CD Rate Reports

Long term bond yields continue to move higher as the best CD rates remain unchanged this week. Long term bond yields have been on a tear since the beginning of the month, 10 year, 20 year and 30 year on bonds are all up more than 30 basis points since May 1st. The Dow Jones Industrial Average (DJIA) and the Standard and Poor’s 500 (S&P 500) have hit record highs more than once this month.

Shorter term CD rates and bond yields won’t move higher until the Federal Reserve increases the fed funds rate which won’t happen until sometime in the second or third quarter of 2014. The Fed’s current target rate is zero percent to one quarter percent and will remain so until the unemployment rate falls below 6.5 percent, a full percentage point below April’s unemployment rate of 7.5 percent.

The highest CD rates in our 1 year certificate of deposit rate database are from GE Capital Retail Bank at 1.04 percent with an APY of 1.05 percent. Here is a list of the best CD rates in our 1 year rate database right now:

1. GE Capital Retail Bank 1.04% APY 1.05%
2. Home Savings Bank 1.00% APY 1.00%
3. Doral Direct 0.96% APY 0.96%
4. Colorado FSB 0.95% APY 0.95%
5. My e-BAnC by BAC Florida Bank 0.95% APY 0.95%
6. EH National Bank 0.95% APY 0.95%
7. The National Republic Bank of Chicago 0.95% APY 0.95%
8. Ally Bank 0.94% APY 0.94%

The best 2 year CD rates in our database this week are from Home Savings Bank at 1.14% with an APY of 1.15%. Below is a list of the top 2 year rates in our database right now:

1. Home Savings Bank 1.14% APY of 1.15%
2. My e-BAnC by BAC Florida Bank 1.10% APY 1.10%
3. Barclays Bank 1.09% APY 1.10%
4. Doral Direct 1.09% APY 1.09%
5. California First National Bank 1.05% APY 1.06%
6. Ally Bank 1.04% APY 1.05%
7. AloStar Bank of Commerce 1.04% APY 1.05%
8. Lone Star Bank 1.04% APY 1.05%

The best 6 month CD interest rates this week are from Doral Direct at 0.88% with an APY of 0.88%. Here is a list of the top 6 month rates right now:

1. Doral Direct 0.88% APY 0.88%
2. EH National Bank 0.85% APY 0.85%
3. Colorado FSB 0.70% APY 0.70%
4. Discover Bank 0.70% APY 0.70%
5. Ascencia, a div. of PBI Bank 0.65% APY 0.65%
6. My e-BAnC by BAC Florida Bank 0.65% APY 0.65%
7. Ally Bank 0.61% APY 0.61%
8. Barclays Bank 0.60% APY 0.60%

CD rates change constantly, for a list of the most recent rates always check our rate tables. Rates are updated daily for national, regional and local bank’s rates.

The top CD rates in May hold steady as a better April Employment Report sent long term bond yields higher last week. There will be no big uptick in short term or long term CD rates until the Federal Open Market Committee (FOMC) increases the fed funds rate. We are slowly inching closer to a higher fed funds rate as the nation’s unemployment rate drops.

The unemployment rate in the month of April fell to 7.5 percent, down from March’s rate of 7.6 percent. The FOMC has stated they plan to keep the fed funds rate just above zero percent until the unemployment rate falls to 6.5 percent. I believe the rate will fall to 6.5 percent sometime in the second quarter of 2014 or sooner.

If the rate falls to the 6.5 percent level in the second quarter of 2014, the Fed will quickly act to increase the fed funds rate to a neutral level. A higher fed funds rate will mean higher CD rates a few months after. Looks for rates to finally increase again sometime in the third or fourth quarter of 2014.

Here is a list of the highest CD rates for the Month of May:

• 1 Month CD Rate Lone Star Bank and Virtual Bank at 0.15%
• 2 Month CD Rate E-Loan at 0.20%
• 3 Month CD Rate EverBank at 0.46%
• 6 Month CD Rate Doral Direct at 0.88%
• 9 Month CD Rate Doral Direct at 0.92%
• 12 Month CD Rate GE Capital Retail Bank at 1.04% 1.05% APY
• 18 Month CD Rate Doral Direct at 1.03% APY 1.03%
• 24 Month CD Rate CIT Bank at 1.19% APY 1.20%
• 30 Month CD Rate Lone Star Bank at 1.09% APY 1.10%
• 36 Month CD Rate Virtual Bank at 1.30% APY 1.31%
• 48 Month CD Rate Nationwide Bank at 1.45% APY 1.46%
• 60 Month CD Rate Nationwide Bank at 1.59% APY 1.60%

As bond yields continue to decline this past week, the top 12 month CD bank rates remain steady for now. The best CD rates on 12 month certificates of deposit this week remain at 1.04 percent with an APY of 1.05 percent. Average 1 year bank CD rates actually moved higher this week over last. The current national average 12 month CD rate this week is at 0.66 percent, an increase from last week’s average rate of 0.63 percent.

The national average 12 month CD rates at banks in the FDIC’s survey is much lower than the national average rate reported on MonitorBankRates. The FDIC national average for 12 month CD rates is at 0.21 percent for the week ending April 15, 2013, unchanged from the prior week’s average rate.

Below is a list of the top CD rates on 1 year certificates of deposit for the week ending April 19, 2013:

• GE Capital Retail Bank 1.04% APY 1.05%
• Home Savings Bank 1.00% APY 1.00%
• Doral Direct 0.96% APY 0.96%
• My e-BAnC 0.95% APY 0.95%
• E-Loan 0.91% APY 0.91%
• Ally Bank 0.90% APY 0.90%
• California First National Bank 0.90% APY 0.90%
• Discover Bank 0.90% APY 0.90%
• Virtual Bank 0.90% APY .090%

CD rates update constantly, so be sure to check our current rate list for the most up to date rates available.

Below is a quick list of the best CD rates available on our rate tables this week. Our CD rate tables include both national and regional bank CD rates. We list the highest rates for regular, jumbo and IRA certificates of deposit. All of the banks listed on our tables have deposits insured by the FDIC.

• 1 Month Rate Lone Star Bank 0.15%
• 3 Month Rate EverBank 0.45%
• 6 Month Rate Doral Direct 0.88%
• 12 Month Rates GE Capital Retail Bank 1.04%
• 18 Month Rate Salem Five 1.14%
• 24 Month Rates Virtual Bank 1.15%
• 30 Month Rate Discover Bank 1.09%
• 36 Month Rate The National Republic Bank of Chicago 1.35%
• 48 Month Rate Nationwide Bank 1.55%
• 60 Month Rate The National Republic Bank of Chicago 1.85%

Current CD rates are holding up as we head into the 2nd quarter of 2013 with an economy that is gaining steam. GDP growth which stalled in the 4th quarter will pick up again in 2013, eventually leading to higher interest and bank CD rates in 2014. The rate of growth was 0.4 percent in the 4th quarter of 2012, down from the 3rd quarter of 3.1 percent.

GDP forecasts for 1st quarter 2013 growth are at 2.1 percent, gradually increasing to 2.7 percent growth in first quarter 2014. Sequestration will have an impact on growth in 2013 and beyond but hopefully growth in the private sector will pick up even more, mitigating any impact. Looking at 2014, GDP growth is expected to be around 2.8 percent.

Growth is gaining momentum and lowering the unemployment rate but not fast enough for the Federal Reserve to increase their key benchmark interest rate. The federal funds rate which is just above zero percent won’t be increased by the Fed until the unemployment rate falls below 6.5 percent or if inflation is higher than 2.0 percent.

A fed funds rate stuck near zero percent will keep CD rates at banks low as well. The Fed forecasts the unemployment rate will fall below 6.5 percent late in 2015. If the Fed is correct, we can expect CD interest rates to also remain at current levels until the end of 2015. This is bad news for those who live off of interest gained from certificates of deposit and other interest bearing assets.

Current 12 month certificate of deposit rates are averaging 0.51 percent this week. The FDIC’s national average 12 month rate is even lower at 0.22 percent. You can find rates higher than the averages. The highest 12 month CD rates offered on Monitor Bank Rates are double the national average and more than 4 times the FDIC average.

This week, the best 12 month CD rate is offered by GE Capital Retail Bank at 1.04 percent with an APY of 1.05 percent. Looking at shorter term rates, the posted 6 month national average rate FDIC 6 month average this week is at 0.13 percent and the rate available on MBR is at 0.34 percent. The best 6 month rates in our rate database are much higher at 0.88 percent from Doral Bank Direct.

The best 24 month CD rates in our rate database are higher than the averages at 1.15 percent with an APY of 1.16 percent.  Average 2 year CD rates are at 0.78 percent and the FDIC national average 2 year rate is at 0.35 percent. CD rates at banks in the FDIC national survey this week are averaging 0.35 percent while the best 3 year rates in our database are at 1.35 percent with an APY of 1.36 percent.

Moving onto 4 year certificates of deposit, we find the FDIC average this week is at 0.59 percent and the highest 4 year CD rates in our database are at 1.55 percent with an APY of 1.56 percent.  The national average 5 year rate posted on MBR is at 1.21 percent and the FDIC average 5 year rate is at 0.77 percent. The best 5 year CD rate in our database this week is at 1.85 percent with an APY of 1.87 percent.

The Federal Open Market Committee will meet today and tomorrow to decide the direction of monetary policy. There probably won’t be any policy changes from the current accommodating stance of providing stimulus to the economy. What we will be looking out for are the FOMC’s comments about future growth and if those predictions have moved higher since the last meeting. Stronger growth will eventually lead to the FOMC pulling back on stimulus, with includes a higher Federal funds rate which will lead to higher CD rates.

We have reason to believe the Fed will increase their predictions for growth as a lot of positive economic data has been released in 2013. The housing market is gaining steam as stronger housing sales and higher home prices have helped the economy grow. Stronger retail sales and higher consumer sentiment will also help the economy.

The last piece in the puzzle that will lead to bank CD rates and savings rates moving higher is a lower unemployment rate. The Fed has stated that they plan to keep the fed funds rate near zero percent until the unemployment rate falls below 6.5 percent. The current rate is at 7.7 percent so we have some way to go before we get down to 6.5 percent.

The Fed believes the rate will fall that low by the end of 2015 but we believe it will happen sooner. For the first time in three years, it finally looks like the economy is gaining momentum. Growth started out strong each year for the past three but dropped off as the year progressed. This year looks different as economic data has been consistently strong.

We believe the Fed will be forced to start increasing the fed funds rate sometime next year. With the current rate just above zero percent, the Fed will have to increase the rate at least 2 percent in order to have a more “neutral stance” on policy. We also believe the increase will be rather quick and possibly in 0.50 percent or even 1.00 percent increments.

If the Fed does increase the rate in a range between 2.00 and 3.00 percent, average CD rates on 1 year certificates of deposit will also move to that range. Right now the best CD rates on 1 year certificates of deposit are at 1.00 percent, so a 2.00 percent rate will be a big increase. Currently, the highest CD rates on 6 month certificates of deposit are at 0.89 percent. Some time in 2014, 6 month rates will move to the 1.50 to 2.00 percent range.

After 5 years of CD rates moving lower, getting back into a cycle when rates are moving higher will be welcomed by many. You should stay invested in shorter term CD accounts of 1 year or less so you can take advantage of higher rates sooner than later.

The Federal Reserve plans to keep the feds funds rate near zero percent until the unemployment rate falls below 6.5 percent, which the fed believes will happen at the end of 2015. An extremely low fed funds rate will keep CD rates and all interest rates very low. We just moved closer to the possibility of the unemployment rate falling below 6.5 percent before the end of 2015.

The February 2013 jobs report came out showing the unemployment rate unexpectedly falling to 7.7 percent, down from the prior month’s rate of 7.9 percent because more jobs were created than analysts expected. Private sector payrolls increased 246,000 in February and government payroll jobs fell 10,000, leading to a net gain of 236,000 for the month.

The rate at which jobs were created was a lot stronger than what economists had predicted. Economists believed there would be a net gain of 160,000 jobs. This is all very positive news for the economy in a slew of positive reports released recently. A number of positive housing reports also points to an improving economy and higher interest rates before the end of 2015.

This is welcome news for holders of interest bearing assets like certificates of deposit who have been suffering with record low bank CD rates for the past several years. The best CD rates on both long term and short term certificates of deposit are low because of the fed’s policies which are designed to force all interest rates lower to spur growth.

The highest CD rates on 5 year certificates of deposit are at 1.75 percent and the highest CD rates on 1 year certificates of deposit are at 1.05 percent. Only a 70 basis point difference between 1 year and 5 year rates. This is one of the lowest points historically speaking that the rate difference has been that narrow.

Bond yields will be a leading indicator on when the Fed will increase the fed funds rate which will lead to higher bank rates. In anticipation of a higher fed funds rate, market forces will send bond yields higher. A really sharp increase in bond yields will force the fed to increase rates before the unemployment rate falls below 6.5 percent.

It remains to be seen what the unemployment rate will be in the coming months, one thing is for sure, don’t count on government jobs to lower the unemployment rate. Monthly government job creation has been negative every month and will continue to be negative for 2013 as sequestration hits. In past recoveries the Federal and State governments contributed to job creation, this recovery has been slower because of the loss of government jobs.