With bank rates and CD rates dropping many investors are paying little attention to where there short term funds or safe and secure funds are being invested. Evidence of this clear by looking at the size of the holdings in certificates of deposit at the largest US banks.
A sample of Bank of America CD rates in California shows a Bank of America 1 year CD rate at 0.80%, a Bank of America 2 year CD rate at 1.10% and a Bank of America 5 year CD rate of 2.50%.
By reviewing the best CD rates in California at Selectcdrates.com we can see that First Mountain Bank has a 1 year CD rate that is just ten basis points better in yield than Bank of America’s CD at 0.90% but they also offer a 13 month CD rate of 2.00% or more than double that of Bank of America. 13 month California CD rate 2.00%!
Oh, Bank America also happens to be holding over $165 billion in CDs in their vault.
Maybe we should take a look at Wells Fargo in California. This bank has over $105 billion in CDs. Eeek, the Wells Fargo CD rate for a 11 month promotional CD is 0.45%, the Wells Fargo CD rate on a 21 month certificate is 0.90% and the 28 month Well Fargo CD rate is 1.40%.
And maybe First Mountain Bank is too far away. Well, Pacific Alliance Bank has a six month CD rate of 1.50% and a 2 year CD at 2.00%.
Seacoast Commerce Bank just reduced their 2 year CD rate, yet still offers a rate at 1.75% or 65 basis points above Bank America CD equivalent and 35 basis points above the equivalent Wells Fargo CD rate.
Current CD rates are currently quite low and finding the best CD rates is not as simple as looking at the bank rates in your neighborhood. But the forecasts for increasing bank rates has been wrong for the past two years and we are now seeing more financial analysts accepting the fact that low rates may be with us for some time into the future.
Finding the best CD rates during the difficult economic times that the US and world economy is experiencing can provide investors with an investment they can count on. But as with most financial investments, it pays to do some research before committing funds to the best local bank or the largest bank.
Unfortunately, a number of retires and savers are not doing the necessary research as is made clear by the staggering amount of CDs held at the largest U.S. banks at less than optimal rates. These are banks that fail to offer CD rates that are among the top ten highest national CD rates or the highest local CD rates yet continue to draw in investors’ funds.
The most recent action in the bond market as well as the most recent Federal Reserve statements makes it painfully clear that there is no impetus in the market for bank CD rates to rise.
Keeping money in CDs can be a great way to avoid market gyrations and capitalize on the protection afforded by the FDIC, but investors cannot simply invest without comparing the best CD rates. The above CD rate examples are proof that a bank CD account holder can make more money by paying just a bit of attention to the market and market rates.
Tags: 1 year CD rate, Bank America CD, bank CD rates, Bank of America CD rates, bank rates, best CD rates, California CD rate, CD rates, current CD rates, Wells Fargo CD rate
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