bank rates

Small Banks Lower Top CD Rates

We’ve seen it happen time and time again.

A successful small bank offers a couple of great CD rates to depositors nationwide and gets buried in applications.

Overwhelmed by the paperwork and the influx of cash, the bank quickly cuts its rate or starts refusing out-of-state deposits.

The banks that topped our latest listings of the best 6-month and 12-month CD rates are the most recent to succumb to that pressure.

Wilshire State Bank was paying 2.50% APY on 6-month and 12-month CDs.

That put the Los Angeles-based bank at the top of our rankings of the best-paying 6-month CDs and second in our rankings of the best paying 12-month CDs.

Now Wilshire is paying a very respectable 1.96% APY on its 6-month CDs and 2.15% on 12-month certificates of deposit.

Quantum Bank is still paying the 2.66% APY that put it at the top of our rankings of the best-paying 12-month CDs.

But the suburban Atlanta bank is now accepting deposits from Georgia residents only.

That means UFB Direct now has the best nationally-available rate for 6-month CDs — 2.00% APY.

Two big online banks, Ally Bank and Discover Bank have moved to the top of our rankings for the best 12-month CD rates — 2.30% APY.

We suspect this problem will continue as long as small banks are offering far better rates than big banks.

And that will continue as long as the federal government remains a bottomless source of cheap money for the big banks.

They just don’t have to compete for deposits and can pay, for example, 0.80% APY (Wells Fargo), 1.50% (Bank of America) or 1.70% APY (Citibank) for 12-month CDs.

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Comments (2)
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2 Existing Comments
  1. BankVibe said:
    on June 23rd at 02:28 am got tipped off on a small “in branch only” CD special in PA. A 24 month CD yielding 4.06% APY.

    But I think your analysis is correct in that if it were advertised nationally it would be too much to handle for a 15 branch institution.

  2. CrankySaver said:
    on June 23rd at 08:49 am

    That was a great rate that Miner’s Bank in Minersville, PA had. Unfortunately, the promotion ended last Friday.