Continued economic concerns have placed unrelenting pressure on short term bank CD interest rates.  This week, six month CD rates dropped modestly but it was a continuation of falling rates that has taken place each week since the start of 2010.  The average of the best six month CD rates fell one basis point or 1/100 of a percent for the week ending January 29, 2010.  The average rate of the top ten CD rates finished the week at 1.37%.

The best six month CD rate available nationally is at 1.45% which is unchanged from the previous week.  The highest rate is available from UFB Direct on a minimum deposit of $8,000.00.  The second best rate comes from two banks, AmTrust Direct and The Palladian Private Bank.  Both banks offer six month CD rates of 1.40%.

Three banks follow these yields in the six month term category with similar rates.  Ascencia Bank, State Bank of India and Giant Bank have six month CDs yielding 1.36%.  One basis point lower is the six month certificate coming from La Jolla Bank with an interest rate of 1.35%.  One basis point again lower is the six month CD promoted by Aurora Bank with an interest rate of 1.34%. 

The final two banks wrapping up the list of the top ten best six month CD rates are Nexity Bank and Excel National Bank.  Nexity and Excel both have six month CD interest rates set at 1.33%.

Although the average rate of the top six month CD rates was down by just 5 basis points, five out of the top ten banks from the previous week’s list reduced the rate they offer on a six month certificate of deposit.  Most of the rate reductions were small with 2 banks reducing their rates by just one basis point for the week.  State Bank of India made a major rate reduction, dropping their six month CD rate from 1.41% to 1.36% for the week.  Ascenia Bank made a similar rate reduction, with their six month falling from 1.40% to 1.36%.  One bank fell off the list, NewDominion Bank, and was replaced by Excel National Bank.

Unfortunately for investors in certificates of deposit, the dreary forecast looks to continue.  Economic activity is up as indicated by the increase in GDP released last week but bank lending is stuck in neutral and the FOMC had very little positive input regarding the economy in their statement released January 26.  Until the economy starts to grow without government spending being the largest component, short term rates should remain low.

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