cds

CD Rates for Aug. 25, 2011

 

 

I'm Greg McBride, senior financial analyst with Bankrate.com, and here is your weekly look at yields on certificates of deposit.

Yields were lower on most CD maturities from 1-year through 5 years. The average 1-year CD yield is now 0.41 percent, while the 3-year CD dipped to 0.82 percent and the 5-year fell to 1.42 percent. All are record lows.

Despite the low yields, money continues to flow into the safety of bank deposits as investors strive to preserve their principal.

But these returns won't be enough to preserve the buying power of that money. Inflation is up 3.6 percent in the past 12 months and it won't have to rise nearly that much in the upcoming year to wipe out the meager returns investors earn. Don't confuse preserving the amount of your investment with preserving the value of it.

Low interest rates are received warmly by the stock market and by borrowers, but certainly not by savers.

With CD yields continuing to move lower, its more important than ever to shop around for the best available returns on CDs and other savings instruments. To do that, be sure to go to Bankrate.com.

I'm Greg McBride.

 

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