Sometimes I hate being right. I am often asked for a certificate of deposit rate forecast and last week I made a doozy. Unfortunately, it seems to be coming true.

I predicted that 1-year CD rates would be heading towards 0.50% and 5-year CDs down to 1.50%. When you remove the top players, we are quickly approaching those numbers. Which also means that the top players are likely to begin going down.

Institutional jumbo CD investors are especially hard hit. The top player such as Alliant Federal Credit Union still has a 1.75% APY for 1-year, but it isn’t available for institutional CD buyers. And once you have $250,000 of personal funds with them you have to move on down the list. The average for the top 10 and top 20 certificate of deposit rates is quickly decreasing.

As with any investment vehicle, those who try to time the market generally don’t fare so well. That is why I believe long-term CDs with low penalties are a good option. You get some better yield now and have a fixed cost to close if rates go up anytime soon. However, rates rising anytime soon doesn’t seem likely.

If you have jumbo investment needs, give us a jingle and we’ll let you know what we can do.

Some Rates To Consider

-- By Chris Duncan

Posted in Economy