![]() And as the central bank continues to raise rates in its attempt to tame high inflation, experts suggest there is a chance that it will continue to move the needle higher in the year ahead. “It’s a mix between interest rates going up and bank competition to keep deposits,” Bunio says.įor some background, the Fed has increased the benchmark funds rate 11 times in its past 12 meetings to 5.25%-5.5%, significantly higher than nearly zero a year ago. Why are CD rates running so much higher now? Nicholas Bunio, a certified financial planner at Retirement Wealth Advisors, says the answer is really two-pronged. Twenty-four-month CDs at that time came with an average rate of 0.43%. Just last year, though, rates were significantly lower: 12-month CDs had an average deposit rate of 0.31%, while 1-month CDs carried were as low as 0.05% through July 18, 2022, data show. Shorter-term certificates with 1-month terms had an average rate of 0.20% APY, while longer-term certificates, such as those with 24-month terms, currently have the highest average rate this year at 1.47%. To be sure, CDs with 12-month maturity dates reported an average deposit rate of 1.72% through July 17, according to data from the Federal Deposit Insurance Corp., or FDIC. As an industry, CD rates have been steadily on the rise for some time now. ![]()
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