bank rates

Highest CD Rates Roundup For Feb. 21

Bringing you the very best CD rates from credit unions and local banks.We’ll take good news where we can get it, even if we have to twist ourselves into contortions to find it.

But, if you look just right at this week’s release of the minutes from January’s Federal Reserve policy meeting, you might be able to see a crack in the resolve to continue holding short-term interest rates low.

A key passage from the minutes: “A few participants raised the possibility that it might be appropriate to increase the federal funds rate relatively soon.”

This was not a consensus view. But we’re being optimistic today.

The federal funds rate is the interest rate the central bank allows commercial banks to charge each other to borrow money on deposit with the Fed. The Fed has been effectively keeping that rate at zero since late 2008 as part of its effort to prop up the economy.

Unfortunately, as the federal funds rate goes, so too go rates on certificates of deposit.

The eventual increase in the federal funds rate has been tied (loosely) to unemployment. The Fed most recently said it would hold interest rates low “well past the time” the unemployment rate hits 6.5%.

The rate fell to 6.6% in January.

While most Fed members still indicated the central bank wouldn’t raise short-term rates until 2015 or later, they have talked about what to do about the unemployment threshold.

From the Wall Street Journal:

“Given the jobless rate’s close proximity to their threshold, officials at the January meeting agreed that ‘it would soon be appropriate for the Committee to change its forward guidance in order to provide information about its decisions regarding the federal funds rate after that threshold was crossed.’

“But there appeared to be little agreement on exactly what changes the Fed should make. Some officials thought the central bank should lower its unemployment threshold, while others advocated a ‘qualitative approach’ of providing the public with more information on what other factors officials would consider when making the decision to raise rates.

“Several officials argued that the Fed should emphasize that risks to the stability of the financial system are among the factors guiding their decision, the minutes said. Others thought the Fed should stress that it is willing to keep rates low for longer if inflation remains below their 2% official target.”

An increase isn’t imminent, but at least there are rumblings among some on the board that the time to raise rates is coming.

Highest CD Rates

This week, we added two deals to our list of the highest CD rates from credit unions and local banks:

  • NASA Federal Credit Union ( pays 2.00% APY on 49-month CDs with a $5,000 minimum deposit. Membership is open to all U.S. residents. You can qualify for membership by first joining the American Consumer Council. Membership in the American Consumer Council is free, and you can apply on the credit union’s website.
  • Pilgrim Bank in Massachusetts ( pays 2.00% APY on 48-month CDs with a $1,000 minimum deposit. You don’t have to be a Massachusetts resident to buy these certificates of deposit, but you need to do so in person. Pilgrim Bank has two branches in Cohasset and a third in Marion.

There was just one change to CDs already on our list. Icon Credit Union in Idaho and Oregon ended its 24-month special 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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