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 early last summer, 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 pushed the best national returns back to 2.31% APY in April — and 2.30% APY today.

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

We keep hoping this will trigger a similar rebound in shorter-term rates. So far, however, this phenomenon has been limited to 5-year CDs.

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 Synchrony Bank or EverBank — the two banks paying savers in all 50 states 2.30% APY.

Here's how all of the national deals paying 2% APY or more on 5-year certificates of deposit stack up.

TOP 5-YEAR CD RATES: Nationally Available Bank Deals

Bank APY Minimum Deposit
Synchrony Bank 2.30% $25,000
EverBank 2.30% $1,500
Barclays 2.25% No minimum
CIT Bank 2.25% $1,000
GE Capital Bank 2.25% $500
State Farm Bank 2.15% $500
Sallie Mae 2.10% $2,500
State Bank of India-New York 2.05% $5,000
CSBDirect 2.01% $1,000
Salem Five Direct 2.00% $10,000
BBVA Compass 2.00% $500

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
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/
EverBank Primarily an online bank with 14 branches in Florida. www.everbank.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
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
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
CSBdirect The online division of Citizens State Bank, which has four branches in Florida. www.csbdirect.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 Sun Belt region. www.bbvacompass.com

Only a few community banks and credit unions continue to offer local deals on 60-month CDs.

Advancial Federal Credit Union (www.advancial.org), for example, is paying its members (most of whom live in Alaska, Louisiana, New Jersey, Oklahoma and Texas) 2.57% APY with a $50,000 minimum deposit and 2.47% with a $25,000 minimum deposit.

Way out on the eastern end of Long Island, Montauk Credit Union (www.montauk-cu.com) is celebrating the summer with a 5-year CD for 2.5% APY.

But most of their peers have shifted their specials to shorter 2- and 3-year CDs.

Take, for example, Patriot Federal Credit Union in Chambersburg, Pennsylvania.

Two months ago, it ended a special that paid savers in south-central Pennsylvania and northern Maryland a surprising 3.0% on 60-month CDs with a $25,000 minimum deposit.

Now the special is on 29-month CDs and the return for 60-month CDs has been cut to no more than 2.00% APY with a whopping $250,000 minimum deposit.

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.

It was 0.78% APY at this time last August and is currently at 0.79% APY.

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.

We can only hope that trend gathers steam during the last six months of 2014. After five years of earning practically nothing on their bank accounts, savers deserve a return to reasonable rates as soon as possible.

Contributing editor Darci Swisher contributed to this report.
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