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Rates Drop at GMAC Bank - Have Rates Peaked?


GMAC Bank lowered the rate on is Money Market Savings account today from 5.10% to 5.00% APY. In addition, there were large drops in CD rates. The largest drop was the 6-month term which fell 0.50% to 5.00% APY. The 3-month CD rate also had a large drop from 5.25% to 5.00% APY. GMAC started to drop long-term CD rates last week. Below shows how the CD rates have changed today:

GMAC Bank Certificate of Deposit Rates:
Term Old APY New APY Change
3 months 5.25% 5.00% -0.25
6 months 5.50% 5.00% -0.50
9 months 5.50% 5.45% -0.05
12 months 5.50% 5.50%
18 months 5.50% 5.45% -0.05
2 years 5.60% 5.55% -0.05
3 years 5.60% 5.55% -0.05
4 years 5.60% 5.55% -0.05
5 years 5.60% 5.55% -0.05

For more information on opening a GMAC Bank CD, please refer to this post.

One of the experts quoted in this Bankrate.com rate trend article stated that based on history the inverted yield curve won't last, and eventually, short rates will either drop or longer rates will rise. Longer rates overall are trending down at many banks. Today's rate drop at GMAC seems to be a sign that short rates may be next. If the Fed decides to pause next week, perhaps we'll see other banks following GMAC and start lowering short term rates.
Anonymous   |     |   Comment #1
what percentage of people let their cds roll automatically into a new one , due to procrastination or neglect?this maybe gmac's strategy.how many people who received a middlesexbank 3 months cd heads up maturity letter and didnt act in time. 5.25% apy to 4.0% apy
Tom (anonymous)   |     |   Comment #2
I'm through GMAC Bank and I just noticed this rate decrease this morning. This is the first time in a while. It's actually the first time since I joined them almost a year or so ago.

Do you think it's time to start investing in 1, 18 month CDs?

Keep up the fantastic blog!
Banking Guy
Banking Guy (anonymous)   |     |   Comment #3
I think that is a good point about how banks might use CDs and the common condition of people's neglect. This is especially the case of World Savings. That's why it's important to note the grace period. World's grace period is only 6 days after the maturity date.

Tom, thanks for the feedback. About CDs, it's hard to say when to lock in the rates. This week should provide some more data on this issue.