Best and Average CD Rates September 6, 2012: FOMC Will Force Rates Lower

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The best CD rates available are are still well above the national average CD rates available. Unfortunately both the highest and average CD rates will probably continue to decline in the coming months. The Federal Open Market Committee meets on September 12 and 13 to decide the future direction of economic policy.

The current policy of keeping the Fed Funds rate at an exceptionally low level until the end of 2014 won't change. What might happen is the FOMC announces another round of easing to send bond yields lower. Another round of quantitative easing (QE3) will be more than likely if tomorrow's employment report is weak. While lower bond yields help the housing market by sending already low mortgage rates today even lower the policy also keeps deposit yields depressed.



The highest CD rates on 1 year certificates of deposit are just above 1.00 percent while the current national average 1 year CD rate is at 0.72 percent in Bankrate's survey. The Federal Deposit Insurance Corporation's (FDIC) national average 1 year CD rate is even less at 0.26 percent. 1 year jumbo bank CD rates in the FDIC national survey are slightly higher at 0.28 percent.

The highest CD rate on our national 1 year rate list is from CIT Bank, Bank of Internet USA and AlsoStar Bank of Commerce. Current CIT Bank CD interest rates on 1 year certificates of deposit are at 1.09 percent with an APY of 1.10 percent. The minimum opening deposit to earn this rate and yield at CIT Bank is $25,000. Bank of Internet USA and AlsoStar Bank of Commerce have the same rate and yield with a minimum opening deposit of only $1,000. AlsoStar recently raised their 1 year Bank CD rates and how are tied for the best rate on our list.

The best CD rates on 2 year certificates of deposit are just above 1 year CD rates at banks. In fact the rate curve going from short term certificates of deposit to long term certificates of deposit is flat. Bankrate's 1 year CD rates are averaging 0.72 percent and 5 year CD rates are averaging 1.36 percent, not much of a difference but how can there be when rates are slow low.

Right now the highest 2 year CD rates on our 2 year certificates of deposit rate list is at 1.25 percent with an APY of 1.26 percent. AlsoStar Bank of Commerce tops our 2 year CD rates list with the recent increase in the bank's CD rates. The second highest 2 year CD interest rate is from CIT Bank. Today's CIT Bank CD rates on 2 year certificates of deposit are at 1.25 percent with an APY of 1.25 percent.

The highest CD rates at banks for 5 year certificates of deposit on our rate list are just under 2.00 percent. The highest CD interest rate on our list is at 1.83 percent with an APY of 1.85 percent. CIT Bank tops our 5 year CD rate list with that rate and yield. The second highest 5 year rate is from three different banks. Discover Bank CD Rates, Third Federal Savings & Loan CD rates and iGOBanking CD rates are all at 1.73 percent with an APY of 1.75 percent. Ally Bank CD rates are right behind these banks at 1.71 percent with an APY of 1.72 percent.
 
Author: Brian McKay
September 6th, 2012