Bank Deals Archive - History of Online Banking, Interest Rates, Bank Bonuses

Saturday, January 03, 2009

Bank Deals Highlights for 2009 - Savings Accounts, Checking Accounts, Certificate of Deposits

It looks like savers are headed into a difficult time as interest rates plummet. At the end of 2008 the Fed slashed the target federal funds rate to a historic low (range of 0% to 0.25%) as it appeared likely that the recession will last well into 2009.

In 2008 savers did have some luck in that banks kept their savings account and CD rates well above the federal funds rate. I hope this will continue into 2009 or else it'll be difficult to find CD rates above 1%. With savings account rates dropping below 3%, locking money into a CD looks appealing. At the start of 2009 there are still some banks and credit unions offering CD rates above 4%. Locking into a long-term CD is nice when rates stay low, but there's concern that all the money being pumped into the economy by the Feds will lead to high inflation and much higher interest rates. As we saw in 2008, it can be difficult to predict interest rates. It's possible that we could see inflation and interest rates shoot up later in 2009 or in 2010. It's also possible the US will see what Japan saw in the 1990's when inflation and interest rates stayed low for the entire decade.

posted by Banking Guy at 12:43 PM