Bank rates are still dropping as we start the year 2011. Online savings account rates in January of 2010 were at 1.5% and as of January 2011 savings rates are at 1.0%. If this trend continues, soon bank rates will be at 0%. However, as the mortgage market improves, rates should improve as well. Many of the banks who offer bank rates are involved in the mortgage realm and therefore as the mortgage rates drop so do the bank rates. Kind of a game of picking your poison. Either get a lower mortgage rate and deal with low interest rates with savings, money markets, and cds OR have a high interest rate with banking and deal with high mortgage rates.
What to do when bank rates are dropping?
Some people think that there is no point in pursuing a new savings account because it is just going to keep dropping. While this may or may not be true, the average savings account rate is 0.01 % and 1.00% does make a big difference on the amount of interest earned. With bank rates continually dropping, it would be of interest to lock in a rate with a cd account.
Use Certificates of Deposits to Lock in a Better Rates
Cd accounts are a great choice if you are tired of rates dropping. Be sure to check the penalty for early withdrawal. Ally bank has one of the fairest withdrawal fee – only 2 months of interest is with held. This is much more generous than the majority of cd accounts. Hurry before it is too late to lock in a rate.
Check out Featured CD rates.