bank rates

Highest CD Rates Roundup For Jan. 24

Bringing you the very best CD rates from credit unions and local banks.There’s an interesting report out from Fitch Ratings – one of the big three credit rating agencies – that argues a number of popular online banks are at risk of losing your business once interest rates begin to rise.

Fitch focuses on banks operated by financial companies: Ally, AmEx, CIT, Discover, GE Capital and Sallie Mae.

Although they’re never named, the report essentially argues that once the traditional brick-and-mortar big banks finally boost savings rates from, well, practically nothing, these online start-ups that have been the only thing worth talking about in recent years could lose out.

The six companies mentioned are at risk of losing business because their banking arms are newish and haven’t had time to develop long-term relationships. They’re also at risk because they “are predominately centered on gathering deposits online.”

And while competitive interest rates may have gotten you to throw your money into a CD account, that might not be enough to keep you: “Fitch believes that institutions that offer high interest rates on deposits could attract ‘hot money’ that may quickly leave the institution when interest rates rise.”

The bank in this group in the best position? Ally Bank.

From the report:

“Of the institutions reviewed, Fitch believes Ally’s deposit platform is best positioned to withstand a rise in interest rates given its focus on low balance retail time deposits while not offering an above-market interest rate.”

“Time deposits” is another way to say CDs, which are mentioned less frequently in the report than savings accounts. Ally has offered good, if not great, CD rates.

Fitch says these banks can better keep customers with a “greater mix” of long-term CD deposits “with strict restrictions and/or penalties on early withdrawal …”

For anyone who has taken money from a traditional bank in recent years and opened an account at one of this six banks, will rising interest rates give you reason to go back? I’m not so sure.

Highest CD Rates

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

  • Credit Union West in Arizona (www.cuwest.org) pays 2.90% APY on 60-month CDs with a $10,000 minimum deposit. The rate increases to 2.95% APY with a $50,000 deposit. Credit union membership is open to residents of Maricopa or Yavapai counties.
  • Pegasus Community Credit Union in Texas (www.pegasusccu.com) pays 2.25% APY on 60-month CDs with a $2,000 minimum deposit. The rate increases to 2.30% APY with a $50,000 minimum and 2.40% APY with a $75,000 minimum. Credit union membership is open to residents of Dallas or Denton counties.

We saw a few more rate changes on our existing list this week.

Union Community Bank in Pennsylvania dropped its 50-month CD that paid 2% APY, but Montauk Credit Union in New York raised rates and now pays 2.75% APY on 84-month CDs, 2.50% APY on 60-month CDs, 1.75% APY on 36-month CDs and 1.50% APY on 24-month CDs.

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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