Fall's leading 3-year CD rates top out at 1.45%
There's a new leader in 3-year CDs, but it's paying less than you could have earned last month, according to our November survey of the best nationally available deals.
Intervest National Bank is offering 1.45% APY with a $2,500 minimum.
Last month, you could have earned a slightly higher 1.50% APY from Salem Five Direct. But after offering that deal for five months, the Massachusetts's bank dropped its return to 1.30% right after our October survey.
Even the best rates are pretty dismal these days, and we expect they'll remain that way for the foreseeable future.
The Federal Reserve mainly influences how much we make on our savings by setting the federal funds rate, the interest rate that commercial banks pay to borrow money from the Fed.
That rate has been essentially zero since December 2008, and expectations for when that policy might change continue to slip.
Economists who confidently predicted that the fed funds rate would be pushed up this year have had to push their projections back to 2014, then 2015 and now a growing number of experts don't think it will happen until sometime in 2016.
In a speech to the National Economists Club this week, Fed Chairman Ben Bernanke said the fed funds rate would remain near zero until well after unemployment drops below 6.5% and “the preponderance of the data” supports the beginning of tightening.
Our interpretation is that the Fed now wants the economy to be so robust that it's generating a reasonable amount of inflation — 2% is the Fed's usual standard — before it will allow interest rates to rise.
Here are the best nationally available 36-month certificates of deposit, as of today:
Top 36-month CD Rates
|State Bank of India-CHI||1.31%||$2,500|
|Salem Five Direct||1.30%||$10,000|
|GE Capital Retail||1.30%||$15,000|
|State Bank of India-NY||1.25%||$5,000|
|National Bank of Kansas||1.25%||$5,000|
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 3-year CD rates
|Intervest National Bank||A community bank headquartered in New York City. It has one branch there and six branches in Clearwater and Pinellas counties in Florida.||www.intervestnatbank.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|
|AloStar Bank of Commerce||An online bank based in Birmingham, Ala., formerly known as Nexity Bank.||retail.alostarbank.com|
|State Bank of India - Chicago||The FDIC-insured Chicago branch of India's largest bank, which operates independently of other U.S. branches.||www.sbichicago.com|
|Salem Five Direct||The online division of Salem 5 Bank, which has 23 branches just north of Boston.||www.salemfivedirect.com|
|GE Capital Retail Bank||The other bank that's a subsidiary of GE Capital Corp.||banking.gecrb.com|
|CIT Bank||The online consumer bank of CIT Group Inc., which offers financing to small businesses and middle-market companies.||www.bankoncit.com|
|Nationwide Bank||An online bank owned by Nationwide Mutual Insurance Co. and its affiliates.||www.nationwide.com|
|State Bank of India - New York||The FDIC-insured New York branch of India's largest bank, which operates independently of other U.S. branches.||www.statebank.com|
|Barclays||The online American operation of the worldwide British bank with more than $2 trillion in assets.||www.banking.barclaysus.com|
|National Bank of Kansas City||A community bank with two branches in Kansas and four in Missouri.||www.bankofkc.com|
|Discover Bank||An online bank owned by the credit card company.||www.discover.com|
Over the past several decades savers could usually count of earning something like 3% or 4% on a 36-month CD.
But the Federal Reserve has driven returns to record lows in an attempt to haul the economy out of the worst financial crisis and recession since the 1930s.
It did that by lowering the federal funds rate to essentially zero in December 2008 — and leaving it there.
Since then, the average return on 3-year CDs has fallen from 2.57% APY to a record-low 0.46% APY today.
Late last year, 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.
Not surprisingly, the Fed's policy-making committee continued to follow that policy at its late October meeting, reiterating its commitment to hold short-term interest rates near zero.
And now it sounds like the Fed could wait even longer to move the benchmark fed funds rate.
"Several more years" sounds like 2016 to us.
Contributing editor Darci Swisher contributed to this report.
Mitch Strohm on Google Plus.