Best national 24-month CD rates pay 1.51%

Piggy bank in dollar bills

Since the Federal Reserve raised interest rates in December, we've been watching to see how banks would react.

We, of course, hoped to see rate sheets inch upwards. But what we've gotten instead is a tale of two rate directions, with 2-year CD yields staked down in the middle.

The three major terms below 2 years — 3, 6 and 12 months — have all seen their top nationally available rates elevated since the Fed's move two months ago.

Meanwhile, the top national 3-, 4- and 5-year returns have all disappointingly dropped over the same period.

Two-year returns are currently the boundary marker between the two trends, sitting virtually unchanged since the Fed's move.

That means the case is the same as always for capitalizing on local and regional deals if you can qualify for one, since the best of these pay almost three-quarters of a percentage point more than the top national rate.

As for what the future holds, it's entirely unclear whether the Fed will make further rate increases this year. Perhaps, perhaps not.

So in the meantime, we'll clue you in on where to find today's best national and local deals, as well as what to watch for in coming Fed developments.

The top national deals

First Internet Bank of Indiana is currently offering the best nationally available yield on 2-year certificates, paying 1.51% APY.

The Indianapolis-based online bank secured the lead when it raised its entire rate sheet earlier this month, after E-Loan dropped its top-billed 1.52% yield to 1.50% APY.

Technically, that means the 24-month lead is a basis point down from its pre-Fed hike level. But where we used to have a single bank offering a rate of 1.50% or better, we now have three. (Live Oak Bank raised its 24-month yield to 1.50% late last month.)

While rates like these are hardly anything to celebrate, it's mildly heartening to remember the ground we've regained. For close to two years between 2012 and 2014, the best national 2-year return you could earn was mired between 1.20% and 1.30% APY.

And just nine months ago, the lead maxed out at 1.35% APY.

So for now, we'll consider it a positive that the top 2-year yield is holding steady.

TOP 2-YEAR CD RATES: Nationally Available Bank Deals

Bank APY Minimum Deposit
First Internet Bank of Indiana 1.51% $1,000
Live Oak Bank 1.50% $2,500
E-Loan 1.50% $10,000
Silvergate Bank 1.47% $25,000
Nationwide Bank 1.46% $500
AloStar Bank of Commerce 1.46% $1,000
Synchrony Bank 1.45% $2,000
California First National Bank 1.45% $5,000
Colorado Federal Savings Bank 1.45% $5,000
BAC Florida 1.41% $1,500
CIT Bank 1.40% $1,000
State Bank of India — Chicago 1.36% $2,500
State Bank of India – New York 1.36% $5,000
Triumph Savings Bank 1.35% $1,000
Ally Bank 1.30% No minimum
Barclays Bank 1.30% No minimum
Nordstrom Bank 1.30% $1,000
Northpointe Bank 1.30% $1,000
Discover Bank 1.30% $2,500
Northwest Community Bank 1.26% $1,000
Giant Bank 1.26% $2,500
VirtualBank 1.26% $10,000

Earn more with local deals

Fortunately, savers who live in the right place or work for the right employer almost always have options to outearn the top national rate by shopping for local deals.

We're aware of almost 30 credit unions and community banks currently offering 2-year yields that not only beat First Internet Bank but pay as much 2.25% APY for savers who qualify.

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%
Service Credit Union Military, New Hampshire, Massachusetts 27 2.00%
Triangle Credit Union New Hampshire, Massachusetts 28 2.00%
Four Corners Federal Credit Union New Mexico, Colorado, Utah, Arizona 24 1.96%
Farmers State Bank Iowa 25 1.88%
Financial Plus Credit Union Michigan 29 1.77%
University of Iowa Community Credit Union Iowa, Illinois 23 1.75%
Beverly Bank Massachusetts 23 1.75%
Idaho Central Credit Union Idaho, Nevada 24 1.75%
Cedar Falls Community Credit Union Iowa 25 1.75%
Dupaco Community Credit Union Iowa, Wisconsin, Illinois 25 1.75%
Veridian Credit Union Iowa, Nebraska 25 1.70%
Pioneer Federal Credit Union Idaho 25 1.65%
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%
Federal Employees Credit Union Federal employees and military nationwide 24 1.60%
Georgetown Bank Massachusetts 24 1.60%
F&A Federal Credit Union California 24 1.56%
Transit Employees Federal Credit Union Washington, D.C. 24 1.55%
Mutual Security Credit Union Connecticut 25 1.55%
First American International Bank New York 26 1.55%
Bogota Savings Bank New Jersey 20 1.50%
Heritage Bank Iowa 23 1.50%
Omaha Federal Credit Union Nebraska 23 1.50%
Scenic Falls Federal Credit Union Idaho 23 1.50%

As you can see, local deals like these or a leading national CD are definitely worth your attention since they can earn you three to five times more than the current national average of 0.42% APY, according to our weekly nationwide survey of banks and thrifts.

The renewed Fed waiting game

The national average for 24-month CDs sank to a record low of 0.36% APY in December 2013 and hit that low point 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.

That decline was caused by the Federal Reserve, which stepped in to rescue the economy by pushing short-term interest rates to record lows in December 2008 — and holding them there for the following seven years.

That dismal period finally concluded two months ago, when the Fed's rate-setting committee kicked off what was forecasted at the time to be a series of small, gradual rate hikes over the next three years.

As expected, they began with a small increase of just a quarter of a point in the federal funds rate, which is what commercial banks pay to borrow money from each other through the Fed.

When the fed funds rate increases, it makes money more expensive for banks, which in turn makes it more attractive for them to court individual savers for their deposits.

But what we've seen so far is that a single quarter-point rate increase doesn't appear sufficient to move most banks toward a higher rate sheet.

Even more importantly, the global and market uncertainty we've been seeing over the last month has brought into question whether the Fed will progress with its plan to raise rates further during 2016.

Wall Street is forecasting we won't see any more Fed increases this year, and no one knows if that will be proved right. But what we are seeing is that banks are uncertain enough about the rate path that they're unwilling to boost long-term yields until they know more, instead favoring shorter commitments.

The Fed’s next rate-setting meeting will be held March 15-16. Whatever happens or doesn't happen to rates, we'll keep you posted on the best-paying options here.

You can follow on Twitter and Facebook.