decade ago, just before the last recession kicked in,
savers were earning an average of nearly 4 percent on
sounds like a fortune compared with the near-zero
returns that depositors have endured in recent years.
two quarter-point interest rate hikes by the Federal
Reserve in recent months and economists generally
expecting two more this year, the outlook for higher
deposit rates is finally improving. But so far, savers
have seen little relief.
banks are doing everything they can to avoid raising
deposit rates," said Greg McBride, senior financial
analyst at interest rate tracker Bankrate.com, based in
North Palm Beach, Fla.
profit margins have been squeezed for so long, "Itís
now an opportunity to get some breathing room," he
said. "That means passing along higher rates to
borrowers but not to savers."
on certificates of deposit have barely budged in the
wake of the Fedís rate hikes. Returns on six-month CDs
averaged 0.21 percent last week, just a smidgen better
than the 0.17 percent average a year earlier, according
the same time, yields on one-year certificates averaged
0.34 percent vs. 0.28 percent a year ago, and returns on
five-year certificates averaged 0.9 percent vs. 0.83
real improvement appears to be on the distant horizon.
going to be a slow grind," McBride said.
"Looking out over the balance of the year, (savers)
will still be trailing the rate of inflation."
doesnít mean savers canít do better. The best way to
pump up returns is to shop nationally for the highest
yields. And the search shouldnít be limited to big
at online banks, community banks, credit unions. Cast a
wide net," Mr. McBride said.
shouldnít be afraid to do business with an out-of-town
financial institution as long as it is federally
insured, he said.
consumers can add a full percentage point to their CD
returns by parking their savings at the top-yielding
financial institutions. For example, the top-yielding
one-year CDs nationally are paying around 1.5 percent
vs. the average payout of 0.34 percent.
addition, the top-yielding savings accounts are paying
roughly as much as CDs without requiring customers to
lock in their money.
can hunt for the best yields across the country at
websites such as Bankrate.com and BauerFinancial.com.
you sit back and wait for higher yields to land in your
lap, you will be disappointed," McBride said.
"You have to seek out the most competitive offers.
banks wonít raise rates at all and others will be more
aggressive about doing so. That is where you want to
have your money."