Best national 2-year CD rates pay 1.55%
All summer, savers have been stuck with top national 2-year CD rates that were below the leading yield they could earn before the Federal Reserve's December rate increase.
But now two banks (well, sort of) have brought the lead among nationally available 24-month bank certificates back above pre-Fed hike levels, paying 1.55% APY.
Still, almost a dozen credit unions across the country are offering that much or better — above 2% for some lucky savers. So you're smart to see if you can qualify for any of the local and regional deals we've rounded up for you below.
As for what the future of CD rates holds, it's unknowable when the Fed will make a second hike. But we'll clue you in on the possibilities.
The top national deals
E-Loan and Popular Direct are the two places you can currently earn 1.55% APY on a 2-year term.
But to call them two is a little misleading. Both are online portals of the bricks-and-mortar Popular Community Bank, which operates almost 50 branches in New York, New Jersey and south Florida.
Popular Community Bank launched Popular Direct in late July, with an array of CD terms and rates identical to E-Loan's, prompting me to ask the bank's chief operating officer, Manual Chinea, about the reason for running two parallel operations.
Chinea explained they are market-testing Popular Direct to see how well an online operation that's better-aligned with the bank's corporate brand identity can attract consumer deposits.
In contrast to a Popular-branded site, E-Loan was acquired in 2005 and bears no resemblance to the parent bank.
When I talked to Chinea in early August, he told me they expect to keep Popular Direct and E-Loan's CD offerings synchronized for at least a couple of months more, at which time they'll assess their findings to decide if they've learned enough or need more data.
In any case, Popular Community has been toying with the 2-year rate lead since the beginning of May, when E-Loan was paying 1.50% APY.
Later that month, E-Loan boosted its yield to 1.60% APY but then dropped it back to 1.50% by the start of the summer.
It wasn’t until Friday that Popular Direct raised the bar to 1.55% APY, with E-Loan following today.
While 1.55% on a 2-year commitment isn't much to celebrate, it helps to remember the ground we've regained.
For almost two years between 2012 and 2014, the best national 2-year return was mired between 1.20% and 1.30% APY.
So for now, we'll consider a 2-year yield that's above the pre-Fed level of 1.52% as a minor win.
TOP 2-Year CD RATES: Nationally Available Bank Deals
|Live Oak Bank||1.45%||$2,500|
|State Bank of India-Chicago||1.43%||$2,500|
|State Bank of India-New York||1.43%||$5,000|
|BAC Florida Bank||1.41%||$1,500|
|Bank of Baroda||1.40%||$1,000|
|Triumph Savings Bank||1.40%||$1,000|
|First Internet Bank of Indiana||1.36%||$1,000|
|Barclays Bank||1.35%||No minimum|
Earn more with local deals
Fortunately, savers who live in the right place or work for the right employer can often outearn the top national rate by shopping local deals.
We're aware of a dozen credit unions and community banks currently offering 2-year yields that match or beat the national leaders, including three offers of 2% or better, and even a couple that are available nationwide.
TOP REGIONAL 2-Year CD Rates: Credit Unions & Community Banks
|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%|
|Navy Federal Credit Union||Military, Department of Defense, National Guard||20||2.00%|
|Idaho Central Credit Union||Idaho, Nevada||24||1.75%|
|Manatee Community Federal Credit Union||Florida||24||1.75%|
|Pioneer Federal Credit Union||Idaho||25||1.75%|
|North Platte Union Pacific Employees Credit Union||Nebraska||24||1.61%|
|Cedar Falls Community Credit Union||Iowa||25||1.60%|
|Deere Employees Credit Union||Illinois, Georgia, Wisconsin, South Carolina, Iowa, North Dakota||24||1.55%|
|Transit Employees Federal Credit Union||Washington, D.C.||24||1.55%|
|Elements Financial Federal Credit Union||Nationwide||22||1.50%|
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 0.44% APY, according to our weekly nationwide survey of banks and thrifts.
The 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 was 3.78% APY.
The 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 in December, when the Fed's rate-setting committee kicked off what was forecasted to be a series of small, gradual rate hikes over the next several years.
But with inflation still not at the healthy level the Fed would like to see, plus various global instabilities this year, the rate-setting committee has since hesitated, announcing no rate hikes at the five meetings since December.
The Fed holds its next meeting in two weeks, and some economists believe a rate increase on Sep. 21 is possible.
But a majority on Wall Street forecast that we won't see the next hike until December, or even 2017.
In any case, we’ve seen that one small increase hasn’t moved banks to boost their rate sheets. Will a second bump finally trigger some movement?
No one knows, but we'll always tell you the best-paying options here.
Disclaimer: The rates above were manually gathered on September 6, 2016. Before applying, check with the bank or credit union of interest to confirm the offer still stands.