The Federal Reserve is giving off signals that it’s not done monkeying with its forecast on when it might increase short-term interest rates.
That’s more bad news for savers.
First there was Federal Reserve Vice Chair Janet Yellen, who suggested in a speech this week that the rate-setting committee of the Fed could keep “the federal funds rate close to zero until early 2016, about two quarters longer” than the current projection of mid-2015.
The federal funds rate impacts what you earn on certificates of deposit and other savings products. If banks can borrow at little or no cost, which the Fed’s rate policy allows, they have no incentive to pay you for lending them money.
Then came the release of minutes from the most recent meeting of the Fed’s rate-setting committee where there was much discussion on shifting away from a date-specific target for raising rates in favor of a data-specific target.
Specifically, the committee talked about holding down rates until either inflation or unemployment hit a certain threshold. That could be 2.25% inflation or 3% inflation; 5.5% unemployment or 7% unemployment.
Although pesky details like what the thresholds might be clearly haven’t been worked out, we’re not anywhere near any number the Fed would consider for raising rates.
Still, many members of the Federal Open Market Committee appear open to this switch.
From the Washington Post:
“Members of the Federal Open Market Committee ‘generally favored the use of economic variables,’ instead of calendar dates, in their attempts to guide the markets as to the future direction of Fed policy, according to minutes of the meeting. The hope is that this would make financial markets and decision-makers in the economy more confident about the economic future and better understand how to interpret the future of Fed policy.”
No word on how this is supposed to inspire confidence in savers.
For now, anyway, we have some “good” rates to share on our list of highest CD rates from credit unions and local banks. We added three institutions this week:
- Beaumont Community Credit Union (www.bmtccu.com) in Texas pays 2.12% APY on 48- and 60-month CDs with a $50,000 minimum deposit. For smaller deposits of at least $1,000, you’ll earn 2.02% APY. Credit union membership is available to those who live, work, worship or attend school in Jefferson County in the southeastern portion of the state.
- Cambridge Savings Bank (www.cambridgesavings.com) in suburban Boston has a fantastic CD special. It pays 2.00% APY on 6-month CDs with a $1,000 minimum deposit. You have to live or work in Massachusetts to take advantage of this special offer.
- Security Service Federal Credit Union (www.ssfcu.org) offers competitive rates in the three states it serves — Colorado, Texas and Utah. But the rates vary pretty widely. We found the best of the bunch in San Antonio, where you can grab a 5-year CD that pays 2.15% APY with a $500 minimum deposit. If you have $100,000 to invest, the yield climbs to 2.30% APY. The credit union boasts more than 2,300 ways to qualify for membership in the three states it serves, which are detailed on the website.
As for existing deals on our list, there’s just one major rate change this week.
RiverLand Credit Union in New Orleans, which allows all U.S. savers to join, cut its 60- and 36-month CD rates, both to 1% APY. We removed this credit union from our list.
You’ll find all 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.