When the Fed makes a move or even if it leaves rates unchanged, it affects your wallet. Here’s how the latest Fed announcement will affect interest rates on certificates of deposit.

Average yields on long-term CDs, one-to-five-year maturities, range from 1.68 percent to 3.39 percent.

On the shorter end of the landscape, the average yield on a three-month CD is 1.19 percent and 1.29 percent on a six-month.

Money market accounts are paying an average APY of 0.83 percent.

The downward trend in deposit interest rates has virtually stopped. Unless the Fed sees a need to again cut rates we can pretty much assume CD rates will hold the line.

That’s not to say this is a good time to invest in CDs. The average rates offered are abysmal. While we may see some of the longer-term rates slowly tick upward, it will take a Fed rate hike to stir any significant increase in CD rates.

If you must invest in CDs because you have a laddered CD portfolio, or if you just want to protect principal, stick with three- or six-month terms so you won’t be stuck with a low return when rates start to climb.

To find the best rates in your area,
click here.

— Posted: Dec. 10, 2002