Top national 6-month CD rate holds at 4-year high
For almost four months now, MySavingsDirect has been standing tall at the top of our rankings of nationally available 6-month CDs.
The online division of New York’s Emigrant Bank, which offers only a simple savings account and three CDs, pays a solid 1.05% APY.
Not only is that a full two-tenths of a percentage point more than two second-place banks are paying, it's the only national 6-month rate we’ve seen above 1.00% since September 2011.
Indeed, with the exception of a few short-lived spikes to 1.00%, the top national yield had languished between 0.80% and 0.93% APY for nearly three-and-a-half years.
Of course, savers won’t be able to earn 3% or more on 6-month CDs, as we did before the 2008 financial crisis and ensuing recession, until the Federal Reserve reverses its policy of pushing interest rates to unprecedented lows.
But with a rate hike from the Fed looking quite likely this fall or early winter, a 6-month CD can be a savvy place to stash short-term cash while waiting for interest rates to finally start climbing.
TOP 6-MONTH CD RATES: Nationally Available Bank Deals
|California First National Bank||0.85%||$5,000|
|California Business Bank||0.85%||$5,000|
|AloStar Bank of Commerce||0.80%||$1,000|
|Colorado Federal Savings Bank||0.70%||$5,000|
|First Internet Bank||0.70%||$1,000|
|GE Capital Bank||0.70%||$500|
|Triumph Savings Bank||0.70%||$1,000|
|State Bank of India - New York||0.60%||$5,000|
If you live in the right place or work for the right employer, you might qualify to do even better with a 6-month CD from a community bank or credit union.
Although they pay up to 1.74% APY, we're aware of only a few such deals and most come with strict eligibility rules.
TOP REGIONAL 6-MONTH CDS: Credit Unions & Community Banks
|Peoples Transport Federal Credit Union||New Jersey||1.74%|
|Self Reliance New York Federal Credit Union||New York||1.41%|
|Four Corners Federal Credit Union||Arizona, Colorado, New Mexico, Utah||1.26%|
|LOMTO Federal Credit Union||New York||1.10%|
In addition, one 6-month deal is available to select savers living anywhere the country.
Catholic United Financial Credit Union is offering 1.26% APY on 6-month CDs to its nationwide membership, as well as Catholics living in North Dakota or belonging to select Minnesota parishes. A minimum investment of $200 is required.
As for what the rest of the nation’s 6-month CDs are paying, the national average return had crept upward to 0.17% this spring, but now hovers at 0.16% APY.
According to our weekly survey of banks and thrifts, 6-month CDs sunk to a record-low average 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 — for six years now — to allow the economy to rebuild to full capacity.
The Fed’s rate-setting committee next meets in mid-September, at which time it could institute the first interest rate hike in almost a decade.
If they don’t boot rates higher at that meeting, most economists and Wall Street analysts expect them to do so by December.
While we wait for that much-anticipated event, short-term CDs paying one of the country’s top rates can be a smart play for savers who want to be ready for higher rates as soon as they begin arriving.