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Survey of the Best CD Rates for December 3, 2011

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Rate changes at credit unions and banks are most common at the start of the month, and there were quite a few changes with the start of December. Unfortunately, must were rate cuts. However, there was some good news. Most of the CD rate leaders on my list that are nationally available kept rates unchanged. That includes Ally Bank's 5-year CD.

The only rate cut was the end of the promotional CDs at Velocity Credit Union. Those ended in November. However, Velocity Credit Union's standard 5-year CD rate is still competitive with a 2.32% APY. There are a few all-access credit unions with higher rates, but all except Digital Credit Union have larger early withdrawal penalties. Velocity and Digital just have the standard 6 months of interest penalty. Velocity members who are at least 50 can get an extra 10 to 20 bps on the standard CD rates by qualifying for Elite Rewards.

If you prefer a bank over a credit union, you will likely have to settle for much lower rates especially for long-term CDs. The best nationally available 5-year CD rate at a bank continues to be at US Bank with a 2.25% APY. This is US Bank's special CD, and the term is just under 5 years (59 months). As you can see in the list below, you can get a much higher rate at Digital Credit Union and Melrose Credit Union. Another downside with US Bank is that it's on my list of inflation dangerous banks since its disclosure gives the bank the right to refuse an early withdrawal. On top of that, it has a harsh early withdrawal penalty (see my US Bank CD review).

If you prefer short-term CDs with terms under one year, you'll have a difficult time finding anything over 1.00%. You might ask why not just keep your money in an internet savings account which can earn about the same rate. The risk is that the savings account rate will fall, and as we have just seen with SmartyPig and with ING Direct, savings account rates can fall quickly.

For short-term CDs, the best deal is Ally Bank's 11-month No Penalty CD which currently has a yield of 0.96% APY. The no-penalty feature allows the customer to make this CD into any term he or she wants from 7 days to 11 months. Thus, there's no reason to choose a 3-month, 6-month or 9-month CD over this 11-month CD unless the other CD rate is higher.

Local CD Deals

Not all rate changes in December were rate cuts. Two Texas credit unions actually increased their rates, and they were both already rate leaders.

El Paso Employees Federal Credit Union increased rates on several of its long-term CDs including its 5-year CD. The 5-year CD yield increased from 3.03% to 3.29% which puts the credit union on the top for the highest CD rate in the nation. Unfortunately, membership is limited to those who live, work, worship or attend school in El Paso County, Texas.

The other Texas credit union which increased rates is San Antonio Credit Union (SACU). Its 10-year CD yield increased from 3.00% to 3.20%.

Unfortunately, the number of credit unions and banks offering CD rates of at least 3.00% didn't increase. I now have just three Texas credit unions on my list that meet this criteria. All three have limited membership. You can find other banks and credit unions with CD rates of at least 3.00% in our CD rate tables, but this survey focuses on credit unions and banks in sizable metro areas. Also, the credit unions in this survey allow more people than just those in small employer groups to join.

Long-Term CD Break Strategy

For the short-term CDs in my lists, you might notice CDs with the note "5-year CD closed after X years". These take into account the yield after the early withdrawal penalty is applied. Since Ally Bank's 5-year CD only has a 60-day interest penalty, it's still a good deal when closed early even with the recent rate cuts.

Since the early withdrawal penalty of Digital Credit Union and Velocity Credit Union is only 6 months of interest, this makes their 5-year CDs a good deal for short terms. Ally Bank's 1.84% 5-year CD is still the best deal for 6 and 12 months. However, Digital's 2.61% APY 5-year CD (2.86% with relationship checking) becomes a better deal when it's closed at 18 months or later.

As we learned last month, there is some risk that the bank or credit union may increase the early withdrawal penalty on existing CDs (see my post on a credit union that was allowed to raise the EWP on existing CDs).

Note About the CD Survey

As I described in my rate table overview, you can use our CD rate tables to find the best rates for both nationally available CDs and local CDs. This CD survey blog posts are intended to highlight nationwide CD deals that may not be apparent in the tables. For example, I'll include the post-penalty yields of a few long-term CDs.

The CD survey blog posts are also intended to highlight the local CD deals that are available in large metro areas. There are many high CD rates, but most of these are at small banks in rural areas or at small credit unions with very narrow fields of membership. In these local CD surveys, my focus is on local CD deals that are in big cities or that are available in large areas of a state.

Yields Accurate as of December 3, 2011

Under 1-Year CD Rates

  • Noteworthy Local Deals

1-Year CD Rates

  • Noteworthy Local Deals

18-month CD Rates

  • Noteworthy Local Deals

2-Year CD Rates

  • Noteworthy Local Deals

3-Year CD Rates

  • Noteworthy Local Deals

4-Year CD Rates

  • Noteworthy Local Deals

5-Year CD Rates

  • Noteworthy Local Deals

Over 5-Year CD Rates

  • Noteworthy Local Deals

Note: All rates listed above are Annual Percentage Yields (APY) which factor in compounding.

  Tags: CD rates

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