For the first time in a least a decade, the national average rate for checking, savings, money market account and certificates of deposit at banks dipped below the 1% mark.
That's according to research firm Market Rates Insight. In July, the national average rate was 0.99%. The closest dip in deposit rates occurred in January 2004, when the national average rate was 1.88%, MRI discovered.
Major economic indicators tracked between January 2004 and July 2010 also revealed links to deposit rate fluctuations, according to MRI. In January 2004, the annual inflation rate was 1.93% compared to 1.24% in July. The Fed Fund effective rate was 2% during January 2004 and 0.18% in July 2010. The firm had previously said when the national unemployment rate goes up, deposit rates tend to go down.
"Clearly, the unemployment rate is a major factor in deposit rates" said MRI Executive Vice President Dan Geller. "Historically, the Fed did not increase the funds rate during high unemployment periods, and therefore, when we see the unemployment rate start to decline, it will be a sign that interest rates on deposits are about to go up."
