Top 2-year CD rates tread water waiting for the Fed

Piggy bank in dollar bills

Until the Federal Reserve finally opts to raise rates, we may be stuck at about the same top 2-year CD yield we saw at the start of the year.

Paying 1.52% APY since July, E-Loan is the current 2-year leader among nationally available bank CDs.

It’s just a hair below the 1.55% that Citizens State Bank offered from September 2014 through the first week of January.

But when Citizens State stopped offering its CDs nationally, the top 2-year yield sank to 1.35% APY and disappointingly stalled there until returns began increasing in May.

Recovering most of that lost ground is welcome news for a term whose leading rate not only was mired below 1.30% APY for close to two years between 2012 and 2014, but was at its post-recession low of 1.20% APY just a year and a half ago.

The rate offered by E-Loan is part of a dramatic new strategy that has moved the online bank from rates that didn’t even register in our CD rankings up to the very top spot not only for 2-year CDs, but across the 1-, 3-, 4- and 5-year terms as well.

E-Loan is an online operation of Popular Community Bank, which has almost 50 branches throughout New York, New Jersey and South Florida.

As the mainland division of Puerto Rico’s Banco Popular, Popular Community’s deposits (and those made through E-Loan) are fully insured by the FDIC, as are all bank CDs we feature on

According to banking experts, Popular Community is a healthy bank whose commercial lending business is growing rapidly, requiring it to become more aggressive in courting deposits to fund those loans.

TOP 2-YEAR CD RATES: Nationally Available Bank Deals

Bank APY Minimum Deposit
E-Loan 1.52% $10,000
Silvergate Bank 1.46% $25,000
CIT Bank 1.45% $1,000
Colorado Federal Savings Bank 1.45% $5,000
Synchrony Bank 1.45% $2,000
AloStar Bank of Commerce 1.40% $1,000
California First National Bank 1.40% $5,000
Triumph Savings Bank 1.35% $1,000
BAC Florida 1.31% $1,500
First Internet Bank of Indiana 1.31% $1,000
Barclays Bank 1.30% No minimum
Discover Bank 1.30% $2,500
Nordstrom Bank 1.30% $1,000
Northpointe Bank 1.30% $1,000
Ally Bank 1.29% No minimum
Giant Bank 1.26% $2,500
Virtual Bank 1.26% $10,000
AmTrust Direct 1.25% $500
BankDirect 1.25% $10,000
EverBank 1.25% $1,500
MyBankingDirect 1.25% $500
Salem Five 1.25% $10,000

Of course, savers fortunate enough to live in the right place or work for the right employer have options to outearn the top national rate by shopping for local deals.

We’re aware of almost 20 credit unions and community banks currently offering 2-year yields that not only beat E-Loan’s 1.52% but pay as much as 2.25% APY for savers who qualify.

In addition, one credit union — USAlliance Federal Credit Union — has two competitive offers that are available to savers anywhere in the country.

It's paying 1.61% APY on a standard 24-month certificate, or 1.51% if you prefer an option to bump up your return if rates increase.

USAlliance membership is available to select residents of Massachusetts and Connecticut, those who work for certain employers in New York, or anyone nationwide who makes a donation to an affiliated charitable organization.

TOP 2-YEAR CD RATES: Credit Union, Community Bank Deals

Bank States Term (in months) APY
Peoples Transport Federal Credit Union New Jersey 24 2.25%
Self Reliance New York Federal Credit Union New York 24 2.07%
Select Federal Credit Union Texas 24 2.00%
First Federal Credit Union Iowa 25 2.00%
Bent River Community Credit Union Iowa, Illinois 28 2.00%
Four Corners Federal Credit Union New Mexico, Colorado, Utah, Arizona 24 1.96%
University of Iowa Community Credit Union Iowa, Illinois 23 1.80%
FORUM Credit Union Indiana 23 1.75%
Idaho Central Credit Union Idaho, Nevada 24 1.75%
Cedar Falls Community Credit Union Iowa 25 1.75%
Veridian Credit Union Iowa, Nebraska 25 1.70%
Pioneer Federal Credit Union Idaho 25 1.65%
Chicopee Savings Bank Massachusetts, Connecticut 22 1.61%
Greater Springfield Credit Union Massachusetts 24 1.61%
North Platte Union Pacific Employees Credit Union Nebraska 24 1.61%
Westmark Credit Union Idaho 23 1.60%
Transit Employees Federal Credit Union Washington, D.C. 24 1.55%

Of course, all of these yields dwarf the national average among the nation’s banks.

According to our weekly survey of banks and thrifts, 24-month certificates are currently averaging 0.44% APY.

At its post-crisis worst, the 2-year average dropped to 0.36% APY in December 2013 and hit that low again in July 2014.

Compare that to February 2007, before irresponsible mortgage lending put the economy in a tailspin and the national average return for 24-month CDs was 3.78% APY.

With the Federal Reserve stepping in to rescue the economy by dropping interest rates in December 2008, savers’ yields have suffered for almost seven years as the economy has taken its time building up to full capacity again.

At its September meeting, the Fed once again disappointed savers by concluding that the economy is not yet throwing off all the necessary signs to support a rate hike.

Various members of the committee have repeatedly stated they fully expect a rate hike by the end of the year. But with just two meetings left — one late this month and the other in mid-December — time is running short.

It feels like a tortuously long wait to see CD yields regain even a bit of their past glory. But to get back to national 2-year certificates paying anything close to the 3% to 4% yields we enjoyed before the 2008 financial crisis, wait we must.

Meanwhile, we’ll keep you posted on the best-paying options here.