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Second Fed Rate Hike of 2018: Deposit Rate Predictions and StrategiesHow Low Can CD Rates Go? 116 Years to Double Your Money?
Every time we think CD rates have bottomed, we see more rate cuts. The latest round of cuts came after the Fed's Mid-2013 pledge and its Operation Twist. Some banks and credit unions have responded quicker than others. ING Direct responded yesterday with CD rate cuts. Even though the savings and checking accounts have maintained competitive rates, it has been rare for ING Direct to offer competitive CD rates. That is certainly the case today. The new lower rates are low even by today's standards. All of the CDs with terms up to 2 years have a rate of only 0.60%. For terms of 30 months to 4 years, the APY is 0.90%. To break one percent, you now need a 5-year CD which has an APY of 1.10%.
ING Direct's 5-year CD APY is now only 10 basis points higher than ING Direct's savings account APY. I'm glad they kept that the same. The Orange Savings Account yield has remained at 1.00% since February.
Unfortunately, the Electric Orange checking account rates fell by 5 basis points. The top tier now matches the 5-year CD with a 1.10% APY. This requires a $100K balance. The $50K tier has a 1.05% APY, and below $50K, the rate is 0.20%.
I think ING Direct should consider rewriting their CD page. On that page they say "The Orange CD - Guarantee yourself a high yield" and "High Interest - Safe place to grow a nest egg".
So let's see how fast you can grow your nest egg with a 0.60% interest rate. If you want to double your money, it will take 116 years. How about the 5-year 1.10% CD? That's not much better. For that to double your money, you'll have to wait 70 years.
Of course the term high yield is relative. It's only high compared to what others are offering. However, many other internet banks are offering CD rates much higher than ING Direct as you can see in our rate tables for 5-year CDs and 2-year CDs (both links are set to show just internet banks).
Even if a bank's rate is higher than the others, there has to be a point in which the word "high" just can't mean high. At the very least when the yield is so low that you can't double your money in one lifetime, that's no longer high.
There seems to be a compulsion for some of you to use this Blog as a platform for advocating some sort of political solution to the current economic difficulties. Although I don't own this Blog, I nevertheless recommend that you take yourselves to some other forum that's dedicated to attracting that sort of rhetoric. It's not that I'm so smart but, by now, it should be clear to most reasonably sophisticated readers that politicians are foremost interested in holding power. Whatever they say about the economy is less about factual accuracy and more about saying what they think the voters wants to hear.. So, unless you have a magic bullet that will solve everyone's problems, I'd be genuinely grateful if you'd pack up you soap box and move elsewhere.
To Bancxman: You can't separate politics from what is happening in banking and elsewhere in the economy. It is relevant.
The politicians with their policies implied on all of us, ruined our plans and savings.
No,w after they did that, you want to leave them alone, hum!!, are you a politician?
If not, you must be biased against the bleeding poor savers or you are socialist dictator.
Either way, infringing on my free speech puts you at the bottom of my opinion for being
un-American human being.
I agree with Bancxman, to those who use this as your personal soapbox please find another forum for your rhetoric and BTW feel free to invite the "oh just here for a laugh because I need it" (maybe you do but that's not what the rest of us are here for), "oooh bobert we miss you", and other assorted posters to go along with you. Don't worry, the rest of us will struggle along and make it with you somehow.
With a little research, a decent income, and a reasonable credit score you can make several thousand dollars from bonuses in a year. Could be worse.
'A little research, a decent income, and a reasonable credit score', we can earn several thousand dollars of bonuses in a year? Gosh, sounds great, but could you please explain the details of your reasoning of your eutopia? Thanks.
#20- Oh my mistake. I must have missed all of the comments talking about inflation in this thread. You can't have an intelligent conversation about money rates, without also talking about the spending power of that money. Unless you just want to gather dollar coins to build a Scrooge Pool, it matters what you can buy with each coin. One must also consider the extremely low tax rates we currently have. Younger investors shouldn't be too heavily invested in CDs, and older investors should have made plenty of profit in the market over the last 30 years (and been out of stocks so they missed the recent downturn), so the only people being crippled are those without a plan.
They don't NEED your tax money when they can and will print more money whenever they want some to buy votes with.