Best 3-year CD rates pay up to 1.70% nationally

Clear piggy bank with coins 3-year cd rates

If there's one CD term that's gotten the short end of the stick since the Federal Reserve raised rates last December, it's 3-year CD rates.

The top nationally available 3-year yield has dropped repeatedly since the Fed's move, which of course is the opposite outcome we had hoped savers would reap.

In fact, the magnitude of the 3-year retreat is the worst of any major term, with today's top rate paying 8% less than a year ago.

As usual, local deals from credit unions and community banks are still the best way to earn top dollar on your CD investments, up to 2.33% APY right now on 36-month certificates.

Obviously, a single bump from the Fed was insufficient to move banks' rate sheets upward. But what about a second increase, and when might that come? We'll spell out what we know.

The top national deals

For the last five months of 2015, E-Loan towered above the competition for nationally available 3-year CD rates.

Not only did its 1.85% APY outpay the runner-up by almost two-tenths of a percentage point, but it was the best national yield we'd seen in almost four years.

Indeed, the lead for 3-year returns had sunk as low as 1.40% APY in 2013.

3-year CD rates

But after E-Loan lowered its 36-month yield in January, it and other contenders have bobbed the national lead up and down between 1.75% and a disappointing 1.66% APY.

The top rate today is 1.70% APY, held there since late July by relative newcomer Bank of Baroda.

As India's second-largest bank, Bank of Baroda operates in 25 countries. Its American CDs are offered by the bank's FDIC-insured U.S. branch, which has operated in New York for more than 30 years.

However, the bank only recently began accepting nationwide CD deposits via a mail-in process.

TOP 3-YEAR CD RATES: Nationally Available Bank Deals

Bank APY Minimum Deposit
Bank of Baroda 1.70% $1,000
State Bank of India-Chicago 1.68% $2,500
State Bank of India-New York 1.68% $5,000
EverBank 1.65% $5,000
Popular Direct 1.65% $10,000
TAB Bank 1.62% $1,000
Capital One 1.60% No minimum
Radius Bank 1.60% $500
Gulf Coast Bank & Trust 1.60% $2,000
Sallie Mae Bank 1.60% $2,500
VirtualBank 1.56% $10,000
BAC Florida Bank 1.55% $1,500
Live Oak Bank 1.55% $2,500
Ally Bank 1.55% $25,000

Earning more with local deals

Fortunately, many savers can do better with a credit union or community bank, the best of which are paying above 2% on certificates of deposit in the 3-year range.

By tweaking your term by a few months, you can boost your list of options, resulting in more than a dozen deals below. You'll even find a couple offers that are available nationwide.

As always, eligibility requirements apply. So contact the bank or credit union directly to determine if you qualify.

TOP REGIONAL 3-YEAR CDS: Credit Unions & Community Banks

Bank States Term (in months) APY
Self Reliance New York Federal Credit Union New York 36 2.33%
VITAL Federal Credit Union South Carolina 36 2.01%
Vibrant Credit Union Illinois, Iowa 33 2.00%
Gulf Coast Federal Credit Union Texas 36 1.95%
Lake Huron Credit Union Michigan 37 1.75%
Community Financial Services Bank Kentucky, Illinois, Indiana, Tennessee, Missouri 35 1.86%
Linn Area Credit Union Iowa 33 1.85%
NavyArmy Community Credit Union Texas 36 1.85%
RTN Federal Credit Union Nationwide 37 1.85%
Wilmington Savings Fund Society Delaware, Maryland, Pennsylvania, New Jersey, Virginia 37 1.80%
Inspire Federal Credit Union Pennsylvania 30 1.76%
Crescent Bank Louisiana 36 1.76%
USAlliance Federal Credit Union Nationwide 36 1.76%
Greater Alliance Federal Credit Union New Jersey 36 1.75%
Freedom Credit Union Pennsylvania 30 1.75%
Asian Bank Pennsylvania, New York, New Jersey, Delaware 30 1.68%

Awaiting more help from the Fed

Whether you qualify for a local deal or opt for a top-paying national bank, you'll want to take advantage of these offers because they pay three to four times more than the current average return of 0.57% APY, according to our weekly nationwide survey of banks and thrifts.

The average fell as low as 0.43% in the summer of 2013, before beginning a slow but steady rebound.

Unfortunately, we're still a long way from February 2007 — before reckless mortgage lending plunged us into the Great Recession — when the average return on 36-month CDs was 3.8% APY.

The Federal Reserve's subsequent efforts to rescue the economy by pushing interest rates to record lows had condemned savers to pitiful returns for almost seven years.

Then in December, the Fed finally began what was expected to be a gradual process of returning interest rates to "normal" levels over the next few years.

But since then, global instabilities and an inflation rate that's still below its healthy target have given the Fed pause, with no further rate increases announced at its seven meetings this year.

The Fed meets again in two weeks, announcing its rate decision on Dec. 14. And this time, most economists predict we'll finally be treated to another boost.

But what remains to be seen is whether a second Fed increase will move banks off the dime in normalizing their own rate sheets.

Disclaimer: The rates above were gathered on Nov. 28, 2016. Check with banks and credit unions directly to determine eligibility for opening accounts, as well as to verify current offers.