Top 5-year CD rates roll clock back to 2011

White piggy banks with stacks of money and moneybag

It's been a bounce-back year for 5-year CDs.

When rates bottomed out in mid-2013, the best nationally available deal paid a paltry 1.75% APY.

Savers were despondent. And understandably so.

But a slow and steady recovery that began last July has pushed the best national returns back to 2.35% APY this autumn.

That's more than we've been able to earn on these popular certificates of deposit in over three years. Yes, since September 2011.

At this time last year, the very best you could hope for was 2.05% APY on a 60-month CD. Now you'll find six banks offering 2.25% APY or better, with three of those banks offering 2.30% APY or higher.

The half-point rise in nationally available returns has also resulted in fewer community banks and credit unions trying to beat those deals.

Local specials on 5-year CDs have practically disappeared.

That means most of us looking for the best possible rate will have to stash our cash in Citizens State Bank, which is paying savers in all 50 states 2.35% APY.

Here's how all of the national deals paying 2.10% APY or more on 5-year certificates of deposit stack up.

TOP 5-YEAR CD RATES: Nationally Available Bank Deals

Bank APY Minimum Deposit
Citizens State Bank 2.35% $1,000
Nationwide 2.32% $500
Synchrony Bank 2.30% $25,000
Barclays 2.25% No minimum
CIT Bank 2.25% $1,000
GE Capital Bank 2.25% $500
EverBank 2.20% $1,500
State Farm Bank 2.15% $500
Sallie Mae 2.10% $2,500
Discover 2.10% $2,500
First Internet Bank of Indiana 2.10% $1,000

To qualify for this list, a bank must be FDIC-insured and allow savers from all 50 states to buy its certificates of deposit online or through the mail.

Our CD calculator will help you figure out the interest you'll earn, for any term, amount and interest rate.

TOP 5-YEAR CD RATES: About The Banks

Bank Description URL
Citizens State Bank A community bank with four branches in Florida. www.csbdirect.com
Nationwide Bank An online bank owned by Nationwide Mutual Insurance Company and its affiliates. www.nationwide.com
Synchrony 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. www.myoptimizerplus.com/
Barclays The online American operation of the worldwide British bank with more than $2 trillion in assets. www.banking.barclaysus.com
CIT Bank The online consumer bank of CIT Group Inc., which offers financing to small businesses and middle-market companies. www.bankoncit.com
GE Capital Bank The other bank that's a subsidiary of GE Capital Corp. gecapitalbank.com
EverBank Primarily an online bank with 14 branches in Florida. www.everbank.com
State Farm Bank The online bank of the insurance company. www.statefarm.com
Sallie Mae An online bank owned by the student lender. www.salliemae.com
Discover Bank An online bank owned by the credit card company. www.discover.com
First Internet Bank of Indiana An online bank located in Indianapolis. www.firstib.com

Only a couple of credit unions continue to offer great local deals on 60-month CDs.

General Electric Credit Union (www.gecreditunion.org), for example, is paying its members in Ohio, Kentucky and Indiana 2.50% APY with a modest $500 minimum deposit.

And Citadel Federal Credit Union (www.citadelbanking.com) in Pennsylvania is offering 2.40% APY — that's with a $500 minimum. It pays 2.45% APY with a $25,000 minimum and 2.50% APY with a steep $75,000 minimum.

Click here to search Bankrate's database of CD rates to see if you can find a similar deal near you. Or check out the latest local deals on Bankaholic.com.

It's interesting to note that this rebound in leading rates is not reflected in the average return on 5-year CDs.

That remains a paltry 0.85% APY, according to our most recent survey of major banks and credit unions.

So what's driving this rebound in top returns?

We suspect that it's some forward-looking banks out to lock up cheap deposits before the Federal Reserve allows interest rates to rise next year.

The government-controlled bank has driven short-term interest rates to record lows by drastically reducing what's called the federal funds rate, which is what commercial banks pay to borrow money from each other through the Fed.

That rate has been essentially zero since December 2008, so why would a bank pay savers for deposits when it can get pretty much all of the money it needs from the Fed essentially for free?

With the bank widely expected to begin raising the federal funds rate sometime next year, some banks are offering slightly better returns now in an effort to corral as much money as they can before deposits become substantially more expensive in 2015 and 2016.

When next year will the Fed let rates rise?

“It makes sense to raise rates in 2015, perhaps in mid-2015,” Federal Reserve Governor Jerome Powell recently told Bloomberg Businessweek.

Contributing editor Darci Swisher contributed to this report.