CIT Bank pops to top of 2-year CD rates
We have a new leader in 2-year CD rates, but it's paying slightly less than the old leader.
CIT Bank is offering 1.20% APY with a steep $25,000 minimum, according to our March survey of the best nationally available returns on 24-month CDs.
That's slightly less than you could have earned last month when AloStar Bank was offering 1.25% APY with a $1,000 minimum.
But AloStar dropped its rate earlier this month to 1.15% APY, leaving CIT in the top spot.
You've got to consider CIT, and the other 11 banks we've found paying 1.10% APY or more, because that's almost three-quarters of a percentage point above the national average for 2-year CDs.
The only way to make more money on a 2-year CD is to look for local deals from community banks and credit unions.
Gulf Coast Federal Credit Union (www.ccgcfcu.com ) in Corpus Christi, Texas, is offering its members 1.75% APY with just a $500 minimum deposit.
A couple of other credit unions and a Pennsylvania bank are rewarding their customers with 1.50% APY:
- BrightStar Credit Union in Broward and Palm Beach counties, Florida (www.bscu.org).
- Montauk Credit Union in New York City (www.montauk-cu.com).
- Valley Green Bank in Philadelphia (www.valleygreenbank.com).
But you won't find deals like that everywhere, so here are the best nationally available 24-month certificates of deposit, as of today:
Top 24-month CD Rates
|GE Capital Retail||1.15%||$25,000|
|Hudson City Savings||1.15%||$2,500|
To qualify for this list, a bank must allow savers from all 50 states to buy its certificates of deposit online or through the mail.
Click here to compare these returns with the top CD rates from dozens of banks in your area.
Our CD calculator will help you figure out the interest you'll earn, for any term, amount and interest rate.
How to buy the top 2-year CD rates
|CIT Bank||The online consumer bank of CIT Group Inc., which offers financing to small businesses and middle-market companies.||www.bankoncit.com|
|Pacific Mercantile Bank||A community bank with seven branches in Southern California.||www.pmbank.com|
|AloStar Bank of Commerce||An online bank based in Birmingham, Ala., formerly known as Nexity Bank.||retail.alostarbank.com|
|GE Capital Bank||One of two online banks, each with its own FDIC insurance, that are subsidiaries of GE Capital Corp., the financial services unit of the manufacturing giant.||gecapitalbank.com|
|GE Capital Retail Bank||The other bank that's a subsidiary of GE Capital Corp.||banking.gecrb.com|
|Hudson City Savings Bank||A regional bank with 130 branches in New Jersey, New York and Connecticut.||www.hcsbonline.com|
|Barclays||The online American operation of the worldwide British bank with more than $2 trillion in assets.||www.banking.barclaysus.com|
|BAC Florida Bank||A community bank with one location in Coral Gables that sells its products nationally through My e-BAnC||www.bacflorida.com|
|Virtual Bank||The online division of Sabadell United Bank, which has 23 branches in Florida, and is owned by Banco Sabadell, Spain's fourth-largest bank.||www.virtualbank.com|
|Nationwide Bank||An online bank owned by Nationwide Mutual Insurance Company and its affiliates.||www.nationwide.com|
|Palladian PrivateBank||An online division of The PrivateBank and Trust Co., which has 34 branches in nine states.||www.palladianprivatebank.com|
|Ally Bank||An online bank based in Charlotte, N.C.||www.ally.com|
Over the past several decades, savers could usually count on earning something like 3% or 4% on a 2-year CD.
The government's bank-for-banks controls short-term interest rates by adjusting the federal funds rate. That's what commercial banks must pay to borrow money that other banks have on deposit with the Federal Reserve.
In December 2008, the Fed's rate-setting committee slashed that rate to essentially zero in an attempt to spur lending and boost the economy.
Since then, the average return on 24-month CDs has fallen from 2.42% APY to a record-low 0.37% APY today.
In late 2012, Fed Chairman Bernanke said the central bank would start bumping rates up when the unemployment rate hit 6.5%.
With that goal in mind, savers anxiously watched the jobless rate fall to 7.3% in August. Not quite there, but closing in.
Then Bernanke told a news conference after the Fed's rate-setting committee met on Sept. 18 that “the first increases in short-term rates might not occur until the unemployment rate is considerably below 6.5%."
Indeed, the Fed chairman said a return to market-driven rates — and a reasonable return on our savings — could be "several more years" down the road.
New Fed Chairman Janet Yellen seems to think pretty much the same way. She's made speeches explaining why it may be necessary to hold interest rates near zero until at least late 2015.
Contributing editor Darci Swisher contributed to this report.
Mitch Strohm on Google Plus.