Top 2-year CD rates edge higher over past month
After being stuck at 1.35% APY since January, the top nationally available return on 2-year CDs has taken two modest steps forward over the past month.
CIT Bank increased its return to 1.40% in mid-May, and then Synchrony Bank boosted its yield to 1.45% APY in early June.
It’s welcome news for a term whose top national rate not only was mired below 1.30% APY for close to two years, from spring 2012 to spring 2014, but was at its post-recession low of 1.20% APY just 15 months ago.
True, we’ve seen better news in the term since then, when Citizens State Bank started paying 1.55% APY on its 2-year certificates of deposit last fall. But when it stopped offering CDs nationally in January, the top yield sank to 1.35% APY and disappointingly stalled there until CIT’s May increase.
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.
The best 24-month returns at credit unions and community banks that only take deposits from members or nearby customers pay more than 2.00% APY (see details below).
But we'll have to wait for the Federal Reserve to finally begin raising interest rates before we'll see 2-year CDs paying anything close to the 3% to 4% yields we enjoyed before the 2008 financial crisis.
TOP 24-MONTH CD RATES: Nationally Available Bank Deals
|First Internet Bank of Indiana||1.31%||$1,000|
|California First National Bank||1.30%||$5,000|
|Colorado Federal Savings Bank||1.25%||$5,000|
|Salem Five Direct||1.25%||$10,000|
|Gulf Coast Bank & Trust||1.15%||$2,000|
|Hudson City Savings Bank||1.15%||$500|
|State Bank of India - Chicago||1.15%||$2,500|
As we mentioned, savers lucky enough to qualify with certain credit unions and community banks around the country can boost their CD returns quite significantly.
Among local and regional CDs with terms at or near 24 months, chart-beating offerings are quite plentiful right now, although customer eligibility is fairly limited with some of these.
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 Credit Union||New York||24||2.07%|
|Select Federal Credit Union||Texas||24||2.00%|
|FORUM Credit Union||Indiana||25||2.00%|
|Four Corners Federal Credit Union||Arizona, Colorado, New Mexico, Utah||24||1.96%|
|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%|
|North Platte Union Pacific Employees Credit Union||Nebraska||24||1.61%|
|Transit Employees Federal Credit Union||Washington, D.C.||24||1.55%|
|Gulf Coast Federal Credit Union||Texas||24||1.55%|
In addition, two credit unions are offering nationally available 2-year CDs that beat the top-paying banks:
- USAlliance Federal Credit Union has two leading certificates, one paying 2.01% APY for 25 months, available only to new USAlliance members, and the other paying 1.61% APY on 24 months for existing members. Membership is open to select residents of Massachusetts and Connecticut, those who work for certain employers in New York and anyone nationwide who makes a donation to one of seven affiliated charitable organizations.
- Justice Federal Credit Union is paying a blended 2.00% APY on a special CD term that’s under 27 months. Although serving primarily law enforcement agencies, the Department of Justice, the Department of Homeland Security and the state and federal court systems, anyone in the country can become eligible by first joining one of two affiliated associations that offer membership for citizens not in law enforcement.
Of course, all of these yields dwarf the national average rate 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 last July.
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 more than six years as the economy has taken its time in building up to full capacity again.
The Fed’s rate-setting committee met last week to discuss when it will finally nudge interest rates up and concluded that the economy is not yet throwing off the right signs to support a rate hike. However, an increase this fall or early winter appears likely.
After this much time, it feels like a tortuously long wait to see CD yields regain even a bit of their past glory. But wait we must, and meanwhile we’ll keep you posted of the best-paying options here.