD yields)
Certificate of deposit rates dipped again in this week's rate survey.
The average one-year CD yield dropped 1 basis point to 0.37 percent. The five-year CD yield fell 4 basis points to 1.22 percent. A basis point is one-hundredth of 1 percentage point.
For deposits of $100,000, the average one-year jumbo CD yield is down 1 basis point to 0.41 percent. The typical five-year jumbo yield fell 4 basis points to 1.26 percent.
The average money market account yield remains 0.15 percent.
In this environment of rock-bottom interest rates, savers and investors are stretching for yield. In order to get higher CD rates for instance, many people simply go for longer maturities to find higher yields. The only problem with that strategy is that when interest rates increase, a saver will be stuck holding a low-yielding CD for years on end.
According to a blog entry on SmartMoney.com, going further out on the yield curve with a plan to take the early-withdrawal penalty may not be such a good idea. Banks have adjusted their fees to discourage jumping out of CDs early.
Before buying a long-term CD for a middling yield, double check the early withdrawal penalty to avoid any expensive surprises.