Dedicated to Deposits: Deals, Data, and Discussion

Rate Cuts at HSBC Direct, FNBO Direct - Future Rates?

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Interest rates are falling. Two major banks recently lowered their online savings account yields:

The stock market tanked today as Wall Street feared a deep recession (see article). Worries of a recession might lead the Fed to cut interest rates again at the next FOMC meeting. I'm afraid it doesn't look good for savers.

If you want to lock in rates, your best bet is a CD. The difficult question is how long of a term. If you go too short, the CD matures in a low rate environment. If you go too long, the CD is stuck at a low rate while rates rise. Just remember you typically have the option of an early withdrawal with a penalty. Make sure the early withdrawal penalty is not too severe. I've seen some CDs that have penalties as high as 30 months of interest on a 5-year CD. Look for CDs with penalties on longer terms of no more than 6-months interest.


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Comments
7 Comments.
Comment #1 by Anonymous posted on
Anonymous
The federal government does not want you save your money, they want us to spend our way out of this mess. Not going to happen this time!

BTW, thank you for this great site. I visit it everyday!

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Comment #2 by Atlanta Wolf (anonymous) posted on
Atlanta Wolf
Here's a great site for seeing short term fed funds rate expectations.

http://clevelandfed.org/research/data/fedfunds/

As of 10/22, the market thinks the most likely next rate is 1.00% (purple line).

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Comment #3 by Anonymous posted on
Anonymous
With all the money flying around, we'll eventually see some crazy inflation in a year or two.

It might be a good idea to buy some I-bonds once the rate resets in November.

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Comment #4 by Anonymous posted on
Anonymous
I like the liquid CD at First Republic Bank. I got a letter that I could present at a branch to get another 25 basis points on a CD, so I got a 4.0% APY that I know I can rely on for 10 months and can take out all but 10K penalty free.

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Comment #5 by Anonymous posted on
Anonymous
Hi,the liquid CD at First Republic Bank sounds good except it's only 4%. Someone else suggested I Bonds...If, as it was suggested, the rates may come doow to 1% (wow!) what's wrong with a CD-type annuity. I just bought one from ING at 5.05% for only 5 years, no fees or any other charges and one can take FREE 10% or only the interest per year. The only thing one must be cautious about is the ratings of the insurance company that issues the annuity (but with the number of banks going on bankruptcy it pays to take the time to find a GOOD ratings ins. co).

I bought another one for a longer period, 9 years, at 5.68%.

Now I just received an email from AnnuityAdvantage with some 9 to 10 year CD type annuities at 6.75% which I'm not getting into as by now I don't have any more cash. lol! Adela

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Comment #6 by Anonymous posted on
Anonymous
In financial crisis the government keeps interest rates low so that investors to put their money in stock and bonds. They don't care about the old pensioner or the conservative investor. It's as simple as that. They lie about inflation rate too.

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Comment #7 by Anonymous posted on
Anonymous
GMAC has good rates too. 12month CD 4.35

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