Best national 1-year CD rates pay 1.31%
Top national 1-year CD rates moved up and down in 2016 but ended the year roughly where they left off before the Fed's historic rate increase the previous December.
Then three weeks ago, the Fed finally made a second hike. But leading 12-month returns haven't yet shown any movement.
A few of the other major CD terms we track have indeed bumped up a notch since the Fed's latest move, so we hope January will bring some 1-year yield improvements as well.
As always, though, several credit unions and community banks are offering better-paying local and regional deals, some as much as 2%. There's even one promotion we'll share that pays a remarkable 5% to certain lucky savers.
Fortunately, more Fed hikes could be in the cards for 2017. What that might mean for banks' rate sheets is a crystal-ball question, but we'll tell you what the Fed is projecting.
The top national deals
Today's top yield among nationally available 12-month CDs is 1.31% APY, up by the tiniest possible margin from December 2015's 1.30% APY.
It's a disappointment after the term topped out at 1.36% APY from March to May, which was a high-water mark for national 1-year certificates over the last five years.
Still, it helps to remember that, after plunging in the spring of 2011, the leading 12-month yield wavered between its post-recession low of 1.05% and 1.10% APY for all of 2012 and half of 2013.
Three banks are currently offering the leading 1.31% APY rate: State Bank of India-Chicago, EverBank and VirtualBank.
State Bank of India-Chicago is a U.S. branch of India's largest bank and carries the same FDIC insurance as all the other banks we rank.
Based in Jacksonville, EverBank operates 10 branches in Florida but is more nationally known for its robust online operation.
We generally caution readers that EverBank is known for making almost weekly changes to its rate sheet, effective each Friday. Its 1.31% APY on 12-month certificates has been in effect since Dec. 23.
Lastly, VirtualBank operates solely online as an FDIC-insured division of Miami-based Sabadell United Bank, which operates two dozen branches throughout Florida and is owned by Banco Sabadell, Spain's fifth-largest bank.
TOP 12-MONTH CD RATES: Nationally Available Bank Deals
|State Bank of India-Chicago||1.31%||$2,500|
|Bank of Baroda||1.30%||$1,000|
|Live Oak Bank||1.30%||$2,500|
|BAC Florida Bank||1.29%||$1,500|
|State Bank of India-New York||1.29%||$5,000|
|Pacific National Bank||1.27%||$1,000|
|California First National Bank||1.26%||$5,000|
|Capital One||1.25%||No minimum|
|Sallie Mae Bank||1.25%||$2,500|
|Colorado Federal Savings Bank||1.25%||$5,000|
Earning more with local deals
As is often the case, savers can find better 1-year returns by turning to credit unions and community banks.
Indeed, we've found more than a dozen offers that beat the national leaders, including four that are even available nationwide.
But for those who live in the right place or work for the right employer, it's possible to make as much as 2%, or even 5% in one lucky region.
On all of the deals below, eligibility requirements apply. Contact the bank or credit union directly to determine if you qualify for membership.
TOP REGIONAL 1-YEAR CDS: Credit Unions & Community Banks
|Bank||States||Term (in months)||APY|
|Leaders Credit Union||Tennessee||12||5.00%|
|Financial Health Federal Credit Union||Indiana||12||2.00%|
|Peoples Transport Federal Credit Union||New Jersey||12||1.94%|
|Florida Credit Union||Florida||12||1.76%|
|USAlliance Financial Credit Union||Nationwide||15||1.51%|
|Idaho Central Credit Union||Idaho, Nevada||12||1.50%|
|Village Credit Union||Iowa||13||1.50%|
|Veridian Credit Union||Nationwide||15||1.50%|
|First Republic Bank||California, New York, Florida, Massachusetts, Connecticut, Oregon||17||1.50%|
|Texas Exchange Bank||Texas||12||1.36-1.46%|
|Michigan One Community Credit Union||Michigan||18||1.46%|
|Melrose Credit Union||Nationwide||12||1.41%|
|Penfed Credit Union||Nationwide||12||1.36%|
If you qualify, these deals are worth your effort because they pay at least four times more than the current national 12-month average of 0.31% APY, according to our weekly nationwide survey of banks and thrifts.
Watching for a Fed impact
Average 1-year CD rates had fallen as low as 0.22% APY and still sat there in January 2014. Improvements have been slow, finally pushing to 0.31% APY in September.
Of course, all of these rates are a far cry from the 12-month average of 3.78% APY we saw in February 2007 — before reckless mortgage lending plunged us into the Great Recession.
The dramatic descent in rates is a result of the Federal Reserve aiming to stave off a complete financial collapse by dropping interest rates to about zero in December 2008 — and keeping them anchored there for seven years.
That dismal period ended a little over a year ago, with the Fed's rate-setting committee approving what was expected to be the first of several small increases in the federal funds rate.
But global stability concerns and the struggle for inflation to reach a healthy level gave the Fed pause, with seven of 2016's eight meetings passing with no announced increase. Finally, on Dec. 14 the Fed announced a second hike.
The Fed is forecasting that it will make 2-3 additional hikes this calendar year. However, it's hard not to note that it made the same projection last year.
Still, there is reasonable hope that additional increases will arrive in 2017 that will translate into higher bank returns by the time a 1-year CD bought now matures next winter.
Disclaimer: The rates above were verified Jan. 3, 2017. Credit unions and banks should be contacted directly to determine eligibility for opening accounts with that institution, as well as to verify current rates.