With the Fed not raising its targeted federal funds rate on Wednesday, investors in certificates of deposit will have to wait on the prospect of higher short-term interest rates.
Does the economy or the Federal Reserve set CD rates? Let’s look at the evidence.
CD rates vary across the country. Find out which cities have the highest rates on one-year CDs and five-year CDs.
Buying a CD through a brokerage may lead to higher CD rates. Be sure to understand the complexities of the deal though.
Since December 2008, interest rates set by the central bank have been virtually zero, leading to low CD rates and even lower savings account and money market account rates.
The megabanks, Chase, Bank of America and so on, typically have little incentive to pay high CD rates.
Besides the banking regulations governing the number of transactions allowed in savings and money market accounts and minimum early withdrawal penalties on CDs, there is a huge amount of variation between banking products.
Last week’s meeting of the Fed was generally interpreted as bullish on the economy and bolstered confidence that an interest rate increase could indeed come this year.
Though there’s no one-size-fits-all answer for savers and investors, examining goals and time frames can provide direction when considering saving and investment vehicles.
Interest rates as set by the Fed are the biggest factor in fluctuations in CD rates.