How have CD rates changed compared to last August? Here's what savers may not know.
CD account interest rates have changed compared to last August, but maybe not in the way savers assumed.
The Federal Reserve's recent rate cuts have not been as impactful for savers as initially anticipated, especially when it comes to Certificate of Deposit (CD) rates. While many expected these cuts to lead to lower rates for savers, the reality is more nuanced. CD interest rates vary by lender and term, but the changes in rates since last August are not as drastic as one might think.
Last August, CD rates stood at 4.30% for 3-month CDs, 4.45% for 6-month CDs, 4.30% for 9-month CDs, 4.40% for 1-year CDs, 4.16% for 18-month CDs, 4.10% for 2-year CDs, 4.10% for 3-year CDs, and 4.15% for 5-year CDs. A year later, these rates have shifted slightly, with some terms increasing and others remaining the same or decreasing.
For instance, 3-month CDs are now at 3.95%, 6-month CDs at 4.15%, 9-month CDs at 4.10%, 1-year CDs at 4.40%, 18-month CDs at 4.35%, 2-year CDs at 4.30%, 3-year CDs at 4.50%, and 5-year CDs at 4.35%.
Thus, while some short-term CD options have seen a minor decrease, others have either stayed the same or even increased. This trend is particularly relevant as the Federal Reserve is expected to raise rates in September for the first time in three years, which could further boost CD rates. Therefore, now could be a strategic time for savers to open a CD account, especially if they aim to secure a higher rate for terms of 18 months or longer.
This resilience in CD rates, despite the fluctuating interest rate environment, reaffirms their value as a savings tool in today's economy.
Written by urgent.news from CBS News's reporting — not their text. Machine-written — it may contain errors, so check the original before relying on it.
