Top 2-year CD rates edge higher over past month

Piggy bank in dollar bills

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

Bank APY Minimum Deposit
Synchrony Bank 1.45% $2,000
CIT Bank 1.40% $25,000
iGObanking 1.35% $1,000
BAC Florida 1.31% $1,500
First Internet Bank of Indiana 1.31% $1,000
Barclays 1.30% None
California First National Bank 1.30% $5,000
Nordstrom Bank 1.30% $1,000
Northpointe Bank 1.30% $1,000
Ally Bank 1.29% None
Virtual Bank 1.26% $10,000
AloStar Bank 1.25% $1,000
BankDirect 1.25% $10,000
Colorado Federal Savings Bank 1.25% $5,000
Discover Bank 1.25% $2,500
Salem Five Direct 1.25% $10,000
Nationwide Bank 1.18% $500
Silvergate Bank 1.16% $25,000
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%
Beverly Bank Massachusetts 23 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%
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:

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.