bank rates

Highest CD Rates Roundup For April 11

Bringing you the very best CD rates from credit unions and local banks.So how, exactly, did the Federal Reserve arrive at its muddled, squishy new policy for when it will increase short-term interest rates?

It started, according to minutes released this week from the Fed’s most recent rate-setting committee meeting, with a secret video conference call held March 4.

During that video meeting and at the subsequent regularly scheduled face-to-face gathering on March 18-19, members agreed on one thing for certain: The unemployment rate could no longer be used as a marker for when the Fed might boost rates.

“Participants agreed that the existing forward guidance, with its reference to a 6-1/2 percent threshold for the unemployment rate, was becoming outdated as the unemployment rate continued its expected gradual decline,” according to the minutes.

With that target so close, the Fed blinked.

But members didn’t all agree on what the new “forward guidance” should be. Forward guidance is Fed-speak for what has to happen in the economy before the central bank will increase the federal funds rate, a lending rate between banks that influences all sorts of short-term interest rates consumers care about – like CD rates.

We’ll go over some of the rejected ideas below. But first, recall what the committee eventually settled on so you can judge whether the Fed made the right call.

The new target says the Fed will “assess progress” in its objectives to promote high employment and 2% inflation by taking “into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments.”

This policy won over the following discarded ideas, according to the minutes:

  • Changing the threshold to 5-1/2% unemployment and 2-1/4% inflation.
  • Changing the policy to suggest rates would remain low if “projected inflation remained persistently below” 2%.
  • Keeping rates low until “complete recovery of the labor market was projected to occur,” whatever that means.
  • Tying an increase to a targeted goal for real GDP growth.

I’ll always favor specific criteria that savers can see to judge when rates will increase. But I guess after the Fed willfully ignored its own earlier threshold, it doesn’t really matter if its new policy is squishy.

Highest CD Rates

This week, we added three deals to our list of the highest CD rates from credit unions and local banks, including one certificate anyone can buy:

  • Leader Bank in Massachusetts (www.leaderbank.com) pays 1.40% APY on 24-month CDs with a $1,000 minimum deposit. You have to live in Maine, Massachusetts, New Hampshire or Rhode Island to buy these certificates of deposit, but you can do so online, by mail or in person at a branch.
  • Mobiloil Federal Credit Union in Texas (www.mobiloilcu.org) pays 1.76% APY on 36-month CDs, 2.12% APY on 48-month CDs and 2.53% APY on 60-month CDs with a $1,000 minimum deposit. Credit union membership is open to residents of Hardin, Jasper, Jefferson, Newton and Orange counties.
  • Quorum Federal Credit Union in New York (www.quorumfcu.org) pays 1.25% APY on 13-month CDs. Anyone can join this credit union by first becoming a member of the Select Savers Club, a nonprofit group that provides information on managing money and debt so its members can meet their financial goals. The credit union will cover the Select Savers Club’s $5 membership fee if you join both at the same time online.

We saw just one change this week to existing deals on our list.

Civic Bank & Trust in Tennessee ended its 30-month special CD offer and has been removed from our list.

You’ll find the top-paying deals clearly marked on our highest CD rates page, showing where they are available, with a quick link back to the original post, which includes more information on the institution and its requirements.

We’ll update this page weekly, so you’ll always know what great deals are out there from credit unions and local banks.

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