August's top deals pay up to 1.1% on 6-month CDs

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If you can earn 1.11% APY on a 6-month CD in this rate environment, you must be living right. Or at least you're living in the right place.

Although the best nationally available rate is just under 0.9% APY (more on that later), credit unions and community banks continue to offer local customers that much for their money.

Two of the best deals in the country can be found in California and New York, where credit unions are treating their members very well.

Sun Community Federal Credit Union and LOMTO Federal Credit Union are paying 1.11% APY and 1.10% APY, respectively.

But you'll have to live in Southern California or the Big Apple to join these credit unions and qualify for these rates.

There are residency and purchase requirements at another credit union paying local savers 1.01% APY in New York and at three other banks and credit unions paying local savers 1.00% APY in Ohio, Texas and the Washington, D.C., area.

TOP 6-MONTH CD RATES: Local Deals

Bank/Credit Union APY State Contact
Sun Community Federal Credit Union 1.11% California https://www.suncommunityfcu.org
LOMTO Federal Credit Union 1.10% New York http://www.lomto.org
Bay Ridge Federal Credit Union 1.01% New York https://www.brfcu.org/
Cintel Financial Federal Credit Union 1.00% Ohio https://www.cintelfcu.org
GPO Federal Credit Union 1.00% Washington, D.C. http://www.gpofcu.com
Gulf Coast Federal Credit Union 1.00% Texas http://www.ccgcfcu.com
Industrial Credit Union 0.90% Massachusetts http://www.icu.org/

Can you find a similar deal where you live? Click here to search our extensive database of the best CD rates from dozens of banks in your area.

Nothing? Then the best nationally available deals on 6-month CDs are your best bet.

Los Angeles-based CapitalSource paid savers in all 50 states 0.90% APY from late October until early April.

When CapitalSource dropped its rates, Doral Bank Direct moved to the top of our rankings with a 0.87% APY return. And yes, that's the online division of the same bank that was offering savers at its New York branches 1.00% APY last month.

TOP 6-MONTH CD RATES: Nationally Available Deals

Bank APY Minimum Deposit
Doral Bank Direct 0.87% $500
National Republic Bank of Chicago 0.80% $1,000
EH National 0.80% $10,000
AloStar 0.75% $1,000
GE Capital 0.70% $500
Colorado Federal Bank 0.70% $5,000
BAC Florida 0.70% $5,000
Discover Bank 0.65% $2,500
Virtual Bank 0.65% $10,000
Synchrony Bank 0.65% $25,000

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 6-MONTH CD RATES: About The Banks

Bank Description URL
Doral Bank Direct The online bank of Doral Bank, the leading community bank in Puerto Rico, which also has five branches in northwest Florida and two in New York City. www.doralbankdirect.com
National Republic Bank of Chicago Which has two branches in Chicago. www.nrbchicago.com
EH National Bank Which has a single branch in Beverly Hills, California. www.ehnbank.com
AloStar Bank of Commerce An online bank based in Birmingham, Ala., formerly known as Nexity Bank. retail.alostarbank.com
GE Capital 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. gecapitalbank.com
Colorado Federal Savings Bank An online bank based in Greenwood Village, Colorado. www.coloradofederalbank.com
BAC Florida Bank A community bank with one location in Coral Gables that sells its products nationally through My e-BAnC. www.bacflorida.com
Discover Bank An online bank owned by the credit card company. www.discover.com
Virtual Bank The online division of Sabadell United Bank, which has 23 branches in Florida and is owned by Banco Sabadell, Spain's fourth-largest bank. www.virtualbank.com
Synchrony Bank The other bank that's a subsidiary of GE Capital Corp. www.myoptimizerplus.com

Over the past several decades, savers could usually count on earning something like 2% or 3% on a 6-month CD.

But the Federal Reserve has driven short-term interest rates to record lows in an attempt to haul the economy out of the worst financial crisis and recession since the 1930s.

It's done that 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 who needs to pay savers for deposits when banks can get pretty much all of the money they need from the Fed, essentially for free?

As a result, the average return on 6-month CDs has fallen from 1.86% APY in late '08 to 0.15% APY today.

Last year, former Fed Chairman Ben Bernanke said the central bank would start bumping up rates when the unemployment rate hit 6.5%.

Then Bernanke reversed course and told a news conference after the Fed's rate-setting committee met in September that “the first increases in short-term rates might not occur until the unemployment rate is considerably below 6.5%."

Indeed, the Fed chairman said a return to market-driven rates — and a reasonable return on our savings — could be "several more years" down the road.

Several more years? Economists who had expected the bank to reverse course and start raising the fed funds rate by late 2015 were suddenly wondering if sometime in 2016 might be more realistic.

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After Janet Yellen took over as Fed chairman, she seemed to lay out a quicker route to higher rates at her first news conference in late March.

Yellen said the Fed must first wind down its campaign to drive long-term interest rates lower by purchasing billions of dollars a month in Treasury debt and mortgage-backed bonds.

That process began in January and, at the current rate of "tapering" as the Fed calls it, is now expected to end in October.

Once the bond purchases end, Yellen said the Open Markets Committee would turn its attention to the fed funds rate about six months later — or perhaps as soon as April 2015 if the bond purchases end in September.

Yellen and other Fed leaders quickly walked back those comments and sought to tamp down expectations that interest rates could be on the rise that quickly.

But the economy is finally experiencing the kind of robust recovery we've been waiting five long years to see, and the unemployment rate fell to 6.1% in June and 6.2% in July.

Now it looks like the Fed will start a gradual return to reasonable interest rates sometime in 2015 — perhaps as early as next April and almost certainly by the fall.

Contributing editor Darci Swisher contributed to this report.
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