Will CD Interest Rates Rise if Borrowing Rates Rise?

[John Galt III]

If interest rates on loans go up, will the interest I get on my CD's go up too? I know it seems like the obvious answer is yes, but I thought CD rates would rise along with inflation (Joe Sixpack inflation : the cost of buying survival things ) but I was wrong. Thanks, JG III

 

[Stevewc]

The rates will rise but it will be a much slower go.
Matter of fact the government and treasury will be all straightened out before the banks even get a chance to make a move, in my opinion. That is, if your question is in relation to the current political mess we are in.
So you will probably see nothing that will help you.
I think, if you are quick, you might buy some bonds or bond funds at good prices though.
Just my $.02 worth,
Steve

 

[SandsofTime]

Good question. I would say yes, but frankly, I stopped holding my breath years ago for interest rates to go back up. I don't expect interest rates to go up any time soon. Sort of like Japan for the last 20 years.

 

[JOHNNIE36]

Kind of what I've been wondering. I am totally in CD's. Largest ones are currently at 4.5% and mature in 2014. I am hoping rates will be on the upturn before then. Largest CD is an IRA and I have to take a MRD every year. One thing that could save me is a mortgage we hold on our last house. It pays 5.5% and in the first year of payments. Ten year payoff, but then I will be 84 and may not give a damn.

 

[John Galt III]

Just to add some data , if I open a new cd at my credit union, the best rate I can get is 2.5 percent, and a 5 year maturity. I'm OK (sort of) with the 2.5, since I have plenty of high risk, higher return investments elsewhere. JG III

 

[ziggy29]

Doubt it will much -- much like gas prices go up immediately when oil prices spike and very slowly fall when oil prices crash. There's just too much cash chasing yield and I don't see that changing any time soon.