Another Drop In Fed Funds Rate, Interest Rates To Follow?

Yesterday’s big news was the Fed Funds Rate drop by 0.25%, which I celebrated by taking my nephews and nieces trick-or-treating and then stealing some of their candy. (I love BottleCaps! :) )

Anyhow, just like last time, this may cause another round of drops in high-yield savings accounts and money market fund accounts.

An early example is Capital One 360, which has already lowered their 360 Savings rate to 0.75% APY (no minimums), and their Electric Checking rate tiers to 3.25% APY (for up to $50,000). You can still get a $25 bonus for signing up the savings account with $250, though.

Countrywide Bank has 6-month and 12-month certificates of deposits offering 5.65% APY ($10,000 minimum), if you are looking to lock-in for a while at a decent rate. Of course, I wouldn’t exceed the FDIC limits if you use Countrywide to be safe. Use different ownership titles to get more coverage.

I predict some weird market turmoil in the next couple of weeks (although I’m not taking any bets on my own accuracy).


  1. You’re right about the turmoil, but in another sense…these continued interest rate drops keep throwing monkey wrenches into my 0% balance transfer plans. Might have to consider putting them off for now..

    Do you have a certain bank interest level at which point you decide carrying on additional credit card debt load isn’t worth the dwindling savings interest returns?

  2. I’ve been leaning this way myself, should have done it a while back. Are there any 5%+ CDs out there with a less then $10,000 minimum? Like $5000 maybe? 12 months would be ideal but I can be flexible with that.

  3. There was a little noted, but significant change to mkt order rules in July that, in my mnd, has contributed to the late summer and fall market volitility. The Depression era rule that disallowed short-selling on down mkts was REMOVED by the SEC July 2007. This makes it legal to sell-short a stock as it keeps on falling (vs wait for an “uptick” in price). There are several web-threads from people who dont think it has anything to do with it, but it only serves the daytraders so I think their comments are self served.

    Anyway, I’m a long term investor :-). (can anyone spell “buying opportunity”?)

  4. ING’s 5 year CD is now higher ( at 5% ) than its shorter term CDs for the first time in quite a while.

  5. GMACbank money market is still at 4.75 APY, but that is down from 5.3 APY…

    Either way, much better than the national or local brick and motars…

  6. Actually, my Washington Mutual setup is still at 5% APY with no minimums. Citi has 5% if you make 2 billpays with their Checking each month I think.

  7. GMAC is down to 4.5% as of tomorrow (11-2) according to bankrate.

  8. As I said on the previous rate drop………..

    I’d like to take Bernanke for a long walk, off a short pier!!!

    Cutting the FFR is a HUGE mistake right now. If *ANYTHING* it should’ve been .25% followed by nothing at all & let this country finally WORK its way out of a hole for once.

    As for the .5% followed by .25%??????…………..thanks Ber-WANKER…………our dollar is now officially worth LESS than Canada’s. Next up……the yen!

  9. Savers will be punished until morale improves!

  10. How about using Countrywide’s Savingslink Money Market Account (5.5%). Yes, there is a 10,000 minimum but you are not tied to it for six month or a year like a CD. It’s been great for me. Easy set up to link to other accounts.

  11. CountryWide dropped to 5.35% APY on SavingsLINK and 5.40% APY on CD. (from 5.50 and 5.65)

  12. Don’t worry folks…not everything is going down. Due to the fact that interest rates are lower in the the United States than elsewhere in the world, the international purchasing power of the dollar is going down; thus the price of gasoline will be rising disproportionally higher in the US than in other countries.

    But, lower rates are saving the big boys who gambled on the subprime mortgage markets.

  13. Actually BankMidwest has a pretty good deal on their 9 month CD’s.
    The drawback could be that there is not a BankMW branch near where you live.

  14. glad I switched from ING to igobanking a while ago…still at 5.17%..figure won’t go below 5% once drop in a week or so.

  15. You guys would have been better off lately skipping this whole “high-interest savings” junk.

    In the past two months your dollar has lost ~10-12% against our Canadian dollar and other world currencies. It’s lost 60%+ in the past 5 years.

    You’d have been better off exchanging all your US dollars to Canadian and storing them in a sock under your pillow. It’d take you till 2027 to make up for that swing with “high-interest savings” accounts.

    And this is not the end. A poster above was absolutely correct. The Fed should allow the US to work its way out of the disastrous situation it’s in. Instead, the Fed has shown it is perfectly willing to sabotage the dollar to appease (read: bail-out) the banks. The astute will understand that dollar-sabotage is outright THEFT from savers, to the benefit of those in debt. Yay America.

    Expect more of the same in the coming months. I predict USD/CAD will pass 1.20 within 6-8 months. We’ll see if I’m right. And if I am, you’d all do well to convert to CAD now.


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