What happened to CD rates?

[GlockIssue]

I consider CD's to be a form of a savings account, not really investing. Savings rates have been in the crapper since the financial crash. Prior to that I remember ING had an online-only savings account that gave 5.5%. Keep in mind, the average rate of inflation is around 2% per year. Anything below that and your money is decaying. Most people in the financial sector are saying "invest, don't save". But that requires some learning. It's unfortunate that financial fluency and health has not been taught in public education historically. It's still not really addressed the way it should be.

With that said, below is a quote from this link: https://www.creditkarma.com/savings...ings accounts,accounts, which might earn more.

"One reason savings account rates are so low is that financial institutions profit when the rate on the money they lend out is higher than the rate they pay people who deposit money into savings.

When rates on loans are low, banks like to keep savings account rates even lower to continue making money on them.

Another reason some banks may not need to offer higher interest rates is that they’ve already won a large share of customers and aren’t competing aggressively with other banks for new business, according to research by Itmar Drechsler, a professor of finance at the University of Pennsylvania."

I believe our current state would fall more under the first reason.

 

[yahnt2]

I am with James 357. Sooner or later something is going to have to give. Our dollar is pretty much worthless thus people jumping to bit coin and precious metals. I have no idea how bit coin even works but I can attest my son makes bank off of it. He just gets it and makes money no matter which way it goes it seems. To me the word "racket" comes to mind. lol

 

[Psilloh1]

Better offloading Ammo, Primers, and even bourbon... folks have gone absolutely full retard on that stuff and itching to pay 200% mark up

You had me at Bourbon...

 

[Shotgun Surgery]

It has been a couple of years since I looked, they are 20% or less of what they were then. (less than 1/5)

Was doing taxes and it is time to move IRA to other investments. CDs are NOT a good investment now.

1: They're terrible, and they almost always have been. The real rate of return is the interest rate minus the rate of inflation, but the stated CPI rate is significantly understated. The real rate of return on CDs has been several percent negative for many, many years now.

2: Why would a bank pay you a decent interest rate to loan them currency when right now there are no reserve requirements? They are loaning currency into existence without having to borrow any currency from anyone; you loaning them currency via a CD is more expensive than them creating the currency out of thin air.

3: Even if reserve requirements are reinstituted, they can borrow currency at lower rates than what they offer you in a CD.

I'll mention this as most people don't know this, but anyone who deposits their currency into a bank or credit union is loaning the bank or credit union their currency to do with as they please; they do this regardless of whether or not your currency is in a CD or in your checking/savings accounts. Also, the contract you didn't read but agreed to states that they can bail-in themselves if need be; this means they can take all of your dollars to keep themselves in business, not give you anything in return, and you have absolutely no legal recourse. Also, any of "your" currency you have in the bank is, legally speaking, theirs; you agreed to this in the contract you didn't read.

Banks are a scam. The stock market is a scam. Everything from top to bottom is a scam to steal wealth from regular people like us and pump it to the elites.

 

[Shotgun Surgery]

Where does one put currency when their business needs to have those cash reserves, either as security deposits, construction & repairs and property taxes ?

The bank, unfortunately.

 

[eightnsand]

Nothing has any yield anymore. Get some crumbs versus loosing the whole loaf. Spread risk to all asset classes. Be very careful of your institutions being at risk due to derivatives. IMHO.

 

[MacTavish]

It has been a couple of years since I looked, they are 20% or less of what they were then. (less than 1/5)

Was doing taxes and it is time to move IRA to other investments. CDs are NOT a good investment now.

CD's are a Certificate of Destruction. They don't keep up with inflation. The interest earned is taxable and you get penalized if you cash out early.

 

[jeep78]

CD's are a Certificate of Destruction. They don't keep up with inflation. The interest earned is taxable and you get penalized if you cash out early.

Taxes are not applicable unless you make enough money. I pay no taxes. Cash out is not a problem either, with low rates, it is just a few dollars.

Where else can you park some money and make anything?