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Posted by on March 2, 2008, 7:23 am
> Are you sure this is the current interest rate at
> Countrywide? And it is not some sort of short term
> promotional rate? Because from my reading, 4.25% is on the
> very high side for a money market account.
Obviously the rate can change but at this time, it's 4.25% APY
https://bank.countrywide.com/CWBRates.aspx?tab=sl The rates were even
higher a few months ago at well over 5%. I've had my money in this
account for over a year at it's never been below 4% rate.
> I imagine you are new to what interest rates have
> historically done. Historically, the longer the maturity of
> a fixed income product (such as a money market account, CD,
> or bond), then the higher the yield.
I am aware of the inverted yield and that the high rates on money
market accounts are abnormally high right now and probably won't last
forever.
> Also, I think one other anomaly is present: Countrywide is
> offering superior rates compared to many "more reputable"
> banks because it needs cash (subprime mortgage problems) and
> possibly, I suspect, because it knows the public knows that
> if it goes bankrupt, getting that FDIC insurance money may
> involve a delay.
They were offering the higher rates well in advance of the cash flow
problems of the subprime mortgage crunch. They have always been in
the top tier yields on
http://bankrate.com/brm/rate/mmmf_highratehome.asp?params=US,416&product=35
Now you could also argue not to deal with a bank like Countrywide in
the event that they go under and having to deal with FDIC, but I
believe that's another topic.
I understand that these yields will probably go away eventually at
which time a CD would be a better investment. However, my question is
specifically targeted to the present. If I can get the same rate or
higher in an online savings account, with better access to my
investment to move around or even use if necessary, what benefit does
a CD have over it?
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