bank rates

Top CD Rates Begin Long Climb Back

If we’re lucky (and that’s a big if), by this time next month we’ll be celebrating the Federal Reserve’s first rate hike after an unprecedented seven years of historically low deposit returns.

Savers don’t need us to tell them they’ve suffered during this period.

Yields began to drop in the fall of 2008, sank for the next four to five years, and only in the last couple of years started very modestly creeping back upward.

But how much have rates suffered, and how much ground have we regained?

Our CD Rates Leaderboard has now tracked the top nationally available yields across the six most common terms for a full five years, having been launched in November 2010 (Happy Birthday, Leaderboard!).

So as we sit waiting in what could be the last month before the Fed kicks off a period of increasing rates, let’s rewind the clock to see what the top yields on certificates of deposit were in each of the last five years.

With the exception of 3-month CDs, all of today’s top yields have surpassed the leading returns of four years ago.

The gain is slight, however, with today’s leaders paying 0.15% to 0.21% APY higher than the November 2011 lead returns.

Two of the terms experienced their lowest November rate in 2012, while three sunk deepest in 2013. Six-month CDs, however, were at their worst lead just a year ago.

With the victories capped right now at beating the lead rates from four years ago, the next milestone becomes regaining all of the ground lost since the Leaderboard began five years ago.

Six-month CDs have the shortest way to go, with MySavingsDirect‘s lead standing just a tenth of a percentage point below the November 2010 lead rate.

One-year returns are similarly close, after Colorado Federal Savings Bank raised the lead two weeks ago, leaving just 0.16% APY to reclaim.

In both cases, the deficits represent roughly 10% of the 2010 lead rates.

In all of the other terms, however, the road back to November 2010 yields is far longer, from 0.42% APY for 36-month certificates up to 0.58% APY for 60-month returns.

This is despite E-Loan‘s commanding lead in the 36- and 60-month terms, where it outpays the runner-up by almost two-tenths of a percentage point.

Compared to the 6- and 12-month terms, the shortfalls in the longer terms are 18% to24% behind the November 2010 leads.

Three-month CDs are a bit of an anomaly. The lead rate there is almost 50% lower than the best yield of five years ago.

With everyone awaiting the Fed’s decision after its rate-setting committee meets Dec. 15-16, we’re not expecting much movement in returns over the next month.

Even then, we might be left waiting for an increase until early 2016.

Whenever it comes, the Fed’s first rate hike isn’t expected to be a singular event but rather the launch of a methodical series of gradual increases over the next several years.

That means we may be in a historic final month of this dismal period for savers – a conclusion we’ll be thrilled to celebrate.

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