CD Money Funnels Into MMAs
That meeting between the rate of a liquid account and of a term deposit called the liquidation point may be one of the reasons more money tends to flow out of CDs into money market accounts.
That is according to Market Rates Insight, which found that the national liquidation point reached the nine-month term in September. In January, the liquidation point was at zero, meaning all terms rates were higher than MMA rate.
The national average rate for MMAs at banks at the end of September was 0.37%, and for nine-month CDs, 0.36%. This means that there is no yield incentive to lock money in CDs for up to nine months since they pay equal or less than the MMA account, said Dan Geller, executive vice president of MRI. In comparison, the liquidation point in January of this year was zero term, because the average MMA paid 0.69% and the three-month CD paid 1.07%.