'Big four' banks now offer no good CD rates

Bank sign on building

I’m planning ahead, focusing right now on CDs I opened in 2009 that are maturing soon at Citibank, Wells Fargo, Bank of America and Chase.

When I established the accounts, these banks still offered decent CD rates. They even vied with one another to get new customers.

I fully realized, of course, these institutions view deposit-taking as something of a quaint holdover from the days when banks were banks, not financial supermarkets offering a plethora of nifty (and fee-laden) "financial services."

Nevertheless, their rates on 24-month (25-month, in the case of Wells Fargo) certificates were still good. To get them, I was willing to listen patiently while some customer service representative tried to cross-sell investment and other products that I didn’t want -- and politely declined.

Never mind the government had bailed out these behemoths, and was nursing them back to health with "accommodative" interest rates and "quantitative easing."

In fact, the aura of being too-big-to-fail actually attracted me to the four banks. I figured the Treasury and the Fed would always rescue them, even if the FDIC wanted to pull the plug and pay off my certificate earlier than I wanted.

But today, good CDs from the "big four" are a thing of the past. All that remains are the bells-and-whistles of financial one-stop shopping.

Of course, thanks to the Fed, interest rates at all banks have plummeted significantly since mid-2009. But the drop in the mega-bank rates, particularly for certificates with less than five-year terms, has been breathtaking.

Consider the spread between big bank rates and yields on Treasuries of comparable maturity.

A Wells Fargo 25-month PMA package CD opened May 2009 in California had a 2.25% APY compared to the then 2-year Treasury yield of about 1.00%. Today, that 25-month rate is 0.75%, compared to 2-year Treasury yield of 0.65%-0.70%.

And I’m told that, with the advent of Dodd-Frank, these banks are no longer too-big-to-fail. If they get in trouble, the Wells Fargos and BofAs of the world will be entitled to no greater government coddling than a run-of-the-mill online bank whose two-year rate is twice theirs.

Anyway, there’s no reason for me to stick around.

I do expect that, in closing my accounts, I’ll still have to endure more cross-selling pitches. But this time I won’t be so patient or polite.

Goodbye mega banks.

And good riddance.