Good news has been sparse for CD savers since the Federal Reserve raised interest rates in December.
Among the seven terms we track on our CD Rates Leaderboard of nationally available bank certificates, every term’s lead but one either hasn’t improved or has declined since the Fed’s hike.
The 2-year lead is among the losers, paying 1.50% APY today versus the 1.52% APY you could earn in December.
This means you’re smart to shop local deals from credit unions and community banks, where the top 2-year deal is paying 2.25% APY right now.
It looks like an improvement in the 24-month national rate will require another nudge from the Fed (or two), which means we’re now left waiting for the next rate increase.
When that will happen is anybody’s guess, but we’ll tell you what to watch for.
The top national yields
E-Loan has been toying with the 2-year lead for the past year, after first taking the helm with 1.52% APY last July.
That remained the uncontested lead for more than six months, until E-Loan dropped its rate to 1.50% APY in January.
Since then, the top yield has bobbed between 1.50% and 1.55% APY, except for three weeks from May to June when E-Loan offered 1.60% APY.
It was the highest watermark we’d seen for the term in almost five years.
Compare that to its lowest post-recession lead of 1.20% APY and it seems like good news.
But E-Loan dropped its rate twice in June, taking it down to 1.50% APY. A few days later it was joined in the lead by Pacific National.
E-Loan is an online portal of Popular Community Bank, which operates almost 50 branches in New York, New Jersey and south Florida.
Pacific National has been operating as a U.S.-owned and FDIC-insured bank in Florida for more than 30 years, after initially being founded by a large Ecuadorian bank.
With a dozen branches around Miami, it had operated as a local bank until it recently made its CDs available online to customers nationwide.
Top National 2-Year CD Rates
|Pacific National Bank||1.50%||$1,000|
|Barclays Bank||1.45%||No minimum|
|Live Oak Bank||1.45%||$2,500|
|Colorado Federal Savings Bank||1.45%||$5,000|
|First Internet Bank of Indiana||1.41%||$1,000|
|BAC Florida Bank||1.41%||$1,500|
|State Bank of India – Chicago||1.41%||$2,500|
|State Bank of India – New York||1.41%||$5,000|
|AloStar Bank of Commerce||1.40%||$1,000|
|Bank of Baroda||1.40%||$1,000|
|Ally Bank||1.30%||No minimum|
To find the nation’s best yields at any time, simply search Bankrate’s extensive database of the day’s best CD rates.
Earn more with local deals
Of course, we track more than the best nationally available bank returns.
In fact, we typically find the best rates at community banks and credit unions, which only take deposits from savers who live or work nearby, or are willing to jump through a hoop to become a member.
We’re aware of a dozen 24-month certificates that exceed the 1.50% APY national lead, with the top offer reaching three-quarters of a percentage point higher.
Top Local 2-Year CD Rates
|Peoples Transport Federal Credit Union||New Jersey||2.25%||$500|
|Self Reliance New York Federal Credit Union||New York||2.07%||$500|
|Idaho Central Credit Union||Idaho, Nevada||1.75%||$500|
|Manatee Community Federal Credit Union||Florida||1.75%||$10,000|
|Denver Savings Bank||Iowa||1.70%||$10,000|
|North Platte Union Pacific Employees Credit Union||Nebraska||1.61%||$10,000|
|Transit Employees Federal Credit Union||Washington, D.C.||1.55%||$500|
|Deere Employees Credit Union||Georgia, Illinois, Iowa, North Dakota, South Carolina, Wisconsin||1.55%||$500|
|University of Kentucky Federal Credit Union||Illinois, Indiana, Kentucky, Missouri, Ohio, Tennessee, Virginia, West Virginia||1.55%||$1,000|
|F&A Federal Credit Union||California||1.51%||$1,000|
|Shared Resources Credit Union||Texas||1.51%||$10,000|
In addition, shortening or stretching the term by a few months scores you another handful of possibilities, including two deals that are available to savers nationwide.
You can find all of these in our constantly updated roundup of the country’s best CD deals from credit unions and community banks.
Waiting for higher rates
As for the rest of the nation’s 2-year CDs, today’s national average return of 0.44% APY has shown little gain.
According to Bankrate’s weekly survey of banks and thrifts, the average rate bottomed out at 0.36% APY in December 2013 and sank there again as recently as last July.
Back in February 2007, before irresponsible mortgage lending propelled the economy into a tailspin, the national average return for 24-month CDs was 3.78% APY.
The huge decline resulted from the Federal Reserve’s decision to rescue the economy by pushing short-term interest rates to record lows in December 2008 — and holding them there.
The seven-year valley finally concluded in mid-December, when the Fed’s rate-setting committee kicked off what was forecasted to be a series of small, gradual rate increases over the next several years.
But the economic measures of late – especially a lack of healthy inflation – coupled with global uncertainties, haven’t yet encouraged the Fed toward a second hike.
So when can we expect the next boost?
The rate committee is meeting today and tomorrow. But it is virtually certain they’ll make no increase at this time.
That means the soonest we could see Hike #2 is September, although most Wall Streeters are betting we’ll be left waiting until December or even 2017.
Whenever that increase is announced, it’s can’t come too soon for America’s suffering savers.