Best national 1-year CD rates still stuck at 1.30%
It's been another frustrating year for anyone buying 12-month CDs.
Last fall, we were encouraged to see the top nationally available return climb to 1.25% APY, which was a welcome contrast to one year before, when the top yield was still at its post-recession worst of 1.05% APY.
But 13 months later, the top 1-year bank rate has only improved to 1.30% APY — and it's been stuck there since late July.
Yields reached their highest level since 2011 when Colorado Federal Savings Bank paid 1.35% APY for five weeks this spring. But it's all been part of a faltering pattern that has brought us little true gain.
Two banks currently lead the term at 1.30% APY: CIT Bank and E-Loan.
CIT is the online consumer bank of CIT Group Inc., a New York-based commercial lender to small and midsize companies.
Its 12-month certificate of deposit comes in two flavors. The first is a standard term CD requiring a modest $1,000 minimum investment.
But for those who can deposit $25,000 or more, it offers a 12-month certificate that provides for one rate bump and one added deposit during the CD's term.
Meanwhile, E-Loan is an online operation run by Popular Community Bank, which is the mainland sister to Puerto Rico's biggest bank, Banco Popular.
With almost 50 branches throughout New York, New Jersey and South Florida, Popular Community's deposits (including those made through E-Loan) are fully insured by the FDIC.
E-Loan's 1-year CD is offered in just one format: a standard certificate requiring a $10,000 minimum deposit.
TOP 12-MONTH CD RATES: Nationally Available Bank Yields
|Triumph Savings Bank||1.25%||$1,000|
|Sallie Mae Bank||1.25%||$2,500|
|California First National Bank||1.24%||$5,000|
|BAC Florida Bank||1.21%||$1,500|
|Colorado Federal Savings Bank||1.20%||$5,000|
|Ally Bank||1.05%||No minimum|
|State Bank of India – Chicago||1.05%||$2,500|
|State Bank of India – New York||1.05%||$5,000|
As is often the case, many savers can find better 1-year returns by turning to credit unions and community banks.
Three credit unions even offer nationwide deals for those who are willing to invest for two or three extra months:
- USAlliance Federal Credit Union is offering new members 1.51% APY on 15-month certificates, available to select residents of Massachusetts and Connecticut, those who work for certain employers in New York and anyone nationwide who donates to an affiliated charitable organization.
- Mills42 Federal Credit Union is paying 1.40% APY on 15-month CDs for those who live or work in Lowell, Massachusetts, and the surrounding area or anyone in the country who makes a qualifying donation to Mothers Against Drunk Driving.
- Fort Knox Federal Credit Union is offering a special 14-month CD paying 1.35% APY, available to those who are active or retired military or civil service, who live or work in one of seven Kentucky counties or anyone nationwide who makes an eligible donation to USA Cares.
For those who live in the right place or work for the right employer, it's possible to make even more from 1-year CDs.
The best return on strictly local deals is pushing 2% this month.
TOP 1-YEAR CD RATES: Credit Union, Community Bank Deals
|Bank||States||Term (in months)||APY|
|Peoples Transport Federal Credit Union||New Jersey||12||1.94%|
|Self Reliance New York Federal Credit Union||New York||12||1.92%|
|Four Corners Federal Credit Union||Arizona, Colorado, New Mexico, Utah||12||1.56%|
|LG&E Co. Credit Union||Kentucky||14||1.51%|
|Seasons Federal Credit Union||Connecticut||14||1.51%|
|Idaho Central Credit Union||Idaho, Nevada||12||1.50%|
|North Platte Union Pacific Employees Credit Union||Nebraska||12||1.50%|
|Westmark Credit Union||Idaho||13||1.50%|
|BCB Community Bank||New Jersey, New York||15||1.50%|
|Direct Federal Credit Union||Massachusetts||15||1.50%|
|Kearny Bank||New Jersey||15||1.50%|
|Grand Rivers Community Bank||Illinois||12||1.45%|
|Rockland Federal Credit Union||Massachusetts||11||1.40%|
|Premier Credit Union||Iowa||14||1.40%|
|First Bank & Trust||Texas||15||1.40%|
|Walpole Co-operative Bank||Massachusetts||15||1.40%|
|Community First Credit Union||Wisconsin||17||1.37%|
If you qualify, these deals are worth your effort since they all pay about five times more than the current average 12-month return of 0.28% APY, according to our weekly nationwide survey of banks and thrifts.
Average 1-year returns had fallen as low as 0.22% APY and still sat there in January 2014. But the improvements have been painfully slow and totally stalled for almost five months now.
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.
Now, almost seven years after the Federal Reserve dropped interest rates to about zero in a bid to revive the economy, the Fed is finally close to reversing course and pushing rates higher over the next several years.
Several members of the bank's rate-setting committee have said they expect the rate hikes to begin in 2015. But there are just two meetings left this calendar year — one next week and one in mid-December.
It's unlikely we'll see a Fed increase at the October meeting, and there's no guarantee we'll even see it by year's end.
But whenever the process does begin, it's fair to expect returns to be higher by the time a 1-year CD bought now matures next October.