After a bit of good news for 12-month yields this spring, summer has seen the term settle back into a status quo of sorts.
The top nationally available return on 1-year bank certificates is currently 1.30% APY, which is the same rate you could earn before the Fed’s interest rate hike in December.
In other words, short-term savers have gained no lasting ground.
Still, three of the seven terms we track have national leads lower than before the Fed increase, so at least 12-month returns aren’t in the losing column.
Fortunately, you can earn up to 2.00% APY from credit unions and community banks (and for one lucky group of savers, an astonishing 5%), and we’ll tell you where to find those local deals.
But with the Fed’s first hike translating into almost no upward rate movement by banks, it appears we’ll need to see two — or even three — rate increases if savers are going to see any boosts to their deposit returns.
So what can we expect from the Fed? And when?
It’s a guessing game that’s popular the world over, but we’ll fill you in on the details.
The top national yields
In early 2014, the leading 1-year rate on our CD Rates Leaderboard of nationally available bank certificates was still at its post-recession low of 1.05% APY.
Since then, the top rate has moved upward in a faltering pattern — two steps forward, one step back — to ultimately reach 1.36% APY in March.
We hadn’t seen a lead that high since June 2011.
But after Country Bank backed off that rate in May, the Leaderboard fell to a three-way tie at 1.26% APY.
Fortunately, it was edged back up to 1.30% APY in late July by a newcomer to our rankings, Bank of Baroda.
As India’s second-largest bank, Bank of Baroda operates in 25 countries, with the CDs highlighted on our Leaderboard being offered by its U.S. branch.
Located in New York for more than 30 years, the U.S. Bank of Baroda is FDIC-insured just like all of the other banks featured on Bankaholic.
Of course, new offers can be unveiled at any time, so to get the latest read of the top CD rates, search Bankrate’s daily database.
Top National 1-Year CD Rates
|Bank of Baroda||1.30%||$1,000|
|Live Oak Bank||1.30%||$2,500|
|State Bank of India – New York||1.29%||$5,000|
|State Bank of India – Chicago||1.26%||$2,500|
|Barclays Bank||1.25%||No minimum|
|Pacific National Bank||1.25%||$1,000|
|Sallie Mae Bank||1.25%||$2,500|
|Colorado Federal Savings Bank||1.25%||$5,000|
|BAC Florida Bank||1.24%||$1,500|
How to earn more with local deals
Of course, we track more than nationally available returns here.
That’s because the very best CD rates often come from community banks and credit unions that only accept savers who live or work nearby or are willing to jump through a hoop to become a member.
In the 12-month term, we’re aware of the eight local offers below that outearn the leading 1.30% APY.
In addition, another handful of winning deals — including several nationwide offers — are available if you’re willing to shorten or stretch your term a bit, as you can see in our constantly updated roundup of the country’s best CD deals from credit unions and community banks.
Top Local 1-Year CDs
|Leaders Credit Union||Tennessee||5.00%||$500|
|Financial Health Federal Credit Union||Indiana||2.00%||$500|
|Peoples Transport Federal Credit Union||New Jersey||1.94%||$500|
|Self Reliance New York Federal Credit Union||New York||1.92%||$500|
|North Platte Union Pacific Employees Credit Union||Nebraska||1.51%||$10,000|
|Idaho Central Credit Union||Idaho, Nevada||1.50%||$500|
|TEXAR Federal Credit Union||Texas, Arkansas||1.45%||$1,000|
|F&A Federal Credit Union||California||1.31%||$1,000|
Watching for higher rates in 2016
As for the rest of the nation’s banks and credit unions, the national 12-month average inched up to 0.29% APY in May and has stalled there.
As recently as January 2014, the average had languished at 0.22% APY.
Back in February 2007, before irresponsible mortgage lending led the economy over a cliff, the national average return for 12-month CDs was 3.78% APY.
But then the Federal Reserve stepped in to talk the markets off a ledge, lowering interest rates to a record low and holding them there until the economy had recovered.
That period lasted seven years, finally concluding in December when the Fed’s rate-setting committee began what was expected to be a series of gradual rate hikes over the next several years.
But with inflation still below the Fed’s target level, and various global events throwing uncertainty into the markets, no further hikes have been announced at the five meetings the committee has held since December.
That could finally change in September, after the odds of a Fed hike increased significantly on the heels of a glowingly robust jobs report this month.
Certainly any boost savers can get can’t come soon enough. The question is whether a second move by the Fed will be enough to make any difference.