bank rates

Highest CD Rates Roundup For April 4

Bringing you the very best CD rates from credit unions and local banks.This has been the week of the walk back.

By that I mean a couple of the Federal Reserve’s leading lights hit the speaking circuit to stomp out any flicker of hope they might have inadvertently ignited in America’s savers.

Thank you, Bob and Janet.

Keep up the beatings until morale improves – or our savings are depleted. Whichever comes first.

Of course, I’m talking about the latest twists in the Fed’s relentless campaign to drive short-term interest rates to record lows.

It’s accomplished that by drastically reducing what’s called the federal funds rate, which is what commercial banks pay to borrow money from each other through the Fed.

Since the Fed set that rate at essentially zero in December 2008, there’s really been no reason for banks to pay more than a pittance for our deposits. They can get pretty much all of the money they need from the Fed, more or less for free.

Last year, former Fed Chairman Ben Bernanke said the central bank would start bumping up rates when the unemployment rate hit 6.5%.

With that goal in mind, savers anxiously watched the jobless rate fall to 7.3% in August. Not quite there, but closing in.

Then Bernanke told a news conference after the Fed’s rate-setting committee met on Sept. 18 that “the first increases in short-term rates might not occur until the unemployment rate is considerably below 6.5%.”

Indeed, the Fed chairman said a return to market-driven rates – and a reasonable return on our savings – could be “several more years” down the road.

Several more years?

Economists who had expected the bank to reverse course and start raising the fed funds rate by late 2015 were suddenly wondering if sometime in 2016 might be more realistic.

No one expected anything to change when Yellen took over as Fed chairman at the end of January.

This Yale-trained economist was supposed to be even more gung-ho for inflicting pain on savers than Bernanke.

At least that’s what her friends said.

I didn’t think we had much to look forward to when Yellen plopped down in front of the microphones for her first press conference as Fed chair late last month.

But wait!

Suddenly it seemed our new money maven was laying out a quicker route to higher rates than we’d heard in ages.

Yellen said the Fed must first wind down its campaign to drive long-term interest rates lower by purchasing billions of dollars a month in Treasury debt and mortgage-backed bonds.

That process began in January and, at the current rate of “tapering” as the Fed calls it, should wrap up sometime this fall.

Once the bond purchases end, Yellen said the Open Markets Committee would turn its attention to the fed funds rate about six months later.

By now I’m frantically counting on my fingers. If the bond purchases end in September, then the fed funds rate could start going up as soon as April 2015.

The words were barely out of Yellen’s mouth before the first bucket of cold water came splashing down.

“She doesn’t really mean it,” said Mike Cetera, Bankaholic’s assistant managing editor (who usually writes this weekly post).

What?! I refused to believe that a highly trained professional would use her first turn on the world stage to misspeak.

“You’ll see,” Mike predicted – and the week of walking backwards soon followed.

Charles Evans, president of the Chicago branch of the Federal Reserve, was the first to temper expectations for a “quick” rise in the fed funds rate.

“I currently expect that low inflation and still-high unemployment will mean that the short-term policy rate will remain near zero well into 2015,” Evans said in a speech in Hong Kong. (That’s from the text. I wasn’t there.)

By the time “the policy rate increases, it will have been near zero for about seven years.”

Then Yellen did her own backpedaling on Monday when she addressed a community development conference in Chicago.

“This extraordinary commitment is still needed and will be for some time, and I believe that view is widely shared by my fellow policy makers,” Yellen said. “The scars from the Great Recession remain, and reaching our goals will take time.”

While Yellen didn’t mention any specific dates, the labor market stats she’s watching indicate that the Fed won’t act until late 2015.

It seems that we’re looking at another year and a half of rock-bottom interest rates before a gradual return to reasonable returns even begins.

Highest CD Rates

This week we added one deal to our list of the highest CD rates from credit unions and local banks.

Dover Federal Credit Union is now offering its 38,000 members 1.45% APY on a special 28-month CD.

NASA Federal Credit Union extended its 49-month, 2.00% special until April 30.

Firstmark Credit Union down in San Antonio increased the return on its special 40-month CD from 1.50% to 1.80% APY.

On the disappointing side of the ledger, two credit unions lowered their noteworthy rates:

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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