bank rates

A Momentous Post On Top 5-Year CD Rates


This is the 1,000th post since Bankaholic rocketed into the blogosphere on July 16, 2006.

This ranking of the best 5-year CD rates is also Bankaholic's 1,000th post.

Our debut deal was Emigrant Direct raising its money market rates to an “AWESOME” 5.15%.

“That is going to be HOT,” we declared.

(We were young. We were impressionable. We used capital letters a lot more back then.)

Of course those aren’t the kind of lusty adjectives we’d apply to today’s top rates.

The best 5-year CDs aren’t even paying 3%.

But you still need to take advantage of those deals because they’re almost twice what you can earn with the average 60-month certificate of deposit. Settle for a below average rate and you’re just giving money away.

The best nationally available 5-year CD rates are:

2.93% APY with a $5,000 minimum deposit from Melrose Credit Union, which has a single office in New York City.

2.75% APY with a $5,000 minimum deposit from Salem Five Bank, which has 22 branches just north of Boston.

2.75% APY with a $500 minimum deposit from Danversbank, which has more than 30 branches in the Boston area.

2.60% APY with a $500 minimum deposit from Astoria Federal Savings ., which has 85 branches in Brooklyn, Queens, Nassau, Suffolk and Westchester counties.

2.55% APY with a $1,500 minimum deposit from EverBank, a predominantly online bank based in Jacksonville, Fla.

2.54% APY with a $1,000 minimum deposit from Bank of Internet, an online bank located in San Diego.

These banks and credit unions qualify for our rankings by imposing no restrictions on who can buy their CDs either online or through the mail.

Melrose is one of the few credit unions that qualify for our rankings because its unique charter allows anyone to join for only $1, regardless of where they live or work. (You will also be required to hold at least $25 in a savings account.)

And finally, we just can’t recommend a 5-year CD from EverBank without noting its punitive early withdrawal penalty.

Most banks charge six months worth of interest.

EverBank charges 25% of the interest you would earn over the full term of the CD. That’s more like 15 months worth of interest. And if you reclaim your money before you’ve earned enough interest to cover the penalty, EverBank takes the difference out of your principal.

We hate that.

See how these returns compare with the best CD rates from scores of other banks in our database.

(The fine print: This is the 1,000th post on our main blog. We’ve also published 366 posts on our Personal Finance Blog, which you can always reach by clicking on the “Finance” tab at the top of every page. Think of those as a little bonus for following Bankaholic.)

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Comments (4)
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4 Existing Comments
  1. CharleyR said:
    on December 30th at 03:45 pm

    These banks should be commended for keeping their 5-year rates substantially above the yield on the 5-year T-Note (2.07%). The too-big-to-fail crowd is now lagging behind the Treasury, although BofA, Chase and Wells Fargo seem to have recently bumped up 5-year rates to be at (or near) 2.00%. Good old Citi is still at 1.25%, although, given its practice of changing rates only on Tuesdays, this may go up next week. It can’t get any lower.

  2. CharleyR said:
    on December 30th at 04:11 pm

    To avoid unfairly bashing Citi, I checked its 5-year branch rate locally (Southern California). It’s a whopping 1.75% APY! The 1.25% APY is only for those of you who open an account online.

  3. Joe George said:
    on December 31st at 10:17 am

    Be acutely aware of early withdrwal penalties when going longer-term. Some banks, such as the Bank of Internet, have penalties well above the normal “180 days” intetrest on CDs with a maturity of > 1 year. Ally Bank’s 5 Year CD pays 2.40 APY (which is a l;itlle lower than the top rates than you can get on a five year product (Melrose CU= 2.90%) BUT Ally Bank’s early withdrwal penalty is only 60 DAYS interest! If rates rise, one can unwind his/her investment in an Ally Bank 5 year CD, with just a minimal slap on the wrist (which is tax deductible).

  4. CharleyR said:
    on December 31st at 11:05 am

    At least two banks sent me Truth-in-Savings disclosures this year telling me that CDs opened or rolled over in the future would have, as an alternative to a fixed penalty like 6 months’ interest, a “make whole” type of penalty, based on the difference between the rate on the CD and the rate for a new CD with a comparable remaining maturity at the time of redemption. This, in effect, makes it impossible (or almost impossible) to take advantage of a sharp spike in rate levels. Also, I think the first thing to check is whether, under the deposit agreement, bank consent is required for early redemption. Many banks set forth specific redemption penalties, but also reserve the right to prohibit early redemption.