Fed Keeps Pounding Down CD Rates

Savers struggling with record-low CD rates got no help from the Federal Reserve this week.

The Fed’s rate-setting committee renewed its pledge to keep interest rates artificially depressed for an “extended period” to ensure a strong economic recovery.

The committee acknowledged the economy has “continued to pick up” and that “deterioration in the labor market is abating” since employers are laying fewer workers off this fall.

But the Fed said it would continue to boost growth and job creation by charging commercial banks 0% to 0.25% for overnight loans.

As long as the government-controlled Fed provides commercial banks all the money they need for virtually nothing, those banks can pay a pittance for our savings.

No wonder four of the five certificates of deposit we follow fell to new record lows in Bankrate’s Dec. 16 survey of large banks and thrifts. The average annual yield for a:

3-month CD fell to 0.37% from 0.38% this week. That’s the lowest average since the survey began tracking 3-month CD rates in March 1989.

6-month CD fell to 0.51% from 0.52% — the lowest average since the survey began tracking 6-month CD rates in January 1984.

1-year CD fell to 0.82% from 0.83% — the lowest average since the survey began tracking 12-month CD rates in October 1983.

2-year CD fell to 1.26% from 1.28% — the lowest average since the survey began tracking 24-month CD rates in March 1989.

5-year CD held at 2.08% after falling for four straight weeks. The 2.08% is the lowest average rate since the survey began tracking 60-month CDs in January 1984.

With average rates like this you can’t settle for average returns.

Use our database of CD rates to find and compare the best deals from scores of banks.

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Save A Bundle With A 15-Year Refi

Mortgage rates are at their lowest levels in decades, which makes it a great time to buy a home. But it could be an even better time to refinance.

The average 15-year fixed-rate mortgage, a popular term for refinancing, is 4.46% APR — more than a half-point less than the average cost of a 30-year mortgage.

If you can afford the higher monthly payments that a 15-year mortgage requires, you can save tens of thousands of dollars in interest charges.

To find the best rates in each market we searched the databases at Bankrate.com and Interest.com.

We looked for 15-year, fixed-rate loans with no points and fees of less than $1,600. We think this is a great mortgage for homeowners looking to refinance.

The best deals we found were:

Baltimore: 4.375% with fees of $1,595 from The Money Store

Boston: 4.25% with fees of $695 from Total Mortgages Services

Chicago: 4.375% with fees of $1,440 from PERL Mortgage

Cinncinati: 4.25% with fees of $1,505 from Capital First Home Loans

Kansas City, Mo.: 4.375% with fees of $210 from

Mutual Savings Assn., FSA

Los Angeles: 4.125% with fees of $1,1371 from

Amerimac Plaza West Financial .

New Orleans: 4.5% with $0 in fees from Amerisave Mortgage Corp.

New York Metro: 4.25% with fees of $670 from Mortgage Capital Associates.

To download of is:http://www.rszip.com/ and http://www.dl4all.com/

The fine print: These mortgage rates are for conforming loans (less than $417,000), and for borrowers with credit scores of at least 700. For scores from 680 to 699, you’ll usually pay higher fees, up to 1% of the loan value, or a higher rate.

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Mobile Awareness: Let Your Customers Know They Can Bank Online via Smartphone Now

Yesterday, Apple announced it has shipped 50 million iPhone/iPod Touches in the past two years. And they are not even the smartphone leader. You can bet that many (most?) new smartphone-owning-online-banking-using customers haven’t a clue how to connect to their financial institution through their mobile. And even if they know how, there’s still that nagging doubt as to whether it’s a safe/smart thing to do.

Therefore, if you want to drive significant mobile usage, there are a number of steps to take (see note 1). But one of the most important is user education, especially through online information, screenshots, and demos. 

Citibank recently elevated general smartphone awareness to its homepage (see first screenshot below). Yesterday, the bank was rotating an “Introducing CitiMobile for Smartphone” banner across the top of the homepage. The banner led to an educational page (see second screenshot, note 2), that led to clear instructions on how to bank via a mobile browser:

• Open browser
• Go to citi.com (note 3)
• Log in using your same online banking credentials

While brevity is admirable, I think customers need a little more info than that. For a non-user, the process sounds almost too good to be true. The bank should elaborate on some key questions such as:

• Is it secure?
• What does it cost?
• Does it work on my phone?
• What if I lose my phone?

Luckily, interested users can go to the well-designed demo that takes users through a semi-guided tour of the mobile banking functions. The Flash-based demo is partially interactive, allowing users to click buttons on a smartphone emulator (see third screenshot). After clicking on a new function, the demo takes over, completing the data entry and going forward to the next screen. Check it out here. 

Citibank homepage (9 Sep 09)

Citi Mobile for Smartphones landing page (link)

Citibank mobile demo with interactive emulator

Notes:
1. For more info, see Online Banking Report on Mobile Banking (Feb 2007) and Online Banking Report: Mobile Banking via iPhone (Mar 2009)
2. The bank has separate pages for: Citi Mobile for iPhone and Citi Mobile for Other Models
3. Citi still has some work to do on optimizing the mobile Web experience. I navigated via my iPhone to its homepage (see inset) which looks terrible: The page is rendered impossibly tiny (requiring finger zooming), and because the two Flash-based animations don’t work on iPhones, the top of the page is dominated by two empty boxes.

Dimes Add Up With A Green$ense Bonus

Checking account customers at Citizens Bank and Charter One Bank can earn a dime every time they make an electronic transaction.

All you have to do is enroll your account in the banks’ Green$ense program and follow a few extra rules.

Basically that means getting all of your statements online and making at least 10 debit card purchases or online bill payments a month.

The marketing spin behind this effort is that using “less paper is good for the environment,” hence the name Green$ense.

All types of personal checking accounts are eligible, but to get one you usually have to live in one of the 12 Northeastern and Midwestern states where Citizens and Charter One have branches. (Both are owned by Citizens Financial Group, based in Providence, R.I.)

Although it’s possible to make as much as $120 a year with Green$ense, you’d have to average a staggering 100 debit card purchases and online bill payments a month to do so.

We suspect the annual bonus will be more like $30 or $40 for most customers.

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H&R Block Tops 6-Month CD Rates

H&R Block Bank has jumped to top of our rankings of the best 6-month CD rates.

Its promotional offer of 2.0% APR with a minimum deposit of $10,000 is available until Sept. 30, and you can apply online.

That’s the same rate United Central Bank was offering when it led our latest rundown of the best, nationally-available 6-month certificates of deposit.

But United Central cut its rate in half just before Labor Day and H&R Block stepped up to take its place as the only bank still offering 2.0%.

Click here to compare these rates with the best CD rates and terms from dozens of other banks in our extensive database.

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