Best national 1-year CD rates pay 1.30%
In the nine months since the Federal Reserve's historic interest rate hike at the end of 2015, the top 1-year CD rates have bobbed up. They've bobbed down. And today the lead sits exactly where it was last December.
A few of the major CD terms we track have actually lost ground since the Fed's move, and for a while, that was true for 12-month yields as well.
So pulling even with the top pre-Fed return is the most we can celebrate.
As is usually the case, 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.
But when might 1-year CD rates be boosted by another Fed hike? When that will happen is a crystal-ball question, but we'll tell you what's on the Fed horizon, including possible news this week.
The top national deals
Today's top yield among nationally available 12-month bank certificates is 1.30% APY, with four banks for savers to choose from.
It's a disappointment after the term bobbed up to 1.36% APY from March to May, which was a high-water mark for national 1-year CDs over the last five years.
Indeed, the 12-month national lead has wavered up and down between 1.26% and 1.36% APY since the Fed's December hike, with 1.30% APY a common resting place.
For perspective, 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.
The four leaders offering 1.30% APY are essentially three banks, since E-Loan and Popular Direct are both online portals of the same bricks-and-mortar Popular Community Bank, which operates almost 50 branches throughout New York, New Jersey and south Florida.
Bank of Baroda allows the lowest minimum deposit of the four, at just $1,000. As the FDIC-insured U.S. branch of India's second-largest bank, Bank of Baroda has operated in New York City for more than 30 years.
Rounding out the four leaders is Live Oak Bank, which specializes in small-business lending and offers consumer CDs to help fund those loans. Although it has a branch in Wilmington, North Carolina, Live Oak operates mostly online.
TOP 1-YEAR CD RATES: Nationally Available Bank Deals
|Bank of Baroda||1.30%||$1,000|
|Live Oak Bank||1.30%||$2,500|
|State Bank of India-Chicago||1.29%||$2,500|
|State Bank of India-New York||1.29%||$5,000|
|Pacific National Bank||1.27%||$1,000|
|Triumph Savings Bank||1.25%||$1,000|
|BAC Florida Bank||1.25%||$1,500|
|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 a dozen offers that beat the national leaders, including one that's even available to savers 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.
TOP REGIONAL 6-MONTH CDS: Credit Unions & Community Banks
|Bank||States||Term (in months)||APY|
|Leaders Credit Union||Tennessee||12||5.00%|
|Village Credit Union||Iowa||9||2.00%|
|Financial Health Federal Credit Union||Indiana||12||2.00%|
|Peoples Transport Federal Credit Union||New Jersey||12||1.94%|
|Self Reliance New York Federal Credit Union||New York||12||1.92%|
|Farmers State Bank||Iowa||15||1.57%|
|Cedar Falls Community Credit Union||Iowa||15||1.55%|
|North Platte Union Pacific Employees Credit Union||Nebraska||12||1.51%|
|LG&E Credit Union||Kentucky||13||1.51%|
|Idaho Central Credit Union||Idaho||12||1.50%|
|Pioneer Federal Credit Union||Idaho||13||1.50%|
|Veridian Credit Union||Nationwide||15||1.50%|
If you qualify, these deals are worth your effort because they all pay at least five times more than the current national 12-month average of 0.30% 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 0.30% APY just last month.
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 to today's 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 in mid-December, 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 have given the Fed pause on making further hikes, with no increases implemented at any of the last five meetings.
The Fed's latest rate-setting meeting began yesterday, with an announcement expected this afternoon.
But few economists and Wall Street forecasters expect the Fed to announce a hike, with most betting that it will be at least November, and more likely December or even 2017 before we see a second increase.
Whatever happens, let's hope it translates into higher bank returns by the time a 1-year CD bought now matures next fall.
Disclaimer: The rates above were manually gathered on September 20, 2016. Before applying, check with the bank or credit union of interest to confirm the offer still stands.