More banks push back above 2% on 5-year CD rates
This month's best 5-year CDs offer a better return than you could have found last January.
EverBank leads the way, according to our new survey of the top nationally available 5-year CD rates, with 2.16% APY with a $1,500 minimum deposit.
That's up from the 2.05% APY the leading bank was paying this time last year and nearly three times the national average for 60-month CDs.
Even more encouraging is that we've found 10 banks paying at least 2.00% APY, up from exactly one in late January 2013 and none earlier that month.
That may be the best market trend going in CD rates right now. (Story continues below.)
The only way to make more money on a 5-year CD is to look for local deals from community banks and credit unions. For example:
- Credit Union West (www.cuwest.org) pays 2.90% APY with a $10,000 minimum deposit. The rate increases to 2.95% APY with a $50,000 deposit. Membership is open to residents of Maricopa or Yavapai counties, Arizona.
- Bank of Utica (www.bankofutica.com) pays 2.50% APY on of $500 to $50,000. Savers who live in central New York can buy these CDs online or at the bank's Utica office.
- Pegasus Community Credit Union (www.pegasusccu.com) pays 2.25% APY with a $2,000 minimum deposit. The rate increases to 2.30% APY with a $50,000 minimum and 2.40% APY with a $75,000 minimum. Membership is open to residents of Dallas or Denton counties, Texas.
But you won't find deals like that everywhere, so here are the best nationally available 60-month CD certificates of deposit, as of today:
Top 5-year CD Rates
|State Bank of India-NY||2.05%||$5,000|
|State Farm Bank||2.05%||$500|
|GE Capital Bank||2.00%||$500|
|Salem Five Direct||2.00%||$10,000|
|GE Capital Retail||2.00%||$25,000|
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 5-year CD rates
|EverBank||Primarily an online bank with 14 branches in Florida.||www.everbank.com|
|iGoBanking||The online division of Flushing Savings Bank, which has 17 locations in New York.||www.igobanking.com|
|Barclays||The online American operation of the worldwide British bank with more than $2 trillion in assets..||www.banking.barclaysus.com|
|Dime Savings Bank of Williamsburgh||Which has 25 branches in the New York City area.||www.dime.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|
|State Farm Bank||The online bank of the insurance company.||www.statefarm.com|
|Virtual Bank||The online division of Sabadell United Bank, which has 23 branches in Florida and is owned by Banco Sabadell, Spain's fourth-largest bank.||www.virtualbank.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|
|Salem Five Direct||The online division of Salem 5 Bank, which has 23 branches just north of Boston.||www.salemfivedirect.com|
|BBVA Compass||A major regional bank with 688 branches in the Sunbelt region.||www.bbvacompass.com|
|GE Capital Retail Bank||The other bank that's a subsidiary of GE Capital Corp.||banking.gecrb.com|
Over the past several decades, savers could usually count of earning an inflation-beating 5% on a 5-year 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.
The government's bank-for-banks controls short-term interest rates by adjusting the federal funds rate. That's what commercial banks must pay to borrow money that other banks have on deposit with the Federal Reserve.
In December 2008, the Fed's rate-setting committee slashed that rate to essentially zero in an attempt to spur lending and boost the economy.
Since then, the average return on 5-year CDs has fallen from 3.13% APY to a record-low of 0.79% APY today.
In late 2012, Fed Chairman Ben 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.
Contributing editor Darci Swisher contributed to this report.
Mitch Strohm on Google Plus.