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Ken Tumin founded the Bank Deals Blog in 2005 and has been passionately covering the best deposit deals ever since. He is frequently referenced by The New York Times, The Wall Street Journal, and other publications as a top expert, but he is first and foremost a fellow deal seeker and member of the wonderful community of savers that frequents DepositAccounts.

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Survey of the Best CD Rates for August 16, 2013

POSTED ON BY

Economic news on Thursday sent Treasury yields rising to their highest levels since the summer of 2011. The economic news is increasing expectations that the Fed will begin the tapering of its bond buying program in September.

As we have seen in the last few months, several banks have responded to rising Treasury yields with higher long-term CD rates. However, we still don’t have a strong trend, and some of the banks that have raised rates have been pulling back. EverBank is one of those banks. It reduced its 5-year CD yield this week from 2.06% to 1.86%. Third Federal is another one. A few weeks ago it had come out with a special 6-year CD yield of 2.00%. Today it reduced that yield to 1.75%.

With the end of EverBank’s 2.06% 5-year CD, the best internet 5-year CD is now at iGObanking.com which continues to offer a 2.05% APY 5-year CD. This CD also has a reasonable early withdrawal penalty of 6 months of interest.

Local CD Deals

We lost a few good short-term local CD deals this week. I think most savers don’t like locking into long-term CDs when rates are so low. So if there’s a good short-term CD deal, many savers quickly jump on these. This week we lost good short-term CDs at Lincoln Park Savings Bank in New Jersey, at HarborOne Bank in Massachusetts and at Libertad Bank in Texas.

Banks seem to prefer to offer long-term CD deals. As I reported last month, some bankers are wanting to lock investors into longer-term CDs before rates rise. That has resulted in some very competitive long-term CD and IRA CD deals.

One of those new long-term CD specials is a 3% CD at Hutchinson Credit Union in Kansas. It’s a 10-year CD with yields that range from 3.15% to 3.00% depending on the deposit size. The credit union also has a 6-year CD with a yield of up to 2.50%.

I also added to the local list a 2.25% APY 7-year IRA CD from Ridgewood Savings Bank in New York and a 2.73% APY 7-year CD from Franklin Federal Savings Bank in Virginia.

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.

If you want to compare the effective yields of other CDs after the early withdrawal penalties, please refer to our CD early withdrawal penalty calculator.

The risks of planning for early withdrawals of long-term CDs were recently highlighted by the deposit agreement change at Ally. The risks have also been seen at credit unions which have raised the early withdrawal penalties on existing CDs. I have more details in this blog post.

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 August 16, 2013

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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Comments
26 comments.
Comment #1 by Robert (anonymous) posted on
Robert
Best CD advice: Open short term Ally CD's (like 3 month) and when it matures, change the term to 5 years.  You'll get a 0.25 % bonues, which makes Ally one of the best choices.

9
Comment #2 by mrvirgo posted on
mrvirgo
I did what Robert suggests in comment #1 and it worked like a charm; there were no glitches whatsoever. I opted for a 3 year CD and am getting 1.44%.APY. I have no intention of closing my CD early which is why I didn't opt for a 5 year term.

6
Comment #3 by Anonymous posted on
Anonymous
Ken hire Robert #1!

3
Comment #4 by Robert (anonymous) posted on
Robert
Ally is only great if you plan to break your CD before maturity.  2 months interest penalty is practicaly nothing on a 5-year CD.

2
Comment #5 by lou posted on
lou
I hate to spoil the party, but Ally can deny your request for an early withdrawal. Changed the language in their CD agreement a while back. I would say that is fairly ominous to me.

5
Comment #7 by Robert (anonymous) posted on
Robert
Yes.  There is risk that Ally will at any time discontinue the loyalty bonus.  There's risk that Ally may not let you do an early withdrawl.  If you want the better deals that Ally offeres, you need to tolerate this risk.  Good points.

5
Comment #8 by Anonymous posted on
Anonymous
You can not outwit a bank. The 1/4% extra for loyalty bonus is  much less than the cost of closing and cashing out costs to the bank.
They just have to change two fields in your file and is done (maturity date and interest) .
Ally just role over their investment of your money from 5 year to 10 year treasury because now they can count your CD as long term investment and make double on the interest than what they
are already paying you. If you roll it over again, Ally can buy 30 year treasury  with your money
and make killings out of you money.

 

7
Comment #9 by Anonymous posted on
Anonymous
I still think that laddering CD's for the highest rate no matter the terms is the best way to go. You always are invested at the highest rate at the time and not settling for a lower rate waiting for that higher rate.  You always have a CD maturing and have no penalty. You can have them mature, yearly, semi-annually what ever you choose. As they mature you can add to them or take some out depending on your circumstances. 

11
Comment #10 by paoli2 posted on
paoli2
I don't like or do laddering of CDs because it means I have to mix in lower rates for the shorter terms.  I prefere to just do all 5 year CDs for the higher rates and just get them as others mature.  This way I am doing laddering "my" way and getting higher rates.  I don't worry about the "what ifs" the rates go higher especially in these times with the consequences fo higher rates on the economy.  I've done this all my financial life and it has worked out just fine no matter what the economy is doing.

10
Comment #12 by Anonymous posted on
Anonymous
Allen Roth of CBS Money Watch covered this as he is very knowledgeable about Ally Bank.  http://www.cbsnews.com/8301-505123_162-57540626/ally-bank-changes-words-not-policy-on-cds/

1
Comment #13 by lou posted on
lou
#12, I agree with ChrisCD's comment to the article that if a sufficient number of depositors begin pulling their money out because of increasing rates, the bank will likely refuse to honor the withdrawal penalty if there is language allowing them to do so. No one has been able to tell me why Ally felt compelled to change the language in their CD agreement to give them this capability. Until I know the reason, one should not give them the  benefit of the doubt.

6
Comment #14 by Robert (anonymous) posted on
Robert
Ally used to offer 0.50% loyalty bonus for renewing a CD.  Has anyone been offered that lately?  If so, let us know what you did to get the offer.

2
Comment #15 by Anonymous posted on
Anonymous
Robert, 0.50% loyalty bonus is history, they will cancel 0.25% bonus very soon. FDIC is keeping a very close eye on them.

4
Comment #16 by Anonymous posted on
Anonymous
Again, to quote the ending of Allan Roth's column:  "With this in writing, I'm happy to say I was wrong on Ally pulling a fast one.  This is good news for consumers, my clients, and me. I know of one financial institution that told me it would not allow an early withdrawal if the IRS placed a lien on the CD.  Perhaps the lawyers who manage the small print at Ally Bank requested the change to address that situation."  Read the above column cited in #12. 

1
Comment #17 by lou posted on
lou
#16, it is obvious you have purchased these Ally CDs and would like to think that Ally would never prohibit early withdrawals, but you would be much better off if you didn't attempt to rationalize this. Allan Roth is speculating in the last paragraph. You don't need any language in a CD agreement to prevent a depositor from withdrawing money if there is a lien (IRS lien) on the account.  Truth be told, he has no idea why they changed the language. Only the CEO and his lieutenants know why and they are not talking. The only thing that matters is that they can do it if they want to. Everything else is wishful thinking. Here is my advice: Prepare for worst and hope for the best.

6
Comment #18 by Anonymous posted on
Anonymous
#17 - You got me concerned enough that I got in touch with Ally today, this is the chat transcript:

 

You are now chatting with 'Candice P.'

** Please do not share your credit card information, security code or CVV during this chat **

Candice P.: Thank you for chatting with me today. How can I help you?

Tom: I have both an IRA and a large # of 5 year CDs with you. There seems to be a lot of discussion online now in forums that Ally changed the wording on whether or not we can break the CDs and withdraw early or not. I'm aware of early 2 mo. penalty fees, but many people are concerned about this. Can you prohibit me from withdrawing money from any of these accounts if I choose to do so?

Candice P.: Hello Tom. How are you today?


Tom: hi

Candice P.: There is nothing prohibiting you from withdrawing funds from any accounts. Due to Federal Regulations, the funds just need to remain in the account within 6 business days from the initial funding date if you need to withdraw the funds.

Tom: Why are so many people suddenly so concerned about this?

Tom: Was some kind of wording changed last year?

Candice P.: I will be right with you.

Candice P.: Yes, wording was changed and notices are always sent either online or by mail to any changes in the Deposit Agreement. The updated information is stated as well on the last page. Please click the link below for the Deposit Agreement and let me know if the link works for you.

Candice P.: CLICK HERE FOR DEPOSIT AGREEMENT

Tom: Yes, I got it, thanks. As long as I can withdraw, that's good. There has been confusion. Thanks.

1
Comment #19 by lou posted on
lou
Tom, with all due respect, how did this conversation change anthing I said in my previous post. You concluded in your last sentence that Ally will always allow you to withdraw your money. How did you come to this conclusion? The customer service agent did not tell you this . All she did was provide you with the Deposit Agreement. Stop engaging in wishful thinking; it will only get you into a lot of trouble.

Tell you what, have Ally write a statement indicating they will never deny you permission to withdraw your money as long as your willing to pay the penalty. Have an officer of the bank sign it. When this has been accomplished, please inform us. I won't hold my breath.

 

6
Comment #20 by Anonymous posted on
Anonymous
I have a better idea.  I just reread Allan Roth's column on this.  He's a CPA, CFP, MBA, highly respected and has six figures tied up in Ally Bank.  I'll stick with what he said.  I refuse to believe that a reputable bank would suddenly refuse to let people have access to their money.  It would destroy their reputation and open them to a ton of lawsuits.  Better yet, I won't continue reading a thread like this where I have no idea if the people in it have any credentials better than mine (son of a CPA lol).  I'm more than happy with my 2.4% going into it's third year. 

2
Comment #23 by paoli2 posted on
paoli2
#20:  I think you are missing the best asset about this Forum/Blog.  We get to learn from people who have "tried" actual different investments and learn from their experiences, good or bad.  Those with all the credentials may just be wanting to sell you something that gives them the biggest commissions.  We  get no commissions for sharing our info and knowledge.  Don't be swayed by credentials.  Some of the biggest crooks in the financial industry probably had a slew of credentials.

6
Comment #21 by lou posted on
lou
If your so sure Allan Roth is correct, why not ask Ally to put it in writing and and have a bank official sign it. Surely, if you and Alan Roth are correct, the bank would have no problem with such a request. Are you afraid to ask?

 

5
Comment #22 by Anonymous posted on
Anonymous
Anonymous #20, you lost all your creditbilty on this forum with you gloting about credentials. 

Many so called "experts" with numerous degrees after their names got it wrong with their disasterous financial advice that left thousands of workers and retirees holding an emty bag which at one time held their life's savings and retirement accounts.

4
Comment #24 by susan (anonymous) posted on
susan
I just got a 3.2% brokered Disocver Bank CD for 10 years through Vanguard. Can someone explain why brokered CDs are paying more now than bank CDs when it has tranditionally been the reverse, 

1
Comment #25 by paoli2 posted on
paoli2
Susan:  I just checked out Discover  Bank's webpage and they are only giving 1.88% for a 10 year CD.  If Vanguard is selling them for 3.2% it has to be, imo, because they aren't getting enough buyers for the 10 year CDs and they have to get them sold.  I have never seen that much discrepancy between the brokerages and the bank rates.  I don't think you'll see it in the shorter terms because those are easier to sell at this time.  I would love to get over 3% but not if I have to go out that far.  Anything could happen in 10 years and I don't want to have money out that long.  My longest time frame is 5 or maybe even 6 years but not 10 years.  You did get a great rate if you are willing to go that long.  Good for you!

1
Comment #26 by Anonymous posted on
Anonymous
Susan:  I just checked Fidelity Investments CD page and they have the same Discover CDs for 3.2% for 10 years also.  BTW, would you mine telling me if you are buying these long term CDs and keeping them in an account for example an IRA within the same brokerage?  I was not aware we could just buy them for personal use and keep any place other than an account in the same brokerage.  Thanks for any info.

1
Comment #27 by Susan (anonymous) posted on
Susan
The reason I bought a taxable CD at 3.2 was because I could keep it in my non-taxable IRA which makes it a better investment than just buying it and paying tax on the interest. To buy a CD from Vanguard or Fidelity, I assume you would have to have an account there, but then you would be free to transfer it elsewhere to be held if you wished. But I am not certain about that. I appreciate Paoli's possible explanation, but I would also like to hear other possible explanations as to why brokered CDs are paying so much more now than bank CDs of the same duration when it has always been the reverse. Also, to respond to Paoli, 10 years does seems like a long time to get 3.2% and it may prove to be a bad choice, but I also have to weigh the cost of keeping cash waiting for rates to go up. I hope to use the 3.2% CD to start a ladder that will keep adding bonds and CDs with better rates as time goes on.

1
Comment #28 by lou posted on
lou
I hope you are prepared to own the CD for the entire ten years. If interest rates go up in the next ten years, you may have to take a substantial discount to liquidate the CDs. Furthermore, even if rates don't rise considerably, these CDs don't trade very often so it will be difficult to get a fair price for them. So, as long as you are prepared to own these 3.2% CDs when 5 to 10 year CDs may be 6% or higher in the next ten years, then this may be an appropriate investment for you.

2
Comment #29 by Susan (anonymous) posted on
Susan
Lou: Barring any unforseen circumstances, i do expect to keep the 10 year 3.2 CD to maturity. But since I still have cash on the sidelines, I sure hope you are right about rates going to 6%, and the sooner the better!. 

1
Comment #30 by Anonymous posted on
Anonymous
Does anyone know why brokered CDs are paying more than bank CDs???

1