Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

The State of the Rates Interest on Cds Still Trending Very Low

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

The State of the Rates Interest on Cds Still Trending Very Low

Article excerpt

Like a balloon with a slow leak, yields on certificates of deposit -- the plumpness long gone -- have continued to shrivel this year.

The average return on a one-year CD was 0.30 percent nationwide this week, down from 0.34 percent at the beginning of the year, according to interest-rate tracker Bankrate.com.

That compares to the most recent peak of 3.77 percent in August 2007, just before the economy began to buckle and interest rates started their relentless descent.

For six-month CDs, yields averaged 0.19 percent this week, down from 0.22 percent in January and 3.55 percent in 2007. On five-year certificates, the average yield was 0.93 percent, down from 1.16 percent at the beginning of the year and 4.02 percent in 2007.

With the Federal Reserve promising to hold short-term interest rates at record lows into 2015 to help keep the fragile economy growing, "It will continue to be a long tough slog for savers," said Bankrate.com senior financial analyst Greg McBride.

"The best you can hope for in the short term is that yields finally reach a bottom," he said. "Any meaningful improvement is still a long way off."

At the current average of 0.30 percent, a one-year, $10,000 CD would earn only about $30 in interest per year.

The meager returns underscore the need to have a diversified savings portfolio beyond cash investments, including dividend- paying stocks, bonds and real estate investment trusts, although those are not insured like bank deposits, Mr. McBride said.

The best way to maximize yields on CDs is to shop around, he said.

For example, although the average yield on a one-year certificate nationwide was 0.30 percent this week, savers could more than triple that return by picking a top-yielding CD paying 1.1 percent available at a number of federally insured banks nationally, according to Bankrate.com's weekly survey.

On a five-year certificate, the top payouts were around 1. …

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