One might think that with the improving economy you might see an increase in deposit interest rates, but you would be wrong. Deposit interest rates are still low and banks are not in a great need for more deposits thanks to the federal bailouts.
The FED has insisted that it isn’t going to raise interest rates any time soon and this means that depositors will continue to lose out. This is completely understandable as the FED wants us to invest our money in American companies instead of stashing it away in CD rates at banks.
For March 2010, short term CD rates have continued to fall. CDs under a year are not even worth putting your money in as the rates are lower than what you can get in a savings account.
When you do a CD rates comparison, you find the best 1 year CD rates have fallen below 2% and continue to be found at credit unions over banks.
The top 2 year CD rate is around 2.25%. If the FED is serious about not changing their interest rates for a long time this might be worth investing in. I’d say it’s a toss up between the 1 year CD rate and the 2 year CD. It all depends on when you think the economy will be booming again I suppose.
The best 3 year CD rate is around 3% APY. This is pretty decent while the 5 year rate is around 3.60% APY. I would definitely stay away from the 5 year CD. The rate increase isn’t great enough over the 3 year CD and you don’t want to be locking into long term CDs while the interest rates are as low as they are. The 3 year might be a good idea but I’d highly recommend going with a bank that has a low early withdrawal penalty. This way you can pull out your money without losing too much when interest rates climb back up.