Personal Finance Questions with Simple Dollar Answers Aug 10 2009

The weeks Personal Finance Question with Simple Dollar Answer is a bit different. This week the question come from me and Hanna.

Personal Finance Question — It’s a little weird when a CD offers a lower rate than a regular savings or money market account. Why is that?

Here’s the scenario — ING has an Orange savings account with an interest rate of 1.40%. ING also has a Electric Orange account with an interest rate of 1.65% (accounts over $50,000). However, ING has a 12 month CD with an interest rate of 1.50%. CD interest rates are usually higher than regular savings and money market accounts because of restrictions that CD have.

Simple Dollar Answer — This Simple Dollar answer comes from Nickel. For those who are wondering why CD rates at some banks are lower than savings and money market accounts the answer is — It’s a sign that the bank intend to lower interest rates.

I don’t know whether Nickel is right or wrong, but the answer does seem to fit.

Why do you think this weird scenario of “lower CD rates” are occurring?

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Other Resources

• Wachovia Bank CDs
• CD Ladder Get Paid Every Year
• Emigrant Direct High Interest Accounts
• Why I Purchased Bank Certificates of Deposits – CDs