Deposit Rates Dropping: What Should You Do?

As any vigilant saver can tell you, savings rates have seen better days. At this time last year, the national average on a 12-month certificate of deposit (CD) was 1.97%, which to some might have seemed low at the time. However, this week, the national average on the same product dipped lower, standing at only 1.07%, according to Informa Research Services’ weekly rate survey. The story reads similarly across the board for savings, money market accounts, and CDs. What does this mean for consumers who want to make the most of their savings?

Since the drop in rates seems to be slow and steady, it may be a good time to lock in the best rate currently available before they dip lower. Although rates are at historic lows, they seem to still be dropping. However, many analysts believe rates will start to go up by the end of 2010. Now is not the best time to lock into a long-term CD with a low rate. Instead, opt for savings accounts, money market accounts, and shorter term CDs.

Be sure to monitor rates regularly to stay informed of what rates are being offered. Become familiar with the rates that are available, so that when a bank advertises a special or promotional rate, you will be aware of whether or not it is a good deal.