Top 5-year CD rates remain stalled this summer
When the top national yield for 5-year CDs rose to 2.35% APY last fall, we hoped it was the beginning of a steady, post-recession climb back to normal.
But when Florida-based Citizens State Bank stopped selling its CDs nationwide in January, the leading 5-year yield dropped back to 2.25% APY and has faltered erratically ever since.
Today, the top nationally available bank return for 60-month certificates stands at just 2.31% APY, offered by both E-Loan and EverBank.
To be sure, it’s a significant improvement over the 1.75% APY low point we saw in the summer of 2013.
But for 17 months now, the leading 5-year return has been stuck in a holding pattern between 2.25% and 2.35% APY, with the only exception being a four-day special offered by Live Oak Bank for 2.50% APY.
Indeed, the past six weeks have brought us various trivial increases, amounting more to jockeying for the lead than providing any substantial improvement in 5-year yields.
TOP 5-YEAR CD RATES: Nationally Available Bank Deals
|Capital One 360||2.25%||No minimum|
|Gulf Coast Bank & Trust||2.20%||$2,000|
|First Internet Bank of Indiana||2.17%||$1,000|
|State Bank of India - Chicago||2.12%||$2,500|
|State Bank of India - New York||2.12%||$5,000|
|Sallie Mae Bank||2.10%||$2,500|
|American Heartland Bank & Trust||2.05%||$1,000|
|Ally Bank||2.00%||No minimum|
|GE Capital Bank||2.00%||$500|
|Hudson City Savings Bank||2.00%||$500|
|Salem Five Direct||2.00%||$10,000|
|State Farm Bank||2.00%||$500|
Fortunately, there are always some lucky savers who can outearn the top national rate by purchasing CDs from a community bank or credit union.
These institutions often offer chart-topping yields to savers who live nearby or work for a particular employer.
Among the best local and regional offerings are 5-year CDs currently paying up to 3.05% APY.
TOP 5-YEAR CD RATES: Credit Union, Community Bank Deals
|Self Reliance New York Federal Credit Union||New York||3.05%|
|Four Corners Federal Credit Union||New Mexico, Arizona, Colorado, Utah||2.78%|
|Deere Employees Credit Union||Illinois, Iowa||2.65%|
|IH Mississippi Valley Credit Union||Illinois, Iowa||2.63%|
|Advancial Federal Credit Union||Alaska, Louisiana, New Jersey, Oklahoma, Texas||2.55%|
|Green Mountain Credit Union||Vermont||2.53%|
|Indiana Members Credit Union||Indiana||2.53%|
|Institution for Savings||Massachusetts||2.50%|
|Bank of Utica||New York||2.50%|
|City Credit Union||Texas||2.50%|
|Cove Federal Credit Union||Kentucky||2.50%|
|Federal Savings Bank||New Hampshire||2.50%|
|General Electric Credit Union||Ohio, Indiana, Kentucky||2.50%|
|Kemba Credit Union||Ohio, Indiana, Kentucky||2.50%|
|Ukrainian Selfreliance Federal Credit Union||Pennsylvania, New Jersey||2.50%|
|Vibe Credit Union||Michigan||2.50%|
Another option beyond these local deals is brokered CDs, which also currently outpay the leading national rate. Through an account with Vanguard, Fidelity or another brokerage firm, you can now earn up to 2.35% APY with a 5-year term.
As for the rest of the nation’s banks, our weekly survey of banks and thrifts saw the average return for 5-year certificates of deposit bottoming out at 0.77% APY in the summer of 2013.
After gradually rising to 0.89% APY earlier this spring, it's foundered lately, down to 0.86% and 0.87% APY over the last eight weeks.
Back in February 2007, before irresponsible mortgage lending led the economy over a cliff, the national average return for 5-year CDs was 4.02% APY.
By most historical standards, that’s a reasonable rate for savers to expect.
But in December 2008, the Federal Reserve stepped in to avert a complete financial meltdown by artificially repressing interest rates until the economy could recover.
The Fed is expected to finally begin raising rates sometime this year, hopefully as soon as September, but possibly not until December.
When that day comes, CD rates in all terms will begin improving, and 5-year yields can certainly use the boost.