Top national 6-month CD rates stuck in neutral

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For most of February, you could have earned as much as 1.00% APY on the best nationally available 6-month CDs.

Sadly, that's no longer the case.

Although California First National Bank continues to offer the best national deal on these short-term investments, it reduced the return to 0.85% APY.

That's even less than you could have earned from the best national deal at this time last year, which was paying 0.90% APY.

We aren't finding as many local deals on 6-month CDs this spring, but it never hurts to see what nearby community banks and credit unions have to offer.

While these rates are only available to savers who live and work in a limited area or specific industry, they're well worth searching out.

LOMTO Federal Credit Union, for example, is offering its New York City members 1.10% APY.

If you can't find a comparable offer near you, then the best nationally available deals are your best bet.

All of these rates are at least four times more than the average return on 6-month CDs — a paltry 0.16% APY, according to our most recent survey of major banks and thrifts.

TOP 6-MONTH CD RATES: Nationally Available Deals

Bank APY Minimum Deposit
CalFirst 0.85% $5,000
BAC Florida 0.80% $5,000
EH National 0.80% $10,000
Giant 0.75% $2,500
Colorado Federal Bank 0.70% $5,000
First Internet Bank of Indiana 0.70% $1,000
GE Capital 0.70% $500
AloStar 0.65% $1,000
Discover Bank 0.65% $2,500
Virtual Bank 0.65% $10,000
UmbrellaBank 0.61% $10,000

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
California First National Bank An online bank owned by the same company that runs California First Leasing Corp., which finances all sorts of high-tech business equipment. www.calfirst.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
EH National Bank Which has a single branch in Beverly Hills, California. www.ehnbank.com
Giant Bank The online division of Landmark Bank, which has six branches in Broward County, Florida. www.giantbank.com
Colorado Federal Savings Bank An online bank based in Greenwood Village, Colorado. www.coloradofederalbank.com
First Internet Bank of Indiana An online bank located in Indianapolis. www.firstib.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
AloStar Bank of Commerce An online bank based in Birmingham, Alabama, formerly known as Nexity Bank. retail.alostarbank.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
UnbrellaBank The online division of Beal Bank, which operates 16 branches in 10 states. www.umbrellabank.com

The Federal Reserve has driven short-term interest rates to record lows by drastically reducing what's called the federal funds rate. That's what commercial banks pay to borrow money from each other through the Fed.

Since it's been essentially zero since December 2008, banks have been able to get pretty much all of the money they need for loans through the Fed for essentially nothing.

When the banks didn't need our deposits, they slashed rates, and savers responded by yanking money out of CDs, with those deposits falling $1.45 trillion in early 2009 to just over $500 billion today.

One measure of how little savers are being paid is the Cost of Funds Index compiled by the Federal Home Loan Bank of San Francisco. It asks banks in California, Arizona and Nevada how much they're actually paying for deposits.

The index hit a record low of 0.663% in September, before rebounding slightly the last three months. It still sat at only 0.692% in December.

Back in 2008, before the Feds lowered the federal funds rate to zero, it was four times higher — 2.757%.

Over the past six years, the Fed’s rate-setting committee regularly issued statements saying it expected to keep interest rates near zero for “a considerable time” or, more recently, that it would be "patient" about raising rates.

But this year the nation's bank-for-banks has dropped both phrases from its policy guidance.

Now almost everyone expects the Fed will finally start pushing rates higher as early as June, and no later than this October.

A new survey of the 17 Fed governors shows they expect the federal funds rate to be just below 1% by the end of this year, just below 2% by the end of 2016 and to reach their ultimate target of 3.75% sometime in 2018.

That will be a wonderful change for savers who have endured artificially low returns for so long.

Contributing editor Sabrina Karl provided research for this report.