CD Rates Decline Slightly This Week
CD rates declined slightly again this week, continuing a slow descent since the Federal Reserve started cutting the fed funds rate about 2 months ago. The Fed's first rate cut of 25 basis points in 2019 was in early August and the second rate cut, also 25 basis points, was in mid-September. These cuts were the first time the Fed lowered rates in over a decade. The last time the rate was lowered was back in 2008 during the Financial Crisis.
Over the past two months, the best CD rates on our 12-month rate table have fallen to 2.35 percent this week, a decline from a high of 2.40 percent last week. Average 12 month CD rates are currently at 2.12 percent, a decline from the prior week's average rate of 2.15 percent.
Longer-term CD rates are also declining. The highest 5 year CD rate on the rate table is at 2.45 percent, slightly higher than 12 month CD rates. The average 5 year CD rate is at 2.07 percent, down from the prior week's average of 2.11 percent.
The best 4 year CD rate right now is also at 2.45 percent and the average 4 year CD rate is at 2.05 percent. If you're wondering why the best CD rates available are much higher than the average CD rates, it's due to online banks offering much higher rates. Online banks don't have the overhead of traditional brick and mortar banks, so they can offer better rates.
The top 3 year CD rates are currently at 2.40 percent while average 3 year CD rates are at 2.01 percent. 6 month CD rates are currently averaging 1.35 percent while the highest 6 month CD rates are at 1.95 percent.
CD rates will continue to decline in the coming months and into 2020 if the Federal Resevere keeps lowering the fed funds rate. Even if the Fed doesn't lower the rate, don't expect rates to remain where they are. The decline won't be as pronounced but rates are likely to drift lower.