Stash Your Cash In CDs Now

The Federal Reserve Board is expected to cut interest rates soon, and you can bet that banks will quickly follow their lead and slash rates on savings accounts and certificates of deposit. By purchasing a CD now, you can lock in favorable rates ahead of the Fed’s September 18 meeting. From the Chicago Tribune:

“Banks usually are really fast to cut rates and slow to raise,” he said.

Some experts are advising people to lock in longer-term certificates of deposit soon, at least with a portion of their savings, in case rates begin to slide.

“Locking in a CD is particularly attractive now,” said Greg McBride, senior analyst at in North Palm Beach, Fla. “The yields haven’t yet reflected the idea of a Fed rate cut.”

If you have spare cash parked in a high-interest saving account, consider using Bankrate’s excellent comparison tool to find the best rate on a CD before the Fed busts the cheap money party.

Savers would be wise to lock in high CD rates [Chicago Tribune]
(Photo: corrieb)


Edit Your Comment

  1. jgkelley says:

    Thanks to the consumerist, I have several thousand stashed in HSBC. It sounds like I should move it soon..but the actual article states:

    “For now, many economists expect the Fed to drop its key rate to 5 percent from 5.25 percent when policymakers meet Sept. 18, and that one or two additional quarter-point cuts are probable by year-end if the crunch doesn’t show signs of abating quickly.”

    I can stand a drop from 5.05 to 4.5 while keeping the money more fluid, rather than getting a CD that requires maturity of a year to reach a level just a few tenths of a percentage point above that.

    Am I misinterpreting, or does it sound like the best (six-month or one-year) CD rates are just a fraction above the lowest likely new high-yield savings rates?

  2. mrjimbo19 says:

    Anyone know how this would influence on-line banking through companies like ING and such?

  3. TheRealCMJ says:

    Consider finding a CD that has some liquidity. BofA and others offer a CDs which provides a higher interest rate than savings and only SLIGHTLY lower than normal CD rates yet still allows you to take money out. BofA’s offer has 2 limitations:
    (1) you can only take money out once per week
    (2) you cannot add more money to the CD without closing it and reopening a new one.

  4. FLConsumer says:

    ING’s still sitting at 4.5%, so I wouldn’t expect them to lower their rate anytime soon.

    A great site to keep tabs on this stuff is:

  5. TechnoDestructo says:


    Exactly the same way except that their rates are higher to begin with?

  6. Skiffer says:

    But…Americans don’t save, so what does it matter?

  7. anatak says:

    Yes, lock in CD rates now before they go from “dismal” to “crappy”. A CD is just a savings account with unfavorable terms and conditions. If you want a place to park money short-term, then its still pretty tough to beat a good money market account. Looking long-term? Mutual funds are the way to go.

    This is kinda like that “Now is a great time to buy a new car” article. Sure, this time of year maybe better, but like a CD, the general concept still stinks.

  8. zolielo says:

    @anatak: Watch out for lack of FDIC and crashes on money markets.

    @Skiffer: Savings increases standard of living while investment increases growth, very basically. USA picks growth.

  9. PorkTornado1102 says:

    Uhh, CDs???

    How conservative you want to get is your own business, but you can get a much better return with many other investment options.

    Go for a high dividend yield stock that has a relatively low beta and you should beat that by at least a few percentage points.

    Even if you are a conservative investor, the stock market is the place to make real returns.

    FYI – if you are not so risk-averse, get into some tech right now and ride the seasonal rally until February.

  10. lettersnumbershyphens says:

    Given the current state of the economy, isn’t a sock under your mattress a safer bet than money in the bank? Look at this week’s gold prices, and you’ll see that a lot of people with a lot of money are agreeing with me on this.