bank rates

Highest CD Rates Roundup For March 21

Bringing you the very best CD rates from credit unions and local banks.Janet Yellen told us to ignore the dots.

What are the dots, and why are we recommending you do exactly the opposite of what the Federal Reserve chair suggests?

The dots in question are blue, well, dots. The Fed uses them to explain the thinking of the members of the rate-setting committee.

A blue dot on the documents released following each Fed meeting represents a vote of sorts from individual officials. They’re predicting, as it were, where the federal funds rate could be set at the end of a particular year.

The federal funds rate is the short-term bank-to-bank lending charge the central bank sets. It influences all sorts of other yields, including on savings accounts and certificates of deposit.

The federal funds rate has been set at near zero since late 2008. Savers won’t be able to earn a decent return until the Fed significantly boosts this rate.

We have to count on the dots because the Fed has muddled its official policy (what Yellen wants you to pay attention to) so much that it’s impossible to take any useful information from it.

Each dot on the chart above shows where individual committee members believe the rate is likely to be at the end of 2016, as well as what the expected long-run average should be.

As you can see, the consensus is the lending rate should be between 2% and 3% by the end of 2016 and closer to 4% in the long run.

The larger chart, which we haven’t excerpted, shows where committee members think the rate will be at the end of this year and next. The full chart makes clear that a majority of participants believe the first rate increase will occur in 2015.

But that hasn’t always been the case.

Since 2012, the Federal Reserve has offered expectations about the year of the first rate increase. Several times each year, committee members reassess their projections.

When the Fed first started disclosing these projections, opinion was mixed on whether 2014 or 2015 would be the year of the first increase.

But ever since the September 2012 meeting – as shown in the chart below – the majority of Fed officials have set 2015 as the likely target year.

It was during that September meeting the Fed first set policy that rates would be held low “at least through mid-2015.”

No matter what benchmark the Fed says it will use to determine rates – from an unemployment threshold to this week’s vague “wide range of information” – 2015 has long been the target.

Pay attention to the dots. Ignore everything else.

Highest CD Rates

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

  • Countryside Federal Credit Union in New York state (www.countryside.org) has a March Madness special on 12-month CDs. The standard yield is a tiny 0.50% APY, but you can earn as much as 1.50% APY if you correctly choose which NCAA men’s basketball teams make the Final Four and the National Championship. Brackets must be submitted by March 26. Credit union membership is open to Onondaga County residents.
  • Rockland Federal Credit Union in Massachusetts (www.rfcu.com) pays 1.3% APY on 18-month CDs with a $500 minimum deposit. Credit union membership is open to residents of Barnstable, Bristol, Middlesex, Norfolk, Plymouth or Suffolk counties.

There were just a couple of changes to existing deals on our list.

Spokane Teachers Credit Union in Washington cut its 30-month CD rate from 1.76% APY to 1.51% APY. That’s good enough to stay on the list.

But we removed Columbus First Bank in Ohio after it stopped offering its 14-month, 1.15% APY CD rate.

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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