A new study shows Michigan's deposit rates are higher than the national average.
A CD, or certificate of deposit, lends financial institutions a predetermined amount of money for a fixed time period in exchange for a high interest rate once the CD term finishes. A study by Go Banking Rates.com says Michigan's deposit rates are impressive. But some bankers say all deposit rates are too low due to the federal reserve.
"The federal reserve basically sets the prime interest rate which most banks across the nation will use that to gauge interest rates that they will charge their prime loan customers," said Vice President of River Valley Bank, Glendon Peterson.
Interest rates on CDs, savings accounts and money market accounts are based upon the prime lending rate banks pay for loans from the government. The lower the prime, the lower interest you will get. Those who use CDs for long-term savings may need to save more or save longer to make up for low rates.