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POSTED ON BY Ken Tumin
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.
- HSBC Direct - 3.00% APY (was 3.25%)
- FNBO Direct - 3.25% APY (was 3.50%)
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.
BTW, thank you for this great site. I visit it everyday!
http://clevelandfed.org/research/data/fedfunds/
As of 10/22, the market thinks the most likely next rate is 1.00% (purple line).
It might be a good idea to buy some I-bonds once the rate resets in November.
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