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Let Us Reflect: Big CD Anniversary Nears

Clock with wingsWe’re giving you a week to prepare so you can pick out an appropriate gift.

There’s an anniversary approaching, when we’ll commemorate something big that last happened three years ago.

Do you know what last occurred on May 25, 2011?

That was the last day in which a bank offered a certificate of deposit available to all U.S. savers — regardless of the state they lived in — that paid at least 3% APY.

Three years. Time flies.

Chart showing how 60-month CD rates have changed since they last yielded 3%.

We published a post about this offer from the tiny Portsmouth, Ohio-based American Savings Bank on that May morning. The six-branch bank closed the deal to all but local customers just a few hours later.

And savers have been left in the wilderness ever since.

Of course, there have been local offers of 3% since then, and you can’t discount the great 3% rate Pentagon Federal Credit Union offered nationally last winter, but we’re talking about banks here.

It is, after all, banks only that qualify for our CD Rates Leaderboard.

We make this distinction because credit unions — even ones like PenFed that frequently offer outstanding deals — put up barriers to purchase CDs that banks just don’t do. In PenFed’s case, most savers must join a nonprofit association and pay a membership fee of at least $15 before they can become credit union members.

That may turn off some folks — and it does eat into your savings.

So, for three years no bank has come close to offering a 3% CD. And if you see American Savings’ five-hour sale as little more than a fluke, you’ve already missed the anniversary.

Pennsylvania-based Quaint Oak Bank offered the most recent 3% deal that lasted for any length of time. This deal from the two-branch suburban Philadelphia bank lasted April 4-11, 2011.

Breaking below this threshold wasn’t the start of the collapse in rates. But psychologically, we think, it was pretty huge.

And more bad milestones followed.

We fell below 2.50% APY in September 2011 and below 2% in January 2012.

Five-year CDs didn’t hit bottom, though, until last summer, when the best nationally available deal fell to 1.76% APY. We last saw an offer that weak on June 25, 2013.

Things have improved since then, thankfully.

We’re back above 2%. Back above 2.25%.

And with more than a dozen banks offering competitive offers, it doesn’t look like — barring a huge economic setback — we’ll see falling rates again for some time.

But 3% remains an elusive marker, one that perhaps will signal to savers that certificates of deposit are back as a valid, safe investment.

We’d love to start planning the anniversary party.

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