Bank certificate of deposit rates were mostly lower for the week ending December 11, 2009.  The short term CD rates, six month and one year maturities, ended the week with lower yields while the average yields on the two year bank CDs was unchanged and the five year term CD interest rates managed to gain slightly.  The only consolation regarding this week’s rate drop was that the extent of the interest rate reductions was fairly modest.

The average yield on the best six month bank CDs was lower by one basis point or 1/100 of a percent for the week.  The average interest rate on the top ten best six month CD rates dropped to 1.51%, down from the prior week’s average rate of 1.52%.  The highest six month CD rate held firm for the week, with the top interest rate remaining at 1.60%. 

The one year CD rate average experienced a larger decrease in yield than that of the six month term, with the average rate for the top ten one year bank CD rates falling by two basis points.  The average yield for the best one year bank CDs moved down to 1.93% from 1.95% in the previous week.  The highest one year CD rate was unchanged with the top one year rate yielding 2.00%. 

Two year CD rates remained unchanged for the week.  The average of the top ten best bank rates with a two year term stayed put at 2.26%.  The top national rate on the two year term was also unchanged with the highest two year CD rate holding at 2.40%.

The average of the best five year CD rates available nationally was up by one basis point on the week.  The average rate for the top ten best five year CD rates was 3.32% an increase from the previous week’s average rate of 3.33%.  As with the short term bank CDs, the highest five year CD interest rates were unaltered for the week with the highest five year CD rate holding at 3.40%.

Though the short term CD rates experienced only a mild a rate decrease, the rate increase on the long end of the curve was not only insufficient enough to compensate for the losses on the shorter end of the curve, but the impact of the short term rate drop is more significant as the shorter term maturities have certainly become the terms of choice for most bank CD investors.  Fortunately, the highest rate in each term category held constant week over week including those on the shorter term bank CDs.

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