Certificates of Deposit

There are still many people who think of saving as taking their money to the bank and putting it in a Certificate of Deposit or “CD.”  For many, the interest they earned on their CDs was the money they spent to live on.  At one time, that was possible.  Today, I wonder what those savers are earning with rates at about 0.35% for a 6 month CD.  The real victims of the Federal Reserve policy of low, low interest rates are the elderly whose savings are being eroded by inflation that is several times higher than the interest they are getting on their CDs.

When you get to be a certain age, you start to recall the “good old days.”  For savers who are old enough to remember, I invite you to take a trip down memory lane.

6-Month Certificate of Deposit                                     Historical Chart

The advantage of CDs is that the US government guarantees the return of your money via the FDIC if your bank fails.  The disadvantage, at today’s low rates, is that after taxes and inflation the money you get back buys you less than the money you put in.

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