Considering how bad things have been since the Fed adopted its “zero interest rate” policy six years ago, 2014 was a pretty good year for savers.
I actually believe the positives outweighed the negatives in the CD market for the first time since the financial crisis and recession.
I know that’s a somewhat shocking thing to say after yields on 10-year Treasury notes tumbled from approximately 3% in early January to about 2.2% today!
But here are four encouraging trends that marked 2014 as a turnaround year for CD investors:
The increasing number of institutions posting — and sticking with — 5-year rates of 2% APY or higher.
The growing membership in the “2% club” was perhaps the most significant development of 2014.
Where in January only a handful of institutions belonged to this elite group, today there are some 30 members among banks and credit unions offering nationally available CDs.
This development permitted me to stick with banks at which I’d previously been closing maturing CDs, such as Synchrony and Nationwide.
Attractive promotional deals, including rates of 2% APY or higher on 2- to 3-year CDs.
I took advantage of these whenever and wherever I could.
I was a returnee at Luther Burbank Savings (for its 2% APY, 30-month deal in June) and USAlliance Federal Credit Union (for its 1.71% APY, 35-month deal throughout much of the year).
This summer and fall, I also joined San Diego County Credit Union, XCEL FCU and Capital Educators FCU to glom onto 2% APY promotions on 24-month, 29-month and 36-month CDs, respectively.
Rate increases posted at some banks actually allowed customers to raise rates on outstanding bump-up CDs.
Like many, I’ve been wary of these CDs because of persistently low market rates and the ability of institutions to manipulate posted rates to avoid triggering step-up rights.
So, I was pleasantly surprised when CIT Bank raised its 2-year RampUp Plus CD rate from 1.20% to 1.25% APY this year, permitting me to raise the rate on two IRA CDs.
(Unfortunately, I acted too soon, because CIT has now raised that posted rate to 1.35% APY.)
Ally has also recently upped the rate twice on its 2-year Raise Your Rate CD — first from 1.20% to 1.25% APY and then from 1.25% to 1.29% APY.
CIT Bank led the way in customer-friendly promotions.
I really appreciated special deals offered by CIT Bank to existing customers throughout 2014. I participated in some.
These deals included bump-ups over posted rates for holders of maturing CDs choosing to renew for longer terms and promotions for new IRA and non-IRA CDs.
So, all in all, I consider 2014 a good year.
Let’s hope these positive trends continue into the new year.