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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Let The Feds Lower Your Down Payment

Want to buy a home, but don’t have much cash?

Two government programs can ensure you make the smallest possible down payment.

You can still get 100% financing if you can qualify for a VA loan. And you’ll only have to pay 3.5% of the purchase price with an FHA loan.

These are mortgages where the government promises to repay the bank if you default. With guarantees like that, banks are able to take on borrowers they might have rejected on charged a much higher interest rate.

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