The story behind drooping CD rates is complicated, and it involves: falling inflation (until recently), an aging population, technological innovations and the Federal Reserve lowering interest rates. At the beginning of 1989, for instance, a one-year CD offered an 8.30% APY. The reason? CDs used to be a much better deal. In 2019, however, only 7.7% of households had a CD.
They were still in vogue nearly two decades later, as more than 16% used them in 2007. Roughly a fifth of households owned a CD in 1989, according to the Fed.
CDs used to play an important, albeit complimentary, role in the finances of everyday Americans.
