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No Hope For Savers – Long Term Interest Rates Going Down

Earlier in the week the Fed announced a plan to move short-term securities into long-term holdings, such as 50-year bonds. This move would ultimately affect mortgage rates and other consumer and business loans. As investors buy up U.S. treasuries, yields will drop in response, forcing interest rates on mortgages to also drop. Over the past week the 30-year mortgage has dropped from 4.18% to 4.00%, pushing further into record-breaking ground. Just how far will mortgage rates drop? As long as the US economy stays weak and the Fed keeps short-term rates near 0%, mortgage rates could stay close to where they are right now.

How does this affect savers?

Anyone not buying a house, car or taking out long-term loans will be affected negatively by the current moves of the Fed. As long as banks and other financial institutions can get money at near 0% interest, they have no need to get it from investors. When the Fed increases rates, the cost to banks for borrowing money increases, this will in turn give the banks an incentive to pay its customers more to borrow their money.

Whenever you place your money into a bank account, savings account or certificate of deposit, the bank uses that money to lend to its customers of credit cards, mortgages, car loans and any other type of loans. In turn the bank charges an interest rate for these loans and pays its customers its borrowing money from a part of that percentage. This is how the banking system makes its money. When rates are down, the banks have no reason to pay a higher rate to investors. Therefore, as long as interest rates are at or near 0%, investors will lose, while those buying long-term loans will win by the decreased cost of borrowing money.

Will interest rates increase in 2011?

The U.S economy is projected to grow at an annual rate of 2%, not even keeping up with the rate of inflation. The current inflation rate for 2011 is 3.8% (US Inflation). When the Fed announced that it would keep interest rates near zero percent for ‘an extended period’, they said so because there was little prospect that the economy would recover within the next two years. This means that interest rates would stay low for this period of time, giving borrowers more time to make purchases or to borrow money at record low rates.

One of the dangerous causes of low interest rates is inflation. If inflation increases, interest rates would need to be increased to control the increase of inflation. The only hope for savers to see an increase on their savings accounts or CD rates in the near future would be to see an increase in inflation. Then it becomes a game of when, or if the Fed will renege on their original statement that interest rates would stay low until at least mid-2013. If the interest rate the Fed sets is not increased until 2013, then I do not see CD rates or Savings rates increasing until 2013 also.

Where are the best interest rates for savers?

If you are looking for the best interest rates on CDs or savings accounts, then stay away from major banks. Check your local credit union, as these financial institutions tend to have the best CD rates anyone can find. Melrose Credit Union is a great example of a Credit Union offering some of the highest rates on their certificate of deposits. Melrose is also a credit union open to anyone, while most credit unions are only open to specific groups of people.


Mortgage Rates Take a Dip This Summer 2011

According to Washington, the “Great Recession” has been over since June of 2009. Many have scoffed at this pronouncement, feeling it a bit presumptuous on the government’s part. With unemployment still above 9%, interest rates on your savings still down around the 1.2% mark, and the housing market still in an apprehensive state, some believe the government jumped the gun on announcing the end of the recession.

Worse yet, there are signs that we are about to enter a new recession. The forecasts change ceaselessly, one month mortgage rates show a slight increase, the next month the average slips back. What next month will bring is anybody’s guess, but one thing is for certain: if you have been considering purchasing a home over the last year, even with the slight increases and declines, mortgage rates are at an all-time low. Mix that with the considerably diminished asking price of the average house and you have a homebuyer’s heaven.

The 30 Year Mortgage Interest Rate for June 2011 averaged 4.51%, down 13 basis points from May 2011 rate of 4.64%, and 23 basis points lower than the June 2010. If this downward trend continues we could see rates as low as a tantalizing 4.38% by summer’s end. This drop in the interest rate is at least mirrored by the decrease in the cost of purchasing a new home.

Home prices have fallen greatly, over their peak five years ago. According to CNN, the first quarter of this year saw a drop of 5.1% compared to the same time the previous year. Foreclosures too are abundant, a fact also working to keep housing prices down and prospective buyers naturally gravitate to these often-inexpensive options. With all these low cost homes available and such low interest rates on home mortgages, one can’t help but wonder why the American public is giving a collective “no thanks,” to the housing industry. A good guess would be fear.

In 1992’s Presidential election, the Clinton camp used the phrase, “It’s the economy, stupid!” against opponent George Bush. That phrase pretty much sums up the current housing market. It defies logic that consumers would pass on a cheap house at an all-time low mortgage rate, but as every day we are treated to more bad economic news, it makes a lot of sad sense.

Economists and commentators alike seem always to be spouting reports of impending doom, the perpetual dark cloud that may or may not drift in and ruin your financial life. For the better part, their warnings have been on target; but for little sparks of hope here and there, the economy is still far from recovered, as are the rates on unemployment. Furthermore, mix that with the fact that it is now a global issue! In contrary to what the nightly news would have you believe, not everyone has lost, or is in fear of losing their jobs.

For those with steady employment in a more reliable industry, now is probably the best time to purchase a home. Think of it as a big sale on houses, and your mortgage a super-low interest rate credit card. While everyone hopes for the best, that the economy will pull itself out of this rut (or whatever the politicians would have us call it). When it does, it will probably be a long time until home-ownership is this affordable again. Look realistically at your financial picture, and if it’s feasible to become a homeowner, now is the time to act.

Many current homeowners are taking advantage of these low mortgage rates to refinance their homes, saving thousands of dollars in the process. Refinancing a mortgage currently represents two-thirds of all mortgage activity. It may not be long until interest rates are up again and while our savings will grow quicker, plus we will once again see great deals on CD rates, it’ll be too late! The sale on houses will be over!


Bar Harbor CD Rates Review – Maine

If you live in Maine then Bar harbor Savings and Loan services you.

We are going to take a look at the CD Rates Bar Harbor has to offer and compare them to what is out there nationally.

Bar Harbor is FDIC Insured.

Here is a list of the CD Rates and Minimum Deposits they have available (Today’s date: 9-15-11).

  • 6 MONTH CD 0.6% APY – Minimum Deposit: $1,000.00
  • 12 MONTH CD 0.8% APY – Minimum Deposit: $1,000.00
  • 18 MONTH CD 0.9% APY – Minimum Deposit: $1,000.00
  • 24 MONTH CD 1.00% APY – Minimum Deposit: $1,000.00
  • 36 MONTH CD 1.31% APY – Minimum Deposit: $1,000.00
  • 48 MONTH CD 1.61% APY – Minimum Deposit: $1,000.00
  • 60 MONTH CD 2.27% APY – Minimum Deposit: $1,000.00

*An early withdrawal penalty may apply and reduce earnings.

Now lets take a look at the nations best CD Rates and see how Bar Harbor compares.

  • 6 month CD rate – 1.05% APY with $1000 minimum deposit.
  • 12 Month CD Rate – 1.50% APY with a minimum deposit of $10,000.
  • 24 month CD rate – 1.50% APY and a minimum deposit of $500.
  • 60 Month CD rate – 2.68% APY with a minimum deposit of $5,000.

You can see the financial institutions with the best cd rates here.

Bar Harbor is slightly lower than the nations best CD Rates, but their rates are not that bad. If you look at the average CD rates across the nation Bar Harbor comes in right at or slightly above average.

Visit Bar Harbor Savings and Loan here.


Citizens Community Bank CD Rates Review

Citizens Community Bank is an FDIC insured financial institution that services Kansas, and is a division of Citizens State Bank.

Today we are going to take a look at their certificate of deposit rates and features.

Currently Citizens Community Bank shows rates their CD Rates as:

  • 6-month CD – .70% with an APY of .70%
  • 12-month CD – .85% with an APY of .85%
  • 24-month CD – 1.19% with an APY of 1.20%
  • 30-month CD – 1.34% with an APY of 1.35%
  • 36-month CD – 1.59% with an APY of 1.60%
  • 48-month CD – 2.13% with an APY of 2.15%
  • 60-month CD – 2.48% with an APY of 2.50%

*For the above rates… Interest compounded quarterly. Minimum to obtain above APYs: $1000. Substantial penalty for early withdrawal.

Lets take a minute to compare the rates to the Best CD Rates of 2011 that BankAim as found.

The best 6 month CD rate is 1.05% APY with $1000 minimum deposit from AloStar. This is definitely better than Citizens.

The best 12 Month CD Rates is from Connexus Credit Union at 1.50% APY with a minimum deposit of $10,000. Citizens is much lower but compared minimum deposit Citizens Community isn’t looking so bad.

For the 24 month CD rate MainStreet Bank has a rate of 1.50% APY and a minimum deposit of $500. Not to far off, but MainStreet offers a better minimum deposit.

Melrose Credit Union has a 60 Month CD rate of 2.68% APY with a minimum deposit of $5,000. – This is where Citizens is strong. They are showing a 2.5% APY with only $1000 minimum. Thats a great rate.


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Best CD Rates For 2011 – Top 5 CD Rates So Far

CD rates in 2011 have all been but annoying for those looking for a safe haven to invest their money. Since CDs are FDIC insured, they are a safe place invest your money, but with such low interest rates, many have wondered if its really worth placing their money in a locked up investment. More frustration comes with little glimmers of hope as interest rates bounce around their all time lows. Some financial institutions offer an increase in interest, but soon after cut their rates back down to record low levels. Even credit unions, who only open their doors to specific crowds, tend to have the best interest rates, but they make it nearly impossible for the average saver to cash in on their rates.

As of September 9th 2011 the national average for the 6 month CDs and 12 month CDs have dropped to 0.52% APY and 0.84% APY, that’s down from 0.56% APY and 0.90% APY in April 2011. These are rates from the top nationally available FDIC insured financial institutions. Some online banks, local banks and credit unions offer much better rates, but their averages have continued to fall throughout 2011. These CD rates are having a hard time keeping up with inflation rates. Inflation is averaging 2.90% for the first seven months of 2011, already higher than the 1.64% average inflation rate for all of 2010. (Inflation rate data)

The Federal Reserve Chairman Ben Bernanke stated that interest rates would stay at their record low levels until at least mid-2013, giving almost no hope for an increase in what savers might earn off their money. Even though this is good news for people who can buy houses and cars, this is bad news for investors and savers alike.

Where are the best CD rates found in 2011?

If you are looking for the best CD rates of 2011, your best bet would be to look at smaller financial institutions, online banks or credit unions. Don’t bother with going to your local Bank of America branch, Wells Fargo or Chase Bank as these banks offer some of the lowest interest rates on the market. There are exceptions to big financial institutions offering higher CD rates, such as Discover Bank which has a 1.15% APY on their 12 Month CD.

Smaller financial institutions have a lower overhead cost than the traditional large bank. Online banks also have very low overhead costs and therefore can pay a higher interest rate or be more competitive than a large bank such as Bank of America. Credit Unions have offered some of the highest CD rates we have seen in 2011. These financial institutions are usually not-for-profit and owned by its members. Most also only allow a specific group of people to join, while other credit unions such as Melrose will accept anyone. Credit Unions also have strict requirements to become a member and to stay a member. This all allows them to have more control over who they do business with and also allows them to pay a higher interest rate to its members and savers

Top 5 CD Rates Available So Far In 2011 (As of September 2011)

Interest rates can change at a moments notice and while some banks and credit unions offer the best CD rates one day, those rates might have been a promotional rate that has recently expired. Since rates have been bouncing around throughout 2011, be sure to refer to our CD rates page for the most up to date rates.

    1. AloStar Bank of Commerce has a 6 month CD rate of 1.05% APY with a minimum deposit of $1,000.
    2. AloStar Bank of Commerce has a 12 month CD rate of 1.21% APY with a minimum deposit of $1,000. — Connexus Credit Union has a 12 month CD rate of 1.50% APY with a minimum deposit of $10,000, otherwise with a minimum deposit of $500 you get their 0.75% APY.
    3. MainStreet Bank has a 24 Month CD rate of 1.50% APY (the same as Connexus Credit Union’s 12 Month CD), with a minimum deposit of $500.
    4. MainStreet Bank and Melrose Credit Union have a 24 Month CD rate of 1.90% APY with a minimum deposit of $500 and $5,000.
    5. Melrose Credit Union has a 60 Month CD rate of 2.68% APY with a minimum deposit of $5,000.

Back in April 2011 the best 60 month CD rate was from PEF Federal Credit Union in Ohio at a rate of 3.29% APY. As you can see rates are still dropping from earlier in the year.

The financial institutions listed here are available to anyone nationally either by opening an account over the phone or through their website.

Be sure to visit our CD rates page for the most up to date rate information.


Worcester Fire Dept. Credit Union Has Best 12 Month CD Rate

It must be true, Credit Unions always offer the highest rates on CDs. Worcester Fire Dept. Credit Union is offering a rate of 1.71% APY on their 12 month CD with a minimum deposit of $1,000. That beats the next best deal from AloStar Bank of Commerce at 1.21% APY.  This is a better rate than what any major bank is offering for the same terms. For instance, Bank of America is offering a rate of 0.50% APY on a $10,000 minimum for the same 12 month term. Chase is offering 0.25% APY and Wells Fargo isn’t worth mentioning as their rates are low and their minimum deposits are high. Its best to find the best rates on our CD rate table as these rates will be available to anyone within the US or go to your local Credit Union and ask them what their current rates are.

Here are W.F.D.C.U’s other CD rates and terms:

  • 6 Month CD – 1.51% APY
  • 18 Month CD – 1.91% APY
  • 24 Month CD – 2.12% APY
  • 36 Month CD – 2.32% APY

All of these terms require an active status with the credit union and also requires a minimum deposit of $1,000.

Worcester Fire Dept. Credit Union is located in Worcester Massachusetts and opened its doors to business in 1937 as a way of giving back to its firefighters. The Credit Union also offers a variety of financial products such as loans, credit cards, and deposit accounts. Be sure to contact Worcester Fire Dept. Credit Union to learn about setting up an account and benefiting from the best CD rates on the market.


Credit Card Review – Southwest Airlines Rapid Rewards Credit Card

Southwest Airlines Rapid Rewards® Plus Credit Card (Public) Quickly earn reward points with Southwest Airlines Rapid Rewards Credit Card from Chase.

When you make a purchase on your Rapid Rewards Credit Card you will earn 1 mile/point for every $1 that you spend. You can earn 2 miles/points per $1 spent when make Southwest Airlines or Rapid Rewards Hotel and Car rental purchases.

International Travel Options: You can use your points to purchase flights on more than 50 global carriers to over 800 international destinations.

Don’t travel that much? No problem because your points can be use to get gift cards, experiences, cruises and more. There are a lot of options to spend your points on.

Each anniversary you own the card you will receive extra bonus miles.

More information about the Rapid Rewards Credit Card:

  • You get unlimited reward seats. This means if there is a seat available you get it. Some programs limit the number of reward seats on the aircraft.
  • There are no black out dates so you can use your reward points any day of the year.
  • As long as you have flight or Partner earnings every 24 months your points will not expire. Continue to use your card and points and they will not expire. No activity for 24 months and your points could expire.
  • Bags Fly Free!

You can also get great online customer service and account management tools.

Apply Here for the Southwest Airlines Rapid Rewards® Plus Credit Card from Chase

The fine print:
Travel is subject to the government-imposed September 11th Security Fee of up to $10 per round trip. Number of points required to redeem for free flights is dependent on fare availability, destination, time, and day of travel, which are subject to change. Travel good on Southwest Airlines published, scheduled service. Southwest Airlines Rapid Rewards Visa credit cards are issued by Chase Bank USA, N.A. Accounts subject to credit approval. Restrictions and limitations apply. Annual credit card and balance transfer fees apply.


AloStar Tops The 12 Month CD Chart

AloStar Bank of Commerce is back on the top of the 12 Month CD rates. Is AloStar becoming the next Melrose Credit Union? This online bank who is based in Birmingham, Alabama raised its 12 month CD rate from 1.18% up to 1.21% APY.

This rate move causes AloStar to take the lead over Sallie Mae Bank who offers a rate of 1.20% APY with no minimum balance.

To get the 1.21% rate from AloStar Bank of Commerce, you will need to deposit a minimum of $1,000.

Since the middle of August there have been multiple rate changes, most of them have been cuts. Even AloStar had cut its interest rate on their 12 month CD by a tenth of a percentage point but now has increased their rate back to the top of the list.

Here are the next best 12 month CDs being offered:

  • Sallie Mae Bank is the online bank of the student loan company pays 1.20% APY with no minimum deposit.
  • MainStreet Bank, based out of Virginia but sells its CDs nationally through their (www.airbanking.com) website pays 1.16% APY with a minimum deposit of $500.
  • Virtual Bank, the online bank of Sabadell United Bank out of Miami Florida offers 1.16% APY with a minimum deposit of $10,000.

So far interest rates have continued their overall downward fall, but for how long? No one really knows when interest rates will increase. If you keep watching, some banks offer promotions which come and go as quickly as interest rates have been decreasing. Last year we watched iGoBanking offer some of the best interest rates on CDs and their promotions would only last 2-3 days at a time.

Our CD rate table offers a look at some of the better CD rates on the market today. Be sure to check back often as rates can change at a moments notice.


Overall CD Rates Hold Steady For Week Ending August 19th, 2011

This past week we have seen the Dow move up and down, but ending the week down 450 points. Many banks have cut their CD rates but overall the top CD rate leaders have held steady. The biggest drops come from a major Credit Union – Melrose. Melrose has consistently kept their rates higher than any other major nationwide bank, but since August 8th they have cut their rates down by about a quarter percent.

Here are the current rates offered at Melrose Credit Union:

  • 12 month CD rates down to 1.05% from 1.31%
  • 24 month CD rates down to 1.31% from 1.56%
  • 36 month CD rates down to 1.81% from 2.07%
  • 48 month CD rates down to 2.07% from 2.32%
  • 60 month CD rates down to 2.57% from 2.83%

For the week ending August 19th 2011, the top CD rate holders have held steady:

  • 3 month CD’s – AloStar Bank of Commerce at 0.76%
  • 6 month CD’s – AloStar Bank of Commerce at 1.05%
  • 12 month CD’s – AloStar Bank of Commerce at 1.27%
  • 24 month CD’s – MainStreet Bank at 1.50%
  • 36 month CD’s – MainStreet Bank at 1.90%, DOWN from 2.00% from August 8th
  • 60 month CD’s – MainStreet Bank at 2.50%

Overall the best CD rates have held steady, but we suspect another drop is coming. Connexus Credit Union was also offering some of the highest CD rates, even higher than Melrose Credit Union but have since dropped their rates also.

Connexus Credit Union requires a minimum deposit of $10,000 to receive the higher rates:

  • 6 month CD rate of 1.25%
  • 12 month CD rate of 1.50%, which is down from 1.75% on August 10th.
  • 60 month CD rate of 2.50%, which is down from 3.00% on August 10th.

With these lowered rates, this puts Melrose back in the lead with the best CD rates you will find on the market. Even thought they are a Credit Union, anyone can join as long as you meet a few requirements such as opening an account and funding a savings account. They also have a minimum deposit of $5,000, which might be a little high for the average saver.

Be sure to check out our CD rates page for the most up to date rate information. CD rates can change at a moments notice so be sure to check with the financial institution about their current rates before investing.

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