51M. As a child I had a children’s saving account with compound interest. My $100 went up to just below $200 in around 4 – 5 years. That seems like peanuts, but to a kid that was a lot.As a young adult, in the mid 1990s, I remember my older colleagues were talking seriously about CD interest rates to put away for up to five years, at 6%.
Now, in 2024, with the major banks, a one-year CD from Bank of America is 0.03%. Maximum rates for 5 years is 2.5% at Chase, no matter how much money you put away. Savings accounts compound interest rates are 0.01%, max, IF you maintain at least $10,000 in the account.Yet interest rates for a housing loan are at 7% and putting housing purchases out of reach. How can the banks do this?
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In: Economics
Cash rates are around 5%. Not sure where you are looking but most money market funds are in that range. Hysa maybe a little lower. Mileage with CDs will very depending on the lock up. The longer you go out the lower the rate because the yield curve is inverted, I.e. the expectation is rates will be lower in the future. It all comes back to the fed funds rate and expectations. Deposit beta has also been lower this cycle, but that’s another conversation.
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