CD Rates: June 22, 2009 Bank CD Rates

CD rates continued to fluctuate fractionally this past week. Bank CD rates were down for all certificate of deposit terms. Surprisingly the average certificate of deposit rate hasn't changed much this year, fluctuating in a narrow range.

CD rates at banks will stay at this low narrow range until the Fed starts increasing the Fed Funds rate when the fear of inflation comes back.

Just the opposite has happened, inflation fears have subsided this past week, the consumer price index (CPI) on a seasonally adjusted basis, rose 0.1 percent in May after being unchanged in April. The index for all items less food and energy increased 0.1 percent in May after increasing 0.3 percent in April. We don't anticipate bank CD rates to increase until the end of this year or early in 2010 when the economy recovers.

Shorter term CD rates fell this past week. The average rate on a 3 month certificate of deposit was down to 0.774 percent, down from last week's average rate of 0.787 percent. UFB direct is offering one of the highest CD rates around for a 3 month certificate, their rate is currently at 1.65 percent.

Six month certificate of deposit rates were down this week, the average rate on a six month CD is currently 1.076 percent, down from last weeks average rate of 1.091 percent. AIG Bank is offering one of the best CD rates for a six month CD, their promotion rate is currently at 1.86 percent.

The average rate on a one year certificate of deposit is at 1.358 percent this week, down from last week's average rate of 1.372 percent. You can find rates a lot higher than the average CD rate on a one year CD. Discover Bank is offering one of the top CD rates on a one year CD, the CD rate is currently at 2.30 percent.

Average rates on 18 month certificate of deposits are at 1.503 percent this week, down from the prior week's average CD rate of 1.513 percent. Tennessee Commerce Bank is currently offering a rate of 2.45 percent for a 18 month certificate.

Two year certificate of deposit rates averaged 1.749 percent this week, up from last week's average CD rate of 1.748 percent. Discover Bank is offering a competitive CD rate on a two year CD, the average rate is currently at 2.65 percent.

Longer term certificate of deposit rates aren't that much higher than shorter term CD rates. We recommend sticking to shorter term CD rates this year because rates will increase by the end of the year. If you're still interested in longer term CDs the average rate on a three year certificate of deposit is currently at 2.005 percent, down from last week's average rate of 2.008 percent.

The average rate on a four year certificate of deposit is at 2.221 percent this week, a decreased from last week's average CD rate of 2.224 percent. PenFed is currently offering a rate of 3.75 percent on a four year certificate of deposit.

Average certificate of deposit rates on five year CDs is at 2.467 percent this week, down from last week's average rate of 2.468 percent. PenFed is also offering one of the highest CD rates on five year CD, their CD rate is currently at 4.00 percent.