Current Bank Interest Rates

Current CD Bank Rates are on the rise. Back in May/June 2008, 6-month bank rates ranged from 3.35% to 3.50% and 1-year bank rates were around 3.70%. Now as the Federal Open Market Committee (FOMC) paused again and held the overnight rate (Fed Funds) at 2.00%, competition, demand, and inflation concerns are pushing short-term rates into the 4.00% to 4.25% range. The spread between Fed Funds and CDs is quite large at this time.

For some perspective, I researched historical Fed Funds. In 2005, Fed Funds were on the rise. The average rate was 3.25%. This compared to an average 6-month CD rate of 3.74% and 1-year rate at 4.19%. That is a spread of about 50 to 75 Basis Points (0.50% to .75%). In 2006, Fed Funds kept rising until they peaked at 5.25%. The average rate was 4.94%. The average 6-month bank CD rate was 5.28% and the 1-year was 5.40%. The spread narrowed to about 25 to 50 Basis Points. Matter of fact, the spread at one point was inverted. Fed Funds was higher than a 6-month CD Rate. This spread was maintained through 2007, as the Fed Funds was held at 5.25% through August. In September, the FOMC began lowering rates. They went from the 5.25% to our current 2.00% in a fairly short amount of time.

The FOMC (Federal Open Market Committee) is now caught between a rock and a hard place. The economy is still struggling so they are reluctant to raise the overnight rate. However, inflation has certainly been finding its way into our everyday lives. Once the Fed begins to raise rates the spread will most likely get smaller as banks will try to hold the line on their interest rates. The other most likely scenario is for the curve to flatten. Banks won't want to pay more of an interest rate for any longer than they have too.

One thing to keep in mind is no one has a crystal ball. As current interest rates are rising, it probably makes sense to shorten up some of your CD terms and maybe even play the internet savings rate game (although it can be quite time consuming). However, don't get caught holding all shorter-term CDs. You never know what can happen. Back in 2006 and 2007 people kept thinking rates would just keep going up and many didn't do any longer-term CDs. However, those same people who have been facing rates in the mid 3.00% to low 4% are wishing they had done a few CDs with 5-year rates at 6.00%.

Bank Man has been in the financial industry for over 10-years. He has seen rates come up and down during that time. He spends his time looking for higher CD Rates so that you don't have to.


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Online Bank CD Rates TX (Texas)

So today we'll bring you some On-line CD Rates in TX. Texas is a big state, so does that mean huge interest rates. I've heard their cockroaches are as big as skateboards and their spiders are as large as cars. My favorite are the Bus sized Jackolopes. But I digress. Let's check out the certificate rates.

USAA Federal Savings Bank - San Antonio, TX (FDIC# 32188)
USAA was established on 1983. They are about $32.6 Billion and nicely profitable. Maybe it is a Texas thing. Big states, big profit. They are native to TX. Maybe a healthy heaping of good 'ol Texas pride will help the rates. USAA FSB has a 1-Year at 2.25% APY and a 2-year at 2.45% APY. So, So. A 4-year Jumbo IRA is paying 3.00% APY. With Fed funds at practically 0%, that is pretty good. Although USAA is not open to everyone. You have to be a part of the military or a family member of someone in the military.

Comerica Bank - Dallas, TX (FDIC# 983)
First, check-out the FDIC#. established on March 5, 1849. That is old. They were originally The Detroit Bank and Trust company. They switched their name in 1982 to Comerica Bank-detroit (Yes, with a little "d"). They gulped down just about every bank in Michigan. In 1991, they removed "-detroit". They continued gobbling up banks in MI,CA, FL, and TX. Finally, in 2007 Comerica Bank moved to TX. They are big, about $67.6 Billion, but they aren't native to TX. They have 1.00% APY for up to 1Y and a 2.00$ APY for a 2-year CD to 10-year CD. They were profitable for the year though. That is rare these days.

The American National Bank of Texas - Terrell, TX (FDIC# 23474)
I just loved the name of the bank. But hopefully, it doesn't become an omen for nationalizing the banking system. ANB of TX is about $2 Billion in assets and also profitable. So from what I found, for the most part, TX has a solid set of banks. American National was established on 1981. With a name like, "The American National Bank", I thought for sure this would be an oldie. Rate data wasn't available on their website.

Guaranty Bank - Dallas, TX (FDIC# 32618)
Guaranty Bank has an interesting product, the JumboUp CD. It is a set-up CD and only requires an initial deposit of $10,000. They have a 16-month and 24-month option. The rates step-up every 4-months and 6-months respectively. The interest rates average out to a respective 2.22% APY and 2.32% APY. One problem is, Guaranty Bank also has a 1-year and 16-month CD that are paying a better} yield. However, the step-up (or JumboUp) 24-month CD pays a higher yield than the fixed 2-year term. They were established on 1988. They are about $15 Billion in assets. They do have a loss of about $420 Million. Ouch! That is way down from an $89 Million dollar profit in 2007. Stay away from the Riverboats

Texas Capital Bank, NA - Dallas, TX (FDIC# 34383)
Texas Capital is one of the babies of the bunch. They were established on 1997, but are already $5.1 Billion in assets. And another profitable Texas Bank. But unfortunately, the on-line rates are awful. Top rate is 1.21% APY. I'm really starting to worry here.

So the Big Texas Banks, did not come through with big TX Online CD Rates. At least there is the Jackolope. Check out more On-line CD Rates and a Texas sized awesome Investment Guide for CDs

Corwin has been in the financial industry for over 10-years. He has seen rates come up and down during that time. He spends his time looking for high CD Rates so that you don't have to.

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Understanding Bank CD Rates

A Certificate of Deposit (CD) is a pre-fixed yield financial instrument used by banks in the US to accept deposits from US citizens. Understanding Bank CD rates is important for depositors to maximize the return on their investments in bank deposits. Investing a certain minimum sum of money in a bank deposit earns you a certain fixed rate of interest, for a fixed tenure.

Bank CD rates basically depend upon the state of the US economy and are an indicator of its health. The US Federal Reserve periodically fixes a limit on the prime lending rate (PLR) for banks in the US to lend money to people and the business community. The PLR fluctuates periodically based on the health of the US economy.

Banks in the US work under US Federal Reserve guidelines and the PLR cap. They earn money by collecting higher annualized per year (APY) interest rates on loans extended by them than on bank CD rates offered by them. This comparison is based on the same tenure and same initial date consideration for both loans and deposits.

What banks do is to fix the APY rate of interest they collect on loans on the PLR cap fixed by the US Federal Reserve. They are allowed a slight leeway in loan rates subject to the cap so you will find that different banks offer loans at slightly different interest rates for the same tenure loans. They also from time to time revise the loan and deposit rates based on periodic PLR revisions by the US Federal Reserve.

Banks always fix the CD rates a little lower than the loan rates to earn a profit in their business of offering loans and accepting deposits. Here too they are allowed a slight leeway so you will find that different banks offer you slightly different CD rates for same tenure deposits.

Some banks offer comparatively slightly higher CD rates for same tenure and same minimum deposit principals than others to gain an edge in attracting deposits from customers. By doing so they collect more money and so they are able to invest more money especially in corporate loans. Consequently they can potentially earn more profits.

The strategy of banks to offer more APY interest rates on higher tenure deposits is based on the flexibility that they get to use that money to invest in loans fetching them higher rate of interest. The longer the tenure for which you invest your money with banks, the higher the bank CD rates you can get. However, this also is subject to a cap that exists for 5-year and more tenure deposits.

Like all other people your capacity of investing in bank deposits is based on your household income, expenses, and the time horizon of your needs. So, you will find that different people get attracted towards offerings of differing bank CD rates and tenures from various banks. This is because primarily their needs are all different.

By: steven ross, www.bestonlinebankingservices.com