bank rates

Highest CD Rates Roundup For Aug. 23

Bringing you the very best CD rates from credit unions and local banks.On Thursday, the 5-year U.S. Treasury yield rose to 1.71%.

This is a big deal for two reasons.

First, it marks the highest yield in more than two years. But more significantly, the spike means the gap between Treasury yields and average 5-year CD rates has reached a 3½-year high.

Under normal conditions, this would signal higher CD rates are coming soon. But the Federal Reserve’s efforts at controlling interest rates have made the market anything but normal.

Historically, 5-year Treasury yields and average 5-year CD rates are closely correlated. (It’s important to note the old saw here: correlation doesn’t equal causation.) According to my calculations, since 2001 the typical yield difference between the two has been one-tenth of a percentage point.

This week, the spread rose to more than nine-tenths of a percentage point.

This happens very, very rarely.

In fact, the spread has been greater than it is today in just 31 of the previous 663 weeks. That’s roughly 4% of the time over the last 13 years.

Chart showing the correlation between CD rates and Treasury Yields

The last time we saw an imbalance like this – at the very start of the Great Recession – it took more than three months for falling CD rates to catch up to falling Treasury yields.

This time, Treasury yields have been on a near constant rise since May. Average 5-year CD rates have barely moved during that time, settling this week at 0.79% APY, just two one-hundredths of a percentage point above their record low.

True, the best nationally available deals on our CD Rates Leaderboard have increased this summer, but wouldn’t it be nice if the average 60-month CD paid 1.60% APY or better?

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

  • Aspire Federal Credit Union (www.aspirefcu.org) in New Jersey pays 1.25% APY with a $1,000 minimum deposit on 15-month CDs. This offer is available nationwide. To join this credit union, you must first join the American Consumer Council. When applying for membership online, select American Consumer Council as your eligibility option, and the credit union will automatically enroll you in the consumer advocacy group for free.

There were also a few intriguing changes from credit unions already on our list.

First, Firelands Federal Credit Union (www.firelandsfcu.org) in Ohio, which we featured last week, has ended its three CD specials, including an 18-month offer that paid 2.00% APY. In their place, Firelands now offers a 12-month CD that pays 1.75% APY and a 9-month CD that pays 1.25% APY.

And NavyArmy Community Credit Union (www.navyarmyccu.com) in Texas has cut its 30-month CD rate from 2.30% APY to 2.00%, but raised rates in two other terms. It now pays 1.85% APY on 24-month CDs (up from 1.75%) and 1.50% APY on 12-month CDs (up from 1.35%).

We should also point out the special 15-month nationally available deal we wrote about this week from GE Capital Retail Bank (www.gecrb.com). It pays 1.15% APY with a $2,000 minimum deposit.

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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