# Bank Interest Too Low on CD's? **URL:** \ **Category:** Factual Questions\ **Created:** [July 30, 2003, 9:28pm UTC](https://boards.straightdope.com/t/bank-interest-too-low-on-cds/191991 "2003-07-30T21:28:42Z")\ **Posts on this page:** 6\ **Page:** 1
**Author:** ![don\_willard](https://avatars.discourse-cdn.com/v4/letter/d/a88e57/32.png) [@don\_willard](https://boards.straightdope.com/u/don_willard)\ **Post date:** [July 30, 2003, 9:28pm UTC](https://boards.straightdope.com/t/bank-interest-too-low-on-cds/191991/1 "2003-07-30T21:28:42Z")
I just got a notice from a bank that I have a cd in that the interest will be .60000% and the “annual percentage yield” (which I’ve never understood) will be .60039%. How can the interest be so low? Shouldn’t there be a law that banks can’t give such poor interest? I know it doesn’t mean 6% because nobody gets that, but these percents are six tenths of a per cent!!! Back in the old days we got 6% on mere passbook accounts. Also, what is the use of having a cd if the interest is so low? Isns’t there anything I can invest my money in that is safe and guaranteed but that gives better interest? ---
**Author:** ![friedo](https://avatars.discourse-cdn.com/v4/letter/f/8edcca/32.png) [@friedo](https://boards.straightdope.com/u/friedo)\ **Post date:** [July 30, 2003, 9:40pm UTC](https://boards.straightdope.com/t/bank-interest-too-low-on-cds/191991/2 "2003-07-30T21:40:23Z")
The annual percentage yield is the percentage of increase in principal over one year of compounding. Now, either your bank is seriously messed up, or you’re reading something very long, because no CD could possibly have a APY as low as 0.6%. The lowest I’ve ever seen is for a 3-month CD at 0.9%. If you want higher rates, go with an outfit like Etrade Bank for a long-term CD. ---
**Author:** ![Mr.Slant](https://avatars.discourse-cdn.com/v4/letter/m/c57346/32.png) [@Mr.Slant](https://boards.straightdope.com/u/Mr.Slant)\ **Post date:** [July 30, 2003, 11:35pm UTC](https://boards.straightdope.com/t/bank-interest-too-low-on-cds/191991/3 "2003-07-30T23:35:11Z")
don willard: Time to change banks, at least for your CD needs. Or you could try what my grandfather did: He complained to the branch manager about their CD rates, and they wrote him a CD at a higher rate in order to “price match” the competition. But I’ll say that basically… interest rates right now SUCK. [Bankrate.com](http://Bankrate.com) says that CDs are averaging out to 1.25% or so. By the way: netbank is offerring 1.66% on 3 mo ING direct is offerring 2.10% on 12 mo By the way, mortgages are up 150 basis points, or 1.5% APR over the last MONTH. So I’m betting that CD rates will be headed up soon. And if you have $2500 to put in a CHECKING account, [presidentialbank.com](http://presidentialbank.com) is offerring 2.75%. ---
**Author:** ![Mr.Slant](https://avatars.discourse-cdn.com/v4/letter/m/c57346/32.png) [@Mr.Slant](https://boards.straightdope.com/u/Mr.Slant)\ **Post date:** [July 30, 2003, 11:42pm UTC](https://boards.straightdope.com/t/bank-interest-too-low-on-cds/191991/4 "2003-07-30T23:42:14Z")
don willard: Time to change banks, at least for your CD needs. Or you could try what my grandfather did: He complained to the branch manager about their CD rates, and they wrote him a CD at a higher rate in order to “price match” the competition. But I’ll say that basically… interest rates right now SUCK. [Bankrate.com](http://Bankrate.com) says that CDs are averaging out to 1.25% or so. By the way: netbank is offerring 1.66% on 3 mo ING direct is offerring 2.10% on 12 mo By the way, mortgages are up 150 basis points, or 1.5% APR over the last MONTH. So I’m betting that CD rates will be headed up soon. And if you have $2500 to put in a CHECKING account, [presidentialbank.com](http://presidentialbank.com) is offerring 2.75%. ---
**Author:** ![Mr.Slant](https://avatars.discourse-cdn.com/v4/letter/m/c57346/32.png) [@Mr.Slant](https://boards.straightdope.com/u/Mr.Slant)\ **Post date:** [July 30, 2003, 11:43pm UTC](https://boards.straightdope.com/t/bank-interest-too-low-on-cds/191991/5 "2003-07-30T23:43:49Z")
Stupid hamsters. Sorry for the double post. ---
**Author:** ![fruitbat](https://avatars.discourse-cdn.com/v4/letter/f/58f4c7/32.png) [@fruitbat](https://boards.straightdope.com/u/fruitbat)\ **Post date:** [July 31, 2003, 2:48am UTC](https://boards.straightdope.com/t/bank-interest-too-low-on-cds/191991/6 "2003-07-31T02:48:07Z")
As to the unadressed piece in your OP. The banks are not making any more from CDs than they ever have in the past. The marketplace determines the rate of interest you will be paid. At the moment rates remain extraordinarily low, which benefits some while hurting others. Home buyers benefit from the low rates, while savers are harmed by lower interest payments. Interestingly your dilemna illustrates the value of keeping rates low to stimulate the economy. You may be more receptive to investment in equities if the yield of fixed investments are too low to satisfy your needs. The theory is that savers will be forced to take risks and stimulate markets by less than satisfactory alternatives.