Top national 6-month CD rates pay over 1%

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Before the Federal Reserve announced its historic rate hike in December, we had long expected the move to start bringing relief to savers who have been earning next to nothing on their CDs.

Now that the Fed's increase has come, however, we find ourselves sullenly lowering our expectations.

That's because a boost to national CD rates simply hasn't materialized. At least not yet.

Take 6-month certificates, for example. The top nationally available bank rate is the same one we've seen for 10 months now.

And 6-month yields are no anomaly. In six of the seven terms we track, the top nationally available rate has either stayed the same or even decreased since the Fed raised rates. (Only 12-month certificates have seen a slight elevation.)

So what'’s a saver looking for a worthwhile short-term yield to do?

One option is to sink your funds into a nation-leading savings or money market account instead, since there are almost a dozen options paying more than the best 6-month bank CD.

But if you're more comfortable locking your investment and your rate for a guaranteed six months, then your best bet is to shop the local or regional deals that beat the national banks, some paying as much as 1.74% APY.

But what about the future? Can we expect help from the Fed anytime soon?

Our crystal ball is as nonexistent as everybody else's, but we'll tell you what to watch for.

The top national deals

The 6-month leader among nationally available bank CDs is MySavingsDirect, paying 1.05% APY.

When it rose to the top of our rankings last April, it became the first bank to pay a 6-month yield above 1.00% in more than four years.

Since mid-2011, the top national yield had languished between 0.80% and 0.93% APY, if you don't count a few spikes to 1.00% APY that lasted a day, a week, or one time up to a month.

MySavingsDirect got some company in the above-1.00% club for the first time last month, when AloStar Bank of Commerce raised its 6-month yield to 1.01% APY. EverBank made a similar boost a few days later, but has since dropped its rate back down.

MySavingsDirect is one of several online portals run by Emigrant Bank, which operates two branches in New York.

TOP 6-MONTH CD RATES: Nationally Available Bank Deals

Bank APY Minimum Deposit
MySavingsDirect 1.05% $1,000
AloStar Bank of Commerce 1.01% $1,000
First Internet Bank 0.90% $1,000
California First National Bank 0.90% $5,000
BAC Florida 0.87% $1,500
EverBank 0.86% $1,500
California Business Bank 0.86% $5,000
Triumph Savings Bank 0.85% $1,000
ableBanking 0.80% $1,000
EH National Bank 0.80% $10,000
Giant Bank 0.75% $2,500
Silvergate Bank 0.75% $25,000
GE Capital Bank 0.70% $500
Colorado Federal Savings Bank 0.70% $5,000
Ally Bank 0.67% None
Discover Bank 0.65% $2,500
Virtual Bank 0.65% $10,000
Umbrella Bank 0.61% $10,000
TAB Bank 0.60% $1,000
TIAA Direct 0.60% $1,000
State Bank of India - New York 0.60% $5,000
Synchrony Bank 0.60% $25,000

Earning more by shopping locally

As we've pointed out, credit union and community bank CDs are the best game in town for outearning a savings account, including one deal offered to savers across the country.

Mills42 Federal Credit Union is paying 1.10% APY to savers anywhere in the country who are willing to stretch to a 9-month term. Based in Lowell, Massachusetts, Mills42 membership is extended to anyone who makes a donation of $5 or more to Mothers Against Drunk Driving.

In addition, we're aware of 14 more local deals that pay up to 1.74% APY for those who live in the right place or work for a certain employer.

TOP REGIONAL 6-MONTH CDS: Credit Unions & Community Banks

Bank States Term (in months) APY
Peoples Transport Federal Credit Union New Jersey 6 1.74%
Self Reliance New York Federal Credit Union New York 6 1.41%
Bridgeton Onized Federal Credit Union New Jersey 6 1.30%
Bankers Trust Arizona, Iowa 7 1.30%
Coastal Heritage Bank Massachusetts 9 1.27%
Four Corners Federal Credit Union Arizona, Colorado, New Mexico, Utah 6 1.26%
First American International Bank New York 9 1.20%
Pioneer Valley Credit Union Massachusetts, New York, Connecticut, New Hampshire, Rhode Island, Vermont 7 1.17%
Federal Employees Credit Union Alabama 6 1.15%
LOMTO Federal Credit Union New York 6 1.10%
Oritani Bank New Jersey 9 1.10%
Telco Credit Union North Carolina 6 1.06%
Down East Credit Union Maine 5 1.00%
PCM Credit Union Wisconsin 5 1.00%

Whether it's one of these local deals or a leading national CD, you'll definitely want to take advantage of offers like these since they almost all pay at least seven times more than the current national average of 0.16% APY, according to our weekly nationwide survey of banks and thrifts.

Waiting on an impact from the Fed

The national average for 6-month CDs sank to a record low of 0.14% APY in September 2013 and remained there as recently as June 2014.

Back in February 2007, before irresponsible mortgage lending led the economy over a cliff, the average return for 6-month CDs was 3.50% APY.

But then the Federal Reserve stepped in to talk the markets off a ledge by embarking on a path of holding interest rates down to allow the economy to rebuild to full capacity.

That era finally concluded in mid December when the Fed's rate-setting committee began what's expected to be a series of gradual rate hikes over the next three years.

The initial step was a small one — an increase of just a quarter of a point in the federal funds rate.

That's what commercial banks pay to borrow money from each other through the Fed, and it's the financial lever the Fed uses to control short-term interest rates throughout the economy.

That increase — albeit modest — reverses seven years of monetary policy that meant Americans could earn no more than a pittance on the savings they entrusted to banks.

But while we had hoped this would trigger banks to raise their own rate sheets, so far we’ve seen that the Fed’s small increase simply hasn’t been enough to move most banks.

Add to that the global and market uncertainty we've been seeing in the past weeks, and the Fed's previously anticipated strategy of raising interest rates a full percentage point this year appears to be in jeopardy.

This puts us squarely in a new waiting game — watching for the Fed's next hike, to see if that spurs banks enough to increase their CD rates.

But first, a move from the Fed has to come. Its next meeting is March 15-16, but given its heavy dependence on up-to-the-minute economic data, it's extremely difficult to predict the Fed's rate decision.

With so much uncertainty on the horizon, one thing is clear: The case is as good as ever for earning the best short-term yields you can while we wait for higher returns to arrive.