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Fixed Interest Rates on Savings

Rocky
edited September 2013 in Fund Discussions
I noticed interest rates are starting to go up again. I bought a 2 YR CD last year at my Credit Union (StarOne) to lock in 0.65%. Now, 12 months later I can get a 2 YR CD for 0.1% higher than I am getting on my 2 YR while the 1 YR rates is the same 0.65% so I'm even.

I remember American Express was paying 0.85% for savings last year. Rates at American Express are still 0.85% for a savings account so I would have done better putting my money there, but who knew rates would bottom?

Interesting that this Interest Rate Survey shows that GE Capital Bank is paying the highest rates. I believe GE may spin off their consumer banking so they maybe offering better rates to attract assets to get a more favorable IPO.

The top rates paid for each survey (rate survey history) show rates are still coming down with nobody over 1% for a "no strings" savings account. How many remember the days we got over 10% on money market savings accounts? With all the QE and money printing by the Fed, you have to wonder if that is ahead for us someday....

Comments

  • Rocky
    I checked the Interest Rate Survey again and 0.90% is still tops.

    My local credit union increased its savings rate from 0.60% to 0.65% this month. Good news we get more for our savings accounts but still a long, long way from the days of 5%.
  • Rocky
    edited December 2013
    PenFed Credit Union paying 3% on 5 YR CDs now.

    12/01/13: 5-Year 3.000%
    8/26/13 : 5-Year 1.140%

    Nice gain!
  • msf
    Until Dec 7th, you can get an Ally Bank five year CD paying 1.60%, with only a 60 day early withdrawal penalty. So your net interest in a year is 10/12 of 1.60% or 1.33%, and higher if you hold longer.

    The only downside seems to be that you have to close the whole CD - you can't make a partial withdrawal.

    That Dec 7 deadline is because Ally is changing its early withdrawal penalty at the end of the week.
  • AnnaAnna
    PenFed has gone from a one quarter to a one year withdrawal penalty. They seem to think rates will increase quite a bit. No problem, I'm still putting together a small package for a 5year. Wish some of my existing 1.5% 3 year were coming to term. I still have a couple of 6% from the good ole days but they end next year. PenFed's rates aren't as spectacular as they once were, especially the shorter term.
  • hank
    edited December 2013
    My first mutual fund (outside the workplace plan) was Delaware Cash Reserves, paying around 20% in the mid to late 70s. Nice income for quite a while. (I think the fund no longer exists). Bank rates were substantially lower than money market funds - which attracted a lot of money.

    As far as cash today, I'd rather let most sit at a fund house at near zero than lock-in a percent or so at a bank. As long as the house doesn't restrict your ability to move that cash in and out of other investments (most exempt money funds) you can probably use that money to better advantage with an occasional opportunistic move. I mean - how smart do you have to be to do better than 1% per annum?
  • MikeMMikeM
    FWIW: You can get a much better rate through Internet banking. I've used Ally Bank for years, way back when it was GMAC. Their rates are always at the top and they will add .25% on any CD renewed with them. I can renew a 1 year CD now for 1.23% with the extra customer appreciation added on.

    I once walked into a popular bank here in Western NY, (Citizens bank) and asked for the rate they offered through the Internet. They said they could not give me the same rate as though their website. Go figure.

    This website is a good place to shop for CD's and much more:
    http://www.bankrate.com/
  • Rocky
    Anna.... 6% CDs with 3% inflation... those were the days we could retire early on what we saved! $2M earning 6% was $120K... now you get 1% or $20K if lucky. No wonder the economy is in the tank.
  • Rocky
    StarOne still only paying 0.85% today while I can get 1.00% in FDIC savings at two banks listed at
    Best Savings Account Rates
    I can't see tying up money in a CD now when savings pay more.

    MikeM: Ally bank is listed as paying 0.99% for a savings account. If I put "CD - 1 YR & under $40K" into the tool at "Ally Bank Savings Rates" it says 1.20%.

    Is it worth locking money up for a year for an extra 0.20% if we expect the Fed to raise rates by 0.25% this year? Perhaps if that is the only rate bump.... hard to say.

    What do others think? Will the Fed raise rates by more than 0.25% this year?
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