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Bankrate: CD yields too low? Consider high-yield bank MMAs


NEW YORK, Aug. 20 /PRNewswire/ -- The average one-year certificate of deposit yield inched higher to 1.07 percent from 1.05 percent one week ago, while the average 6-month CD yield was unchanged at a lackluster 0.91 percent, according to Bankrate.com's weekly national survey of large depository institutions. However, with the Federal Open Market Committee pledging to keep short-term interest rates low for a considerable period of time, any substantive improvement in short-term CD yields is unlikely.

But there is an alternative. High-yield bank money market deposit accounts, many with yields exceeding 2 percent and exceeding those of three- month and six-month CDs, may be a better option for investors -- as long as the Fed doesn't cut interest rates again. Although long-term CD yields have consistently improved over the past month, investors are cautioned against tying up too much money for too long at current levels.

"Positive economic news bodes well for the direction of CD yields, but short-term CD yields won't improve much for now," said Bankrate senior financial analyst Greg McBride.

            Deposit averages from Bankrate.com's national CD survey

            Money market account: 0.52%, down from 0.53% last week
                6-month CD yield: 0.91%, unchanged from last week
                1-year CD yield: 1.07%, up from 1.05% last week
                5-year CD yield: 2.76%, up from 2.7% last week

Investors willing to shop nationwide for their FDIC-insured money market accounts and certificates of deposit will earn yields that far outpace the national average. This week, Bankrate.com found seven institutions paying at least 2 percent APY on money market accounts. On one-year CDs, Bankrate.com found 14 institutions paying at least 2 percent APY, nearly one full percentage point above the national average of 1.07 percent. All yields are available nationally to customers who do not have an existing relationship with the institution.

Bankrate.com conducts two surveys each week for money market accounts and CDs:

     *  The 100 Highest Yields survey is conducted weekly to find the
        highest-yielding CD and money market accounts available to consumers

     *  Bankrate.com also conducts a weekly national CD survey, which
        compiles the rates from the largest banks and thrifts in each of the
        10 largest U.S. markets to arrive at a national average.

In addition to these snapshots of where rates are today, Bankrate conducts a weekly poll of CD experts to see where rates might be headed in the future. This week, the CD Rate Trend Index panel sees long-term (greater than one year) yields continuing to rise, but is unanimous in saying that short-term yields will remain where they are.

To see data from Bankrate's 100 Highest Yields survey, go to www.bankrate.com and click on "CD/Savings."

To see this week's CD Rate Trend Index, go to www.bankrate.com/CD-RTI

About Bankrate, Inc.

Bankrate, Inc. (Nasdaq: RATE) owns and operates Bankrate.com, the Internet's leading consumer banking marketplace. Bankrate.com averages 4 million unique visitors per month, according to comScore Media Metrix, which ranks Bankrate.com first in unique visitors in the "Financial information and advice" category. Bankrate.com reviews more than 4,800 financial institutions in more than 180 markets in 50 states. Bankrate.com is a destination site of personal finance channels, including banking, investing, taxes and small business finance. It is the leading aggregator of more than 190 financial products, including mortgages, credit cards, new and used auto loans, money market accounts and CDs, checking and ATM fees, home equity loans and online banking fees. Bankrate.com provides financial applications and information to a network of more than 80 partners, including Yahoo! (Nasdaq: YHOO), America Online (NYSE: AOL), The Wall Street Journal (NYSE: DJ) and The New York Times (NYSE: NYT). Bankrate.com's information is also distributed through more than 100 national and state publications. The Company's stock is included in the Russell 3000 Index and the Russell 2000 Index.

     For more information contact:
     Paula Sirois

SOURCE  Bankrate, Inc.

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