Top national 5-year CD rates pay 2.27%

White piggy banks with stacks of money and moneybag

For savers shopping worthy 5-year CD rates, 2016 is playing out as a year of dashed hopes.

Even though the Federal Reserve raised interest rates in December, the top yields for most major CD terms have stagnated, and in some cases, they've even dropped.

A search through Bankrate's extensive database of the day's best CD rates will show that 5-year yields have been hit especially hard, sitting almost two-tenths of a percentage point lower now than in December.

Fortunately, local deals from credit unions and community banks continue to pay up to three-quarters of a percentage point more than the leading national return — over 3% in one instance.

But when will long-suffering savers finally get to reap some rewards among national offers? It largely depends on the Fed, and we'll tell you what we know.

The top national deals

Today's top 60-month return sits at 2.27% APY, down from the 2.45% APY you could earn at the time of the Fed's hike.

5-year CD rates
But it's worse than just that drop in the lead, because in December savers could earn 2.10% APY or more from 13 banks.

That has now dwindled to just two banks paying above 2.10% APY.

This could also be a precarious lead, since the leading bank — State Bank of India-Chicago — has a sister institution, State Bank of India-New York, and the two often align their rates.

In August, the New York branch dropped its 60-month yield from 2.27% to 2.14% APY, where it now ranks second.

But in the eight weeks since, the Chicago branch has stuck to its 2.27% APY lead, which puts the top rate high above the term's post-recession low of 1.75% APY, endured in the spring of 2013.

State Bank of India is India's largest bank, and in the U.S., it operates three independent branches. Each is individually FDIC-insured.

TOP 5-YEAR CD RATES: Nationally Available Bank Deals

Bank APY Minimum Deposit
State Bank of India-Chicago 2.27% $2,500
State Bank of India-New York 2.14% $5,000
E-Loan 2.00% $10,000
Federal Savings Bank 2.00% $10,000
Popular Direct 2.00% $10,000
Salem Five Bank 2.00% $10,000
First Internet Bank of Indiana 1.92% $1,000
EverBank 1.91% $1,500
KS StateBank 1.90% $500
GS Bank 1.85% $500
Nordstrom Bank 1.85% $1,000
Discover Bank 1.85% $2,500
Synchrony Bank 1.85% $25,000

Earning more with local deals

Of course, there are always some lucky savers who can outearn the top national rate with certificates of deposit 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.

Here are more than a dozen deals that outearn the top national rate, paying qualified savers as much as 3.05% APY on 5-year terms.

One of the credit unions even accepts savers nationwide as members.

TOP REGIONAL 5-YEAR CDS: Credit Unions & Community Banks

Bank States Minimum APY
Self Reliance New York Federal Credit Union New York $500 3.05%
General Electric Credit Union Ohio, Indiana, Kentucky $500 2.75%
Bank of Utica New York $500 2.50%
Cove Federal Credit Union Kentucky $1,000 2.50%
Deere Employees Credit Union Georgia, Illinois, Iowa, North Dakota, South Carolina, Wisconsin $500 2.50%
American United Federal Credit Union Utah $500 2.40%
Cottonwood Community Federal Credit Union Idaho $500 2.40%
Pelican State Credit Union Louisiana $500 2.38%
Jefferson Financial Credit Union Louisiana $10,000 2.38%
Latah Credit Union Idaho $1,000 2.37%
Nebo Credit Union Utah $25 2.35%
Mountain America Credit Union Nationwide $500 2.30%
America First Credit Union Nevada, Utah $500 2.30%

Waiting for higher returns

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 0.81% 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 in spring 2015. But since the Fed's hike in December, it's eroded from 0.85% to 0.81% APY.

Rewind to February 2007, before irresponsible mortgage lending led the economy over a cliff. Back then, the national average return for 5-year CDs was 4.02% APY.

But with the financial crisis throwing the economy into a tailspin, the Federal Reserve applied the brakes not only by repressing interest rates to record lows in December 2008 but by keeping them anchored there for seven years.

That historic era in the Fed's timeline officially ended when it made a small rate increase in mid-December 2015.

Although the Fed had indicated it would gradually push interest rates higher over the next several years, global and economic news over the last several months has given the rate-setting committee pause.

Indeed, six of the committee's eight 2016 meetings have come and gone without any announcement of a further rate increase.

The Fed will next meet November 1-2, but most economists and Wall Street forecasters predict we won't see Hike #2 until December or even 2017.

It's now clear that it will take two — or even three — hikes to push banks out of this long, dry desert of meager rates.

We hope that eventually does come to pass, as 5-year CD rates could certainly use the boost.

Disclaimer: The rates above were manually gathered on September 26, 2016. Before applying, check with the bank or credit union of interest to confirm the offer still stands.

  • ethan

    I called all the regional banks and credit unions, none accept "One of the credit unions even accepts savers nationwide as members."