Bank of America dropped some of its certificate of deposits this past week to follow a trend of cutting rates.
Bank of America, out of Charlotte, N.C cut its rates on the following CDs.
- 5 Year CD dropped by 0.50% to 1.75% from an average of 2.25%.
- 4 Year CD rates dropped from 1.75% to an average of 1.45%.
- 3 Year CD rates dropped to an average of 1.1% from 1.5%.
The falling rates not only on CDs but also on money-market rates are leaving people with fewer places to stash cash and actually make a decent return. Money Market rates have dropped to 0.75% nationally, not making it more attractive to investors. Nationally CD Rates are at all time lows with bank institutions. Credit Unions are popping to the top of the charts, offering the highest CD rates for just about any term.
When the Nation’s largest bank lowers their long term CD rates, this could signal that other banks will follow in their footsteps. Now might be the best time to get into a long term CD with a decent rate, before other banks follow the coming trend. Large banks can offer lower rates because they have other products that can grab the attention of new customers, such as many different types of checking account promotions.
For the average person looking to stash their cash for a short amount of time, the options are limited. Cal Brown, vice president of planning at the Monitor Group in McClean, VA is advising clients to put their extra cash into short term bond funds. Bonds are currently yielding more than 3%, much higher than some of the highest CD rates.