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Searching for a CD as the Rates Plummet

This article was written by in Saving. 9 comments.

Ah, hindsight.

Although I’m glad I got a 5.65% CD when I did, of course I wish I’d invested more and for a longer term than 6 months. But it’s not too late to still lock in a CD at an okay rate.

Or so I’d hoped. Recently, it seems the pickings are slim.

Emigrant Direct, whom I already bank with, is offering a whopping 3.50% APY for 6 months up through 10 years, and it’s hard for me to imagine why someone would want to lock that rate in at all, let alone for ten whole years. But a 4-something rate I’d take, for a little while at least. Just long enough to weather some downturn until I figure out my next steps.

Sovereign Bank has a 6-month CD at 4.25%, which I shut my browser window on in disgust before I realized it was one of the best rates out there.

I’m hesitant to go with this because my FNBO Direct savings account is still at 4.30%, though I can’t imagine that will last long in this environment. The best short-term CD rates I could find at were 4.40% APY from Flagstar Bank for 1 year and 4.90% for 6 months at Countrywide with a $10,000 minimum.

I’ve been happy so far with my other Countrywide CD, so I opened two of their 6-month 4.90% CDs, one for my mother, since her high yield savings account’s rate has recently plummeted, and one for myself. I’m not feeling the lower-rate love so I’m hesitant to commit for longer than that, but 6 months of a decent rate works for me, especially as I watch the savings interest rates continue to decline.

I do plan to use some of the lower rates to my advantage, however. I’ve been keeping close watch over 30-year mortgage rates, and plan to refinance some of my mortgages if they creep low enough.

On my primary residence, I’ve got a 7-1 ARM mortgage with a nice 5.25% rate, but if I’m still living here in 2011, the rate could jump on me as it moves to adjustable. I also have a small 7 year balloon mortgage. I used this strategy to split the total mortgaged amount 80-15 to avoid paying PMI (private mortgage insurance) since at the time I only had 5% to put down.

The balloon mortgage is at 6.99% and even though the monthly payment is positively tiny, it annoys me in principle. I could pay it off in a year’s time, but my financial advisor felt I’d be better off using that money elsewhere. Plus, it’s deductible, so the rate isn’t quite as bad as it looks initially.

I always planned to sell my cute little 750 square foot home before the 7 year point, but am attracted to the idea of locking in a nice 30 year rate so I have the option to stay here as long as I’d like. It’d be nice to get rid of that particular concern.

It’s tricky trying to figure out just how to time these changing rates. Everything I read seems to talk about a long recession underway, but I can’t be sure just how low rates will go. I do feel like in a few more weeks’ time, 4.90% will be a thing of the past.

Updated June 23, 2016 and originally published February 5, 2008.

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About the author

Along with her partner, Sasha owns and manage six residential rental units. Sasha endeavors to support the causes and organizations she believes in through more conscientious spending practices. View all articles by .

{ 9 comments… read them below or add one }

avatar 1 Anonymous

Yup, Countrywide Bank has the top 6-month CD yield. Note, some people may be able to get 5% APY instead of 4.90% APY if you open by phone or at one of their financial centers. The 5% may not be available in all locations. Type in your zip code at Countrywide’s CD rate page to see if it’s available in your area.

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avatar 2 Anonymous

Do you follow this blog: you can get some far better deals, especially at local credit unions

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avatar 3 Anonymous

what do you think of reward checking accounts? I have one right now and I am earning 6.01% rather easily because I use online banking. has a list of banks offering them. The best part is that my bank did not drop the rate even after the Fed cut rates by 75 and 50 points.

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avatar 4 Sasha

I’ll check with Countrywide to see if i can worm my way into the better rate. Thanks!

Thanks for the link. Some intersting deals there, although I’m generally not willing to travel to far away banks or open a checking account I won’t use, which seem to be the qualifiers for the higher rates so far. I’ll keep on reading and see if there’s anything else to be had though. I would like one more CD, if just to tie up my funds so I keep my mitts off them for a few months. You know, savings just sitting there can be awfully tempting!

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avatar 5 Anonymous

yeah I’m not about to drive very far, but I would consider heading into queens (there was a CD deal out there) from manhattan, or maybe jersey…depending on how much better the rate is. No way I’m driving to PA though!

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avatar 6 Anonymous

Interesting. I financed my condo very similarly to your home. I had an 80-15-5 with a 7/1 ARM as the primary mortgage, with a similar rate, but slightly higher. The second trust isn’t a balloon mortgage though. It’s a HELOC that I converted to a fixed rate. I suspect it’s a higher rate than your balloon mortgage. That might have been a good idea for me, but I’m happy with my place and where it’s at. It will turn adjustable in another 3 years, but we shall see what the future brings. I’m considering a refi, but I’m still not sure it’s right for me.

Hey Sasha, kick ass job you do here btw. Don’t think I haven’t noticed. :-)

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avatar 7 Sasha


Thanks for your feedback! My big issue at present is trying to get more time to write, but hope to do so soon.

Yes, today in fact I’ve been staring at a piece of paper from my mortgage company that advertises 5.25% fixed for a 15 year mortgage. The rates are as of 1/15 so I have a feeling they’re even better now. I can’t afford a 15 year mortgage, but if I can get 30 years for a better rate than what I’ve got now, I’m going to try to get moving on this. I’m definitely calling them Monday since rates just took another dive.

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avatar 8 Sasha


I’ve never tried reward checking, but may look into it. I’m at the point now where I’m okay with opening new accounts within my existing banking relationships, but I don’t want to overcomplicate things by having too many banks.

I think I could wallpaper a room with all the tax statements I got for filing this year!

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avatar 9 Anonymous

had I known Bernake and Co. would turn interest rates into a furniture store commercial (we are slashing prices!) I would have bought some CDs back before the ax dropped.

Countrywide looks to the best, although it does have a higher minimum.

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