Top 5-year CD rates stage modest rebound

White piggy banks with stacks of money and moneybag

Although we won't see significant improvements in CD yields until the Federal Reserve finally kicks off a period of rate hikes, 5-year returns benefited from a series of modest increases this summer.

The current leader among nationally available 5-year bank certificates is E-Loan’s 2.45% APY, which stands a full two-tenths of a percentage point above four second-place banks paying 2.25% APY.

It’s also the best sustained national 5-year yield we’ve seen since September 2011, when returns plummeted below 2.50% APY and later descended to a post-recession low of 1.75% APY by May 2013.

(Yes, Live Oak Bank paid 2.50% APY last February. But that deal lasted all of four days and was so short-lived it barely counts.)

After that low point, 5-year rates climbed for the better part of a year but then frustratingly yo-yoed between 2.25% and 2.35% APY for 17 months in 2014 and 2015.

Enter E-Loan in July, whose top-billed rate is the result of a dramatic change in rate policy by its parent company, Popular Community Bank.

Banking experts tell us Popular Community – which operates almost 50 branches in New York, New Jersey and South Florida – is a healthy, on-the-rise bank that’s enjoying robust growth in commercial lending and therefore needs to grow its deposit reserves to support those loans.

To attract deposits, E-Loan is now offering not just the top national 5-year return, but the leading rate on 1-, 2-, 3- and 4-year CDs as well.

TOP 5-YEAR CD RATES: Nationally Available Bank Deals

Bank APY Minimum Deposit
E-Loan 2.45% $10,000
Barclays 2.25% No minimum
Capital One 360 2.25% No minimum
EverBank 2.25% $1,500
Synchrony Bank 2.25% $25,000
CIT Bank 2.20% $1,000
First Internet Bank of Indiana 2.17% $1,000
Northwest Community Bank 2.17% $1,000
State Bank of India - Chicago 2.12% $2,500
State Bank of India - New York 2.12% $5,000
American Bank 2.10% $500
Salem Five Bank 2.10% $10,000
Sallie Mae Bank 2.10% $2,500
State Farm Bank 2.10% $500
American Heartland Bank & Trust 2.05% $1,000
North American Savings Bank 2.02% $1,000
Ally Bank 2.00% No minimum
Discover Bank 2.00% $2,500
GE Capital Bank 2.00% $500
Gulf Coast Bank & Trust 2.00% $2,000
Hudson City Savings 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 or work nearby or are willing to jump through a hoop or two.

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

Bank States APY
Self Reliance New York Federal Credit Union New York 3.05%
Four Corners Federal Credit Union New Mexico, Arizona, Colorado, Utah 2.78%
General Electric Credit Union Ohio, Indiana, Kentucky 2.75%
Deere Employees Credit Union Illinois, Iowa 2.65%
Grand Rivers Community Bank Illinois 2.65%
IH Mississippi Valley Credit Union Illinois, Iowa 2.63%
Green Mountain Credit Union Vermont 2.53%
Indiana Members Credit Union Indiana 2.53%
Bank of Utica New York 2.50%
City Credit Union Texas 2.50%
Cove Federal Credit Union Kentucky 2.50%
Kemba Credit Union Ohio, Indiana, Kentucky 2.50%
Mid-Atlantic Federal Credit Union Maryland 2.50%
Texasgulf Federal Credit Union Texas 2.50%
Ukrainian Selfreliance Federal Credit Union Pennsylvania, New Jersey 2.50%
Vibe Credit Union Michigan 2.50%

If you think you might qualify for any of these deals, they’re worth investigating because they all pay about three times more than the current average 5-year return of 0.86% APY, according to our weekly nationwide survey of banks and thrifts.

The average return bottomed out at 0.77% APY in the summer of 2013 and gradually rose to 0.89% APY early this spring. But since May, it’s wavered between 0.86% and 0.87% APY.

Rewind to February 2007 — before irresponsible mortgage lending led the economy over a cliff and the Fed stepped in to boost the economy with a policy of repressed interest rates — and the national average return for 5-year CDs was 4.02% APY.

While that kind of yield is hard to imagine in the rate climate we’ve been suffering for years now, it’s a reasonable return for savers to expect when you look at rate histories before the financial crisis.

We had hoped the Fed would finally launch its series of interest rate hikes at its meeting last week. But we’ve been left waiting until at least its next meeting, scheduled for late October. It’s also quite possible the committee will hold off until December.

Whenever that day comes, CD rates in all terms will gradually begin improving, and 5-year yields can certainly use the boost.