You are Here: » Business » Financing » Looking at CD Rates with a Different Perspective

Looking at CD Rates with a Different Perspective

Go to: Previous Article Next Article

It's no secret that yields provided on bank CD (certificate of deposit) and savings rates
are at all time lows. Week after week brings more of the same - either more bad news
to savers or no news at all. Today you'll be hard pressed to get a one year CD yielding
much over 1.0% APY, either from online banks or your local credit union. And if you've
been in the market for a bank CD, you know it's been this way for quite some time. But
are rates really as bad as they look on paper?

Let's view the current abysmal state of the bank CD market through the lens of a low
inflation rate.

According to the Labor Department, for the period ending July 31, 2010, the consumer
price index rose just 1.2%, while the core rate was up only 0.9%. This is the lowest it has
been since 1966. And keep in mind the core rate excludes food and energy costs, which
are so volatile they distort the overall rate.

Sure the long term inflation rate averages 3.0% per year, but this can vary widely. For
example, in 1979 it was at an unheard of 13% while in 2008 it sat at just 0.1%.

What this should tell savers is that to truly recognize your gains you must weigh your
savings rates against inflation rates. Understand that "Real" interest earnings are the
interest rate minus the inflation rate, and the real rate reflects the actual growth in the
buying power of every dollar you've stashed away.

That being said, let's examine the current inflation figures with your savings account
rates. If you're willing to let your money sit in a deposit account for five years you
can earn a 3.0% yield with some of the best five year CD rates, thus beating inflation
by around a point. Ok - so beating the inflation rate by a percent or two won't make
you rich, but since when have bank deposits made anyone wealthy anyway? What you
should be looking for in your CD or savings account is assured incremental growth to
supplement a diversified portfolio, offsetting more risky investment endeavors.
Article Source:
- Credit Cards A big selection of Cards in all flavors: Bad Credit Cards, Secured Cards, Prepaid Cards, Credit Cards for Canada, Low Interest Cards, etc -

Word Count: 379

Reduce Your Debts Without Bankruptcy. See How Much You Can Save. Free Debt Analysis

Read Previous Article ~ Read Next Article

Selected Articles

1: Public Car Insurance in Canada
2: Monthly Car Insurance
3: Why Compare Vehicle Insurance Quotes
4: Way to Get your Unique iPhone Apps Developed
5: Why Do I Need to Attend a Fitness Resort?
6: Contact Lenses Online: Convenient, Less Time Absorbing, Order On The Spot
7: Want Assist With Internet Marketing? Try These Suggestions
8: The Foam Filled Chairs Are Perfect Items of Furnishings
9: People clinging to their content sending dcma requests
10: The Enormous Bean Bag is low priced along with a top quality item of furniture
11: Tips on how to Handle Cholesterol Levels to be Healthful
12: A good solid Global One Ultimate Power Profits Paradigm Shift Platinum Superbly Inspection
13: Car Maintenance: Much better Than Auto Repair St. Louis Case
14: Choosing B&b Hartbeespoort Dam
15: Melaleuca- An Impartial Review- So is this a Melaleuca Scam or can you honestly generate income with this business?
16: Los Ciclos Grado Medio en Catalunya interesan a los estudiantes
17: Tips To Start Successfully Marketing On the web Today
18: Prescription Assistance Programs, Goal and Rewards
19: Way to Find an Efficient SEO Service Provider
20: Joomla Development for your Website
21: Website Design Graphics for Niche Businesses
22: Recycling Help in Keeping our Environment Thoroughly clean
23: Nashville Recycling Info for the Folks of Nashville
24: Personal computer Restoration - Suggestions for Locating a Dependable provider at Waukesha
25: Would like To order Tunes On-line?
26: Viviane Skincare- A Completely Independent Assessment By an Expert
27: Dallas Texas HCG Diet plan Protocol
28: HCG Diet Protocol, it genuinely Succeeds
29: The Functions for Charter Jets
30: Try Out the Well known Athlete's Alfredo with Homemade Alfredo Sauce recipe
31: The Broccoli Cheddar Spinach Soup Recipe Is easy To Actualize
32: Technology Consulting Overview
33: Join the opportunity Get Pre-launch Immediately And Tie down Your Place
34: Beneficial Suggestions For Achieving Article Marketing Results
35: Why should you opt for promotional pens?
36: Types of stress relievers to keep you hale and healthy
37: Mistakes to avoid while choosing novelty pens

Read Previous Article ~ Read Next Article

You are Here: » Business » Financing » Looking at CD Rates with a Different Perspective