Lending Club Blog

CD’s: Certified Duds

Finally, somebody tells it like it is:  longer-term certificates of deposit are bad investments because they make savers “lose out to inflation.” Elizabeth Ody, from Bloomberg News, arrived at this conclusion after combing through the latest report from Market Rates Insight.

Many purchase CDs to lock in a fixed return that is also FDIC insured.   Unfortunately, you also are insured that your investment will not keep up with inflation – the rising cost of living – in effect, providing a negative true return.

Elizabeth went on to say that inflation “was 2.11 percent in February, surpassing the long-term CD rate of 2.10 percent for the first time since October 2008″. Read Elizabeth’s full article here.

Wednesday, June 1st, 2011 at 12:16 pm

Comments (1)

  1. Rizdan:

    after reading the sentence “longer-term certificates of deposit are
    bad investments” of course people will always think back to
    long-term investment, in addition to the possibility of inflation
    sometimes where we make an investment “deposit” suffered a loss
    even on the verge of bankruptcy

    June 4th, 2011 at 11:31 am

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