CD Rates Plummet Following Fed Cut; Bankrate.com Posts Weekly Certificate of Deposit - CD - Survey Results.

Business Editors

NEW YORK--(BUSINESS WIRE)--Nov. 20, 2002

Since the Federal Reserve Board cut rates Nov. 6 by a half point, banks have responded by quickly cutting the yields they will pay to consumers on all classes of certificates of deposit (CDs), according to Bankrate.com data.

        Deposit averages from Bankrate.com's national CD survey

           Money market account: 0.89%, down 0.95% last week
          6-month CD yield: 1.35%, down from 1.50% last week
           1-year CD yield: 1.54%, down from 1.68% last week
           5-year CD yield: 3.30%, down from 3.39% last week

While banks have been quick to pass along the rate cut to consumers on savings products, they are slower to pass along the cuts on most loans, where doing so would benefit consumers, Bankrate data show. While CDs showed cuts of at least 10 basis points, credit card and auto loans were unchanged in Bankrate's national survey of large institutions. A basis point is one-hundredth of a percent.

While the Fed's rate cuts have been good for borrowers, setting off booms in mortgage refinancing and auto loans, they have hurt savers badly. Two years ago, just before the Federal Reserve Board's Open Market Committee began its current rate-cutting cycle, the national average yield for a 1-year CD stood at 5.57 percent. The latest yield: 1.54 percent.

The one bright spot is that the worst may be over. The majority on the panel of CD experts Bankrate polls for its weekly CD Rate Trend Index expects rates to stay unchanged. "CD rates sank like a stone after the Fed rate cut. CD issuers should be able to let rates stand," predicted one member of the panel, Bankrate savings writer Laura Bruce.

While the national picture is bleak for savers, there are a few bright spots for investors willing to shop for their FDIC-insured money market and certificates of deposit. This week, in its 100 Highest Yields survey, Bankrate.com found 13 institutions paying 2 percent APY or higher on money market accounts. On one-year CDs, Bankrate.com found 12 institutions paying 2.5 percent or higher. All yields are available nationally to customers who do not have an existing relationship with the institution.

Bankrate.com conducts two surveys each week for money market accounts and CDs. The 100 Highest Yields survey is conducted weekly to find the highest-yielding CD and money market accounts available to consumers nationwide. Bankrate.com also conducts a weekly national CD survey, which compiles the rates from the largest banks and thrifts in each of the 10 largest U.S. markets to arrive at a national average. These surveys are supplemented by the Rate Trend Index, a weekly poll of bankers and industry experts on the direction of CD returns in the coming week.

To see data from Bankrate's 100 Highest Yields survey, go to http://www.bankrate.com and click on "CD/Savings." To read our Rate Trend Index panel's prediction for CDs, go to http://www.bankrate.com/CD-RTI

For a report on how credit card, auto loans and other bank products fared in Bankrate's national survey, go to http://www.bankrate.com/brm/news/bank/report.asp .

About Bankrate Inc.

Bankrate Inc. (OTCBB:RATE) owns and operates Bankrate.com, the Internet's leading consumer banking marketplace. Bankrate.com averages 3.3 million unique visitors per month, according to comScore Media Metrix, which ranks Bankrate.com first in unique visitors in the "Financial information and advice" category. Bankrate.com reviews more than 4,800 financial institutions in 173 markets in 50 states. Bankrate.com is a destination site of personal finance channels, including banking, investing, taxes and small business finance. It is the leading aggregator of over 100 financial products, including mortgages, credit cards, new and used auto loans, money market accounts and CDs, checking and ATM fees, home equity loans and online banking fees.

Bankrate.com provides financial applications and information to a network of more than 80 partners including MSN (Nasdaq:MSFT), Yahoo! (Nasdaq:YHOO), America Online (NYSE:AOL), and Smart Money. Bankrate.com's information is also distributed through more than 100 national and state publications.