Are there any CDs that pay decent interest rates?

[Kat45]

I have a CD that matured today, and I really don't want to renew it when the interest rate will likely be about 0.4%. Interest rates are so absurd today. Man, I remember the days when you'd get about 5% on a regular passbook savings account, and much more on a CD. You do the right thing and save money rather than spend it, and you can't even keep up with inflation on your savings. I think I have about a week before it renews automatically.

[DJ13]

1. This is (sadly) one of the highest rates I've seen

http://www.ally.com/bank/high-yield-cd/

1.49% on a 12 month.

[RKP5637]

2. Interest rates today suck. I've used ING in the past but their rates

aren't that great anymore. Online savings with ING is now 1.10, better than their CDs last I looked. These rates, the lending rate to banks and credit cards are ridiculous. Unless you want the gamble, and I mean gamble on the stock market, you're screwed in the NEW USA, Inc.

[Kat45]

12. I know. ING has gone way downhill compared to what it once was.

I remember when I first opened a bank account with them, they put $25 in it--and the interest rates were pretty good. Then one day I looked at my account and I couldn't believe the paltry interest rate it was.

[Dawson Leery]

3. TARP was one of the greatest cons ever perpetuated.

The banks got their and are not lending money, nor paying much interest even though they get money from Fed at dirt cheap rates.

[RKP5637]

4. I feel I've really been had! n/t

[jtuck004]

5. Think of how the 30 million unemployed or underemployed people feel.

No jobs, no demand, no need for capital, no interest.

If some jobs bill doesn't pass, I wonder where it will be when the ARMs start resetting in Sept - Oct...they might charge you for hanging on to your money short term.

Could be interesting...

[RKP5637]

6. It's a mess. I try to be optimistic, but I sure don't see any easy way out of

this. We had a formula that worked in this country and made it great for many people, but it's been destroyed by greed, selfishness and frankly those not giving a damn about the country, but only their selfishness. All of my friends are underemployed except for a couple that got lucky. And one of my friends with a couple of degrees feels lucky he got a job making burgers at McDonald's. He used to work the grill in HS.

[jtuck004]

8. I know. But we have been dismantling the means for most people

to make a living for 30-40 years. Just saw another article posted in http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x8567381 and we are still at it. The gov could create a real jobs program, something along the scale of the old CCC, but I think the people who could do something like that are all caught up in the short term.

I suspect you are trying to keep your money liquid as well as safe, so there probably aren't a whole lot of alternatives. You could get slightly better with longer terms but that gets rid of the liquidity, and other investments put it at greater risk, which may or may not be appropriate for your situation.

But at least you have a little something. I hope you find what you need..

[RKP5637]

9. Thanks!!! n/t

[Kat45]

13. I'm also either un- or underemployed for most of this century.

When I did have a decent job, I did the right thing and saved rather than spending wildly. Don't have all that much left since I've used most of it for living expenses in this past decade. I'm grateful that I had it for my living expenses, but it would also be nice if I could actually earn some interest on what I have left. It's not like I'll ever have a pension--or the opportunity and ability to build a 401K.

[Paper Roses]

22. The minute they charge me, whether for my meager DC or

my paltry checking account, out comes the money. As it is, the rate is so low it is hardly worth it. I just figure the bank is a good place to keep it safe, not to earn interest.

Charge me? Never happen. I'll dig a hole in the basement and hide the money. Don't need a very big hole, only take me a minute.

About 1% interest paid yet 16% interest charged on your credit card. I guess the 15% in the middle is what it takes to run this usury system.

[gmoney]

7. If you have any debt, pay it down

If you have a mortgage, you could pay down principle an effectively earn the rate of your loan for the remaining term of your loan on that money. Even if you have a great mortgage rate of 4% or so, that's still a better return than the "mason jar" interest rate you'd get on a CD.

Same goes with credit card debt, car loan or any other debt you might have.

If you're debt free, congratulations. You're ahead of about 95% of us.

There are some online banks paying like 1.5% http://www.moolanomy.com/1333/how-to-find-best-high-yield-savings-interest-rate/ -- at least the money wouldn't be tied up like with a CD. Or just put the money in your safe deposit box so it's readily available. If it's $10,000 you'd only be out like $40?

[Kat45]

14. oops - posted in wrong place n/t

[pokercat999]

17. I'm debt free except for the mortgage. But, rather than pay

down on my mortgage I'm saving the money in a credit union and will pay the mortgage off when I have accumulated enough to pay in full. I know this is "costing" me a few thousand in interest BUT should things go to hell and I lose the house I still have the savings. If I pay down a large portion of the mortgage and the worst happens the money just goes away with the house.

There's always more than one way to view things.

[katsy]

10. Try Melrose Credit Union in the Bronx.

http://www.melrosecu.org/




CD Rates:

Term Rate APY
1 Year 1.75 1.76
2 Year 2.00 2.02
3 Year 2.50 2.52
4 Year 2.75 2.78
5 Year 3.25 3.29

[prairierose]

11. That is about the same my CU is paying....n/t

[sendero]

15. The Zero Interest Rate Policy..

.... is yet another transfer of wealth from the people to the banks.

Everyone should be outraged by it, but most don't get it.

We are being ROBBED.

[Statistical]

16. Corporate bonds are a (slightly riskier) higher yielding option.

Default rates for high grade corporate bonds tend to be very low. Now very low is not 0.00% but it is a way to get more than 1% yield.

maturity   	 0-1yr  1-3yr   3-5yr   5-7yr   7-10yr  10-20yr 20+yr
CDs 		--- 	2.778 	1.885 	2.549 	3.082 	4.071 	4.514
Agencies 	0.131 	0.867 	1.900 	2.898 	3.716 	4.755 	4.865
Corporate (AAA) 0.134 	0.769 	1.955 	2.811 	3.352 	4.123 	4.792
Corporate (AA) 	1.202 	1.765 	2.919 	3.225 	4.401 	5.380 	5.537
Corporate (A) 	0.664 	1.655 	2.850 	3.943 	4.362 	5.659 	5.609
Corporate (BBB) 1.154 	2.228 	3.377 	4.388 	4.933 	6.035 	6.167

Default risk of BBB and higher corporate bonds is very low.

If you went slightly up the risk curve you could pick up something like FIDELITY NATIONAL FINANCIAL bond.

FIDELITY NATIONAL FINANCIAL
CUSIP: 31620RAC9
Ratings: BBB-
Yield to Maturity: 6.645
Maturity: 5-15-2017

Anything lower than BBB- is junk grade and default risk starts going up substantially.

The bad news is the Fed is likely going to keep Fed funds rate very low for an extended period of time. Supply & Demand means banks have less need for savings accounts, CD, money market funds thus rates will be very low.

[ParkieDem]

18. CDs are generally a ripoff.

They're illiquid by their very nature, and the interest rates they pay are crappy - even in better times.

You're better off putting your money in a savings account -- many online banks (American Express, for example) are offering savings accounts with rates around 1.3-1.5%, which is pretty good in today's marketplace. Plus, they won't tie up your money like a CD will.

[eridani]

19. Interest rates at my 3 credit unions are down again in June

May was pretty crappy, and I hoped things would be looking up. No such luck.

[Statistical]

20. CD rates track fed funds rate very closely.

With fed funds rate at 0% to 0.25% don't expect short term CD rates to rise.

When banks get worried that fed funds rate will rise significantly in future (3 years, 5 years, 7 years) they will start offering better rates on longer term CD (3+ years) but still offer crap on short term ones. They do this to hedge rising borrowing costs.

Only when fed funds rate rises significantly (5%+) will you see short term CD rates also rise.

With how rocky and uneven the recovery has been I expect Fed won't be making any meaningful raises to fed funds rate anytime in next year+.

[golfguru]

21. Nope! CD rates are competing with depression era rates

and bonds are risky because when the economy picks up, bonds will
go down in value.

It was like this during the great depression of 1930's. Real-estate,
gold, stocks, etc all went down. Cash was king.

[Statistical]

23. Market price of bonds declining is only relevent if you intend to sell before maturity.

At maturity all bond always pay $1.00 on the dollar.

Thus if I buy say a Sallie Mae bond with 5% coupon at $0.80 that matures in day 2015 it has a yield to maturity of 9.5%.

Now if economy picks up the market price of bond *may* drop, the market price may also drop if interest rates rise however neither of those are relevant assuming the company doesn't go bankrupt.

For $800 I will get $50 a year in interest payments (5% of $1000 face value) and in 2015 I will get $1000.

Thus $1250 collected on $800 investment.

market value only matters if you intended to sell bond BEFORE maturity. For new bond investors it is recommended that you simply purchase bonds you intend to hold to maturity thus eliminating the concern of market price changing before maturity.

[Yavin4]

24. T.I.P.S. -- Treasury Inflation Protected Securities

http://mutualfunds.about.com/od/typesoffunds/a/tips.htm

[SlipperySlope]

25. Credit Cards pay over 30% interest

This is just obscene. The banks have maneuvered the government into supporting 0.5% interest rates on savings, but 30% interest rates on credit cards. How the hell do the poor bankers survive with only a 30.5% spread to make money on?