bank rates

Is A 3% CD Rate Good Enough To Buy?

Poll QuestionPentagon Federal Credit Union surprised us earlier this month when it raised its 60-month CD rate to 3.04% APY.

Honestly, we were still reeling over the return of 2% CD rates to our CD Rates Leaderboard. Because, as you know, certificates of deposit have been that bad.

We’re not optimistic that PenFed’s rates will stick. It’s been two years since CD rates have reached the 3% mark, and we’re not sure why PenFed suddenly jacked its 60-month CD rate up this high – or its 48-month CD rate to 2.22% APY, for that matter.

But is this rate good enough for savers to get off the sidelines?

We know many of you have exited the game.

When we asked in the spring when you would stop buying CDs, many of you said you already had. And Federal Reserve data shows the amount of money in CDs continues to decline, with small-time deposits (less than $100,000) now at $540 billion. Before the recession, deposits were in the $1.4 trillion range.

Chart showing how much money is in CDs

Not only is that a huge decrease since just 2009, it also points to a change in savers’ preferred savings vehicles.

Of course, average annual yields from large banks and thrifts remain less than encouraging, with four terms still at record lows:

  • 3-month: a record-low 0.10%
  • 6-month: a record-low 0.14%
  • 12-month: a record-low 0.22%
  • 24-month: a record-low 0.36%
  • 36-month: 0.48%
  • 60-month: 0.79%

Our questions: What will it take to get you back onto the CD bandwagon? Is 3% APY enough?

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I'll start buying CDs again when...
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