bank rates

4 Pleasant CD Surprises Of 2013

A year ago, things looked bleak for CD investors.

With 10-year Treasury yields hovering around 1.80%, many (including yours truly) thought rates had further to fall.

Yet 2013 proved a year of pleasant surprises. Here are four of them.

Surprise 1. Pentagon Federal Credit Union came through with outstanding CD promotions.

The Virginia-based institution’s promotional CD offers were hard to refuse.

With easy membership access and nationally available CDs, PenFed launched 2013 with a 3-year CD having a 1.85% APY.

Following up in November with a 2.02% APY 3-year deal, it topped itself in December with a 5-year CD at 3.04% APY – a yield nearly one percentage point higher than the best bank rate on our CD Rates Leaderboard as of Dec. 1.

I don’t know how PenFed does it, but given its NCUA insurance and 4-Star Bankrate Safe & Sound rating, I’m not asking questions.

Surprise 2. Past CD rate leaders returned to the competitive fray.

I was stunned in June when First Republic Bank – which operates through branches in six states – posted rates of 2.00% APY for 5-year CDs and 2.25% APY for 6-year CDs.

Having closed all my maturing CDs there in 2011 because of the low renewal rates offered, I returned some of the funds in 2013, taking advantage of a quarter-point rate bump-up available to current and former customers.

EverBank was another institution where I’d long ago closed maturing CDs because of unsatisfactory rates. I restored some of my money when, in July, it offered a 2.06% APY 5-year CD.

Surprise 3. A 2% Club emerged – and expanded.

Discussing a long-running local CD offer by BBVA Compass, my final post of 2012 noted: “I’m amazed any institution still offers a 2% APY 60-month CD.”

Today, of course, a growing number offer 5-year APYs of 2% or higher.

This reflects a doubling of 5-year Treasury rates – from around 0.75% then to more than 1.50% today.

In addition to PenFed and EverBank, the 2% Club now includes, Melrose Credit Union, State Bank of India, GE Capital Bank, GE Capital Retail Bank, Salem Five Direct, Barclays and BBVA (which started offering CDs online this year).

Surprise 4. Long-term brokered CD rates often equaled or exceeded direct CD rates.

This puzzling phenomenon developed late in the year, with many banks, like Discover and CIT, serving up non-callable brokered CDs of five years or more duration with rates exceeding their online counterparts.

I wasn’t complaining, though. In fact, I bought some.

And today, I’m looking forward to more, and even better, surprises in 2014.

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