The amount of money held in CDs continued to dwindle this month to the lowest point since 1994, likely because of savers' reluctance to lock their money in at today's rock-bottom CD rates.
Overall, according to the Federal Reserve, CD accounts held $770 billion as of Nov. 14. Compare that to the $1.2 trillion in CDs the Fed counted two years ago, and the decline looks positively precipitous.
It's no wonder savers are staying away. Using the "rule of 72," at the current one-year average CD rate of .35 percent, it would take 205 years to double your money, and 61 years at the current five-year CD rate of 1.18 percent.
What's interesting is that even as CD deposits have taken a nosedive, savings account deposits have reached an all-time high this month, breaking $6 trillion for the first time ever.
That may reflect some wishful thinking. I think there are a lot of savers out there keeping their money in a holding pattern to await higher CD rates in the future. That may have made sense a year ago when it looked like an economic recovery and higher rates could be in the cards.
But with Federal Reserve Chairman Ben Bernanke committing to keep interest rates as low as possible until at least 2013, holding a bunch of cash in savings accounts that are paying even less in interest, on average, than CDs may be pretty pointless.
What do you think? Why are savers abandoning CDs? Do you think that's wise?