As one of the United States’ longest lasting financial services providers, Wells Fargo offers a wide range of money market accounts, high-interest savings accounts, and certificate of deposit accounts for its customers. Ranging from low-yield secure accounts to relatively high interest accounts, there seems to be an option for everyone with one of the country’s biggest and most influential banks.
Over the last four years, more investors – both seasoned professionals and consumers – have looked at certificate of deposit accounts as a serious investment opportunity than ever before. It’s partially a side effect of the huge downturn in stock market performance during the recent financial crisis, with a great deal of investors looking for secure, relatively stable options rather than the stock market.
It’s also due to the short-term nature of many certificate of deposit investments. Despite a reputation for long holding terms and other potential inconveniences, many CDs require deposit terms that are less than twelve months. Some short-term offerings, available through Wells Fargo, are available for time periods as short as three months, with mid-length CDs offering interest on six-month deposits.
Today, we’re going to look at Wells Fargo’s offerings for both consumers, serious investors, and of course, small businesses. With CDs offering value for any type of depositor – be it an investor or a small business aiming to hold its cash in a highly liquid account – it’s important to gain a look into the entire spectrum of CD rates. Read on and you’ll see your options, plus those for other investors.
CD rates, as a whole, can range dramatically from one state to another. Someone based in California may have access to high rates of interest, for example, while another person residing in New York is only able to find a fraction of their interest rate. It’s a consequence of separate economies and banks’ policies and regulations in the different states, and unfortunately it’s an unavoidable difference.
Despite this, CD rates tend to be fairly constant on a nationwide level, aside from a few states in which interest rates can be higher or lower than the mean. All rates given in this guide are around the national average – Wells Fargo may offer better rates locally, but these are general guidelines. Speak with your local bank or an investment advisor to gain up-to-date local CD interest rates.
At the heart of Wells Fargo’s certificate of deposit line-up is the ‘Standard CD’ – a medium-sized CD account that offers reasonable rates of of interest for investors. Standard CDs require at least $2,500 to be deposited in the account for a minimum term of one year. At this deposit level, most account holders can expect interest rates in line with 0.15 percent Annual Percentage Yield (APY.)
This isn’t exactly a record-setting figure, although it appears to be in line with APY from most other banks and credit unions. Wells Fargo’s jump certificate of deposit accounts appear to offer rates that are slightly higher, although again, none of them are exceptional. It may be worth investigating the rates on offer from other major banks, as they’re unlikely to fall below those offered by Wells Fargo.
Other accounts, in fact, may offer better interest rates than Wells Fargo’s CD accounts. A range of savings accounts are available, many of which offer annual interest rates of almost 3 percent with sizable deposits. Other accounts, such as Wells Fargo’s money market account range, offer higher interest rates, too. In many cases, these may be more compelling options for consumer investors.
For longer-term investments, however, the value offered by Wells Fargo does get better. CDs with a 58-month term are assigned a base interest rate of 1.65 percent, with a $5,000 minimum deposit for opening the account itself. Again, this isn’t an industry-leading rate, although it is significantly more competitive and potentially lucrative than the low rates offered on short-term CD accounts.
These CD rates appear to be similar to those offered at other major banks for long-term deposits. A quick survey of other US-based banks showed that Chase is offering similar rates for five-year CDs. UK and Hong Kong-based HSBC appears to be offering more competitive rates on deposits than its US-based rivals, with a 1.85 percent interest rate on twelve-months CDs available for consumers.
As previously mentioned, these CD rates are state-dependent, and could change based on a number of conditions and situations. While the majority of US-based banks offer information on their CDs online, it’s always best to speak with a representative in person. Wells Fargo makes it fairly simple to book appointments with their retail banking assistants, particularly if it’s investment-related.
Overall, Wells Fargo offers a range of CD services, the vast majority of which offer interest at rates that are either in line with the market, or substantially below the market. While unappealing at best, there may be value in Wells Fargo’s offerings for investors that currently use the bank. However, it’s likely that this value is outside of the bank’s CD offerings, which offer poor performance overall.
Investors are advised to shop around for better CD rates, or at least to understand that there is much better value to be found outside of Wells Fargo. Despite the potentially attractive long-term rates, it just isn’t a lucrative package for investors. Other US-based and international banks offer both better interest rates and a significantly more service-focused environment for customers.