Featured Small Business Lending Article

Small Business Lending

Jeffrey Sweeney is an investment banker with years of experience in direct lending and corporate finance for small- to middle-market companies. He is the chairman and CEO of US Capital Partners, an innovator in small- to middle-market business lending. US Capital Partners has been providing prompt, innovative, and reliable financing solutions across the United States and abroad for more than a decade.

Subscribe to Blog
« Join US Capital and New Cities at Investor Event in San Francisco | Main | 480 Holdings LLC Release Plans for Premium Bottled Water from Fiji to Investors at San Francisco Event »

5% Interest on Checking Accounts – Those Were the Days!

Market Insights
August 3, 2017

5% Interest on Checking Accounts – Those Were the Days!

I have great memories hearing my grandparents and my parents recalling when such and such used to cost a dime or a nickel: the subway, the bridge toll, The New York Times, a cup of coffee… those were the days.

While we are getting nostalgic, how about the days when a Certificate of Deposit used to pay 5%....or even on a checking account! One does not have to go too far back. Below is a flyer sent out by First Republic Bank in March 2001:

From the chart below, one can observe that rates (in red) have fallen with extreme volatility since the early 1980s when rates on 6-month CDs were as high as 18%! In August 2007, just ten years ago, 6-month CDs were paying 5.4%. Over the past eight years, 6-month CDs have averaged 0.30%. Another way to look at this extraordinary change is that the interest on $100,000 in 2007 was paying/yielding $5,400 and has dropped to only $300 per annum for the past eight years.

Another observation from this chart is that 6-month CD’s have typically (90% of the time) been greater than inflation from 1980 through April 2009. Over the past eight years, CDs have been running below inflation 100% of the time.

What does this all mean? In short, savings in these CDs are losing to inflation and are not meeting any minimal income requirements. Subsequently, individuals are being forced out on the risk curve (into longer maturities and riskier assets) in search of yield and growth.

One of the most important things when planning for the future and investing is being adaptable. The chart above is a stark reminder. The investment landscape is complex and always changing. Some changes are gradually, while others like the rates of these CDs pictured can change dramatically in short periods. As investors, we need to stay on our toes and/or find someone to help us.

We invite you to give us a call at (415) 249-6337, visit or email us at  if you have questions about how we can assist you in managing your investment accounts.

Click on link below to see this commentary as a PDF:

5% Interest on Checking Accounts – Those Were the Days!

US Capital Partners

Pursuant to the provisions of Rule 206(4)-1 of the Investment Advisors Act of 1940, we advise all readers to recognize that they should not assume that recommendations made in the future will be profitable or will equal the performance of past recommendations. This publication is not a solicitation to buy or offer to sell any of the securities listed or reviewed herein. The contents of this letter have been compiled from original and published sources believed to be reliable, but are not guaranteed as to accuracy or completeness. Nicholas Atkeson and Andrew Houghton are also principals of US Capital Wealth Management, a registered investment advisor. Clients of US Capital Wealth Management and individuals associated with US Capital Wealth Management may have positions in and may from time to time make purchases or sales of securities mentioned herein.


PrintView Printer Friendly Version

EmailEmail Article to Friend

Reader Comments

There are no comments for this journal entry. To create a new comment, use the form below.

PostPost a New Comment

Enter your information below to add a new comment.

My response is on my own website »
Author Email (optional):
Author URL (optional):
Some HTML allowed: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <code> <em> <i> <strike> <strong>