bank rates

Average 5-Year CD At 2014 High

Chart showing a blue arrow moving up.Let’s not get too excited, but the typical 60-month CD you’d find at your corner bank is at its highest rate of 2014.

Our weekly survey of banks and thrifts shows the average 5-year CD now pays 0.81% APY. The rate last hit that mark in February.

The average CD last paid more in April 2013.

The above chart shows the average 5-year CD rate between the start of 2013 and today. Rates have essentially been flat all year, but have edged up ever so slightly in the last two months.

This small movement is by no means a signal that you should run out and buy the first CD you see. It doesn’t even mean you should buy a certificate of deposit at all.

But we take it as a sign that things are getting better, that this era of record low interest rates is mercifully nearing its conclusion.

Heck, the best nationally available CD rates are paying more than they have in years. That’s saying something.

There’s even some speculation the Federal Reserve may offer another signal that it intends to hike short-term interest rates banks charge one another.

The Federal Open Market Committee is scheduled to meet next week. Some Fed watchers believe the central bank could change the language it has used to describe when it might increase rates.

From The Financial Times:

In the past few days, officials from every part of the rate-setting Federal Open Market Committee – hawks and doves, regional presidents and Washington governors – have called for new language.

Their remarks could mean a move at the September FOMC meeting in 10 days, although there is little consensus yet on new wording, so a shift might have to wait until next month.

A particular issue is the Fed’s guidance of low rates for a “considerable time” after it stops buying assets in October. A chunk of the FOMC feels that is a dangerous hostage to fortune, after steady economic progress that could yet require rate rises early next year.

Guidance on this rate increase is key because this measure – called the federal funds rate – influences what you earn on certificates of deposit and other bank accounts.

If the Fed indicates it’s going to take action sooner rather than later, that will be another good sign for savers.

The bottom line: It’s now OK to open our eyes again and to start thinking about a plan for moving money out of low-paying accounts when rates return to respectability.

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