Vertically Challenged

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Note to Banking Websites: Don’t Brag About CD Rates Starting With a 1

Oh lordy. Normally, I just delete the silly press releases that get stuck in my spam filter, but this was almost as good as the Nigerian scam email I got recently.

Get a load of this subject line:

“Go Banking Rates Features Top National CD Account Rate of 1.19% APY in Today’s Rate Alert.”

Uh, what? That’s the best you have to offer? And you’re calling attention to that?


Apparently the Internet financial firm ableBanking took the crown with its “high-yield CD rate” of 1.19% APY for a two-year term. That’s bad enough if it had only been one year with this alleged high-interest CD rate, but a longer term makes it even more galling.

You have to wonder how companies like or the publicly traded (NYSE:RATE) are keeping the lights on in this environment. Obviously not through press releases like this one.

And as a savvy Internet consumer, you also have to wonder how they will survive now that Google (NASDAQ:GOOG) has its own slick CD rating search — which naturally bumps these other sites down the list of search results if anyone queries “high interest rate CD” or whatever.

Back the the CDs themselves, though … seriously, who buys these things? It’s insane! I know that in many respects I am more aggressive than the typical retirement investor — partially because I’m younger and can afford to take risks, but also because I’m a bit of a know-it-all who believes I’m smarter than the average bear.

But come on. Even an investor with low self-esteem or someone concerned with the zombiepocalypse gutting the global banking system should know this is a bad idea, right?

Inflation is running at a 2% clip as of September’s data — and even if you believe Ben Bernanke when he says the rate of inflation is no big deal and isn’t set to move significantly higher anytime soon, a 2% rate still is eroding your money in this so-called “high-yield” account. Unless you get 2% or more, you’re not keeping your head above water.

Longer-term U.S. Treasuries yield double this CD’s rate and are rock-solid (despite what dollar haters and deficit doomsayers might blog about), which at least keeps your purchasing power if it doesn’t grow your money.

Another alternative: Many consumer staples stocks with huge brands like Procter & Gamble (NYSE:PG) or General Mills (NYSE:GIS) are triple that.

And if you don’t like the volatility of equities, a host of investment grade bond funds can edge you even higher. Consider the iShares iBoxx Investment Grade Corporate Bond Fund (NYSE:LQD) which has a 12-month yield of almost 3.9% as of last week.

You get the gist.

I know the Federal Reserve is hell-bent on supporting employment, even if that means savers get the shaft or inflation might heat up … but you have to question the marketing departments at banks that are hell-bent on calling attention to the uselessness of their products in the current market environment via press release.

Even worse? That spammy PR email was a few days old. I just got one this AM that reads “Go Banking Rates Finds Top Online Savings Account Rate of 0.85% APY in Today’s Rate Alert.”

Wow, so now we’re below 1%. Great.

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Jeff Reeves is the editor of and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at or follow him on Twitter via @JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here.

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