Historical CD Rates

When looking at historical CD rates, it is apparent that some trends have remained constant. Generally, institutions that offer certificate of deposits grant higher rates of interest on their CDs that customers deposit money for the agreements to term compared to those on the CDs in which customers can withdraw money on demand. For example, in 2004 most banks around the world had offered 0.4% annual interest rate on saving deposits account are payable on demand, 0.8% at 3 months and 2 CDs % of a CD of 2 years.

When studying historical CD rates, the trend indicates that over the past 30 years interest rates were between 2-16% per annum. In 1979, the average interest rate for CDs 11.44% worldwide. This was the first to consider the rate of tax rate and inflation rate. At the same time, these rates were 66% and 13% respectively, which in turn left the net interest rate of 9.41% as a CD.

In 1981, the CD rate was almost 16% and in which year the tax rate and the inflation rate were 66% and 9%. All these factors have kept the net rate of return on CD at 3.5%. During the year 1986, the gross rate of interest was only 6.6%. However, the rate and the inflation rate was relatively low and were only 52% and 1.1% respectively. So there would be no withholding rate of return on CDs resulting in net rate 2.02%.

Whatever the rate may be earlier, we can say that billions of dollars have been invested in CDs during the ages 20 and 21. When deciding whether to invest in a CD or go for other sources of investment, investors should keep their objectives and the rate of return into consideration.