About Ken Tumin

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 October 21, 2011


Survey of the Best CD Rates for October 21, 2011

The CD rate cuts continue. This was especially the case for several banks with nationally available CDs.

As you might have expected, Ally Bank made more cuts to its 5-year CD rate. The yield fell below 2.00% for the first time. It's now 1.98% APY.

Several banks made cuts to their short-term and mid-term CD rates. These include MainStreet's Airbanking, Aurora Bank, First Trade Union Savings and CNB Bank Direct.

New Internet Bank

On the positive side, CIT Bank launched an internet bank with some competitive rates. The best deal is its 1-year Achiever CD with a 1.15% APY. It allows one add-on deposit and one rate bump-up during the 1-year term. The only downside is that it has a large $25K minimum deposit (see my review).

Best Short-Term CD Deal

If you prefer a CD term under one year, Ally Bank's 11-month No-Penalty CD is the best deal that's available nationwide. Airbanking's 12-month No-Penalty CD had a slight lead last week, but its rate fell to 0.90%. You can make Ally's No-Penalty CD into any term you want from 7 days to 11 months. So I can't see any reason why someone would choose a 3-month, 6-month or 9-month CD instead of this no-penalty CD unless they can get a significantly higher rate. A few weeks ago it might have seemed strange to put money into this No-Penalty CD instead of the savings account since their rates were so close. However, with the recent rate cuts in the savings account, the value of the CD rate lock becomes more apparent.

Best Long-Term CD Deal

For nationally available long-term CDs, Firstmark Credit Union's 5-year CD rate fell 10 basis points this week which puts its Jumbo CD below Melrose Credit Union. Digital Credit Union stays on top of the 5-year all-access list with a 2.86% APY (2.61% APY without a checking relationship). Even without the checking relationship, I would consider this CD a better deal than the 5-year CDs at Melrose and Firstmark. DCU's 5-year CD's early withdrawal penalty is only 180 days of interest. Firstmark's EWP is 365 days of interest and Melrose's EWP has the potential to be even worse (see review).

Noteworthy Local 3-Year CD Deal

On the local CD deals, I thought it would be useful to highlight one noteworthy 3-year CD. It's an internet 3-year CD at Randolph Bank with a 2.05% APY. That's 14 basis points over the best all-access credit union CD rate. The thing that's noteworthy about this CD is that it's available online for all residents of NC, SC, GA, VA, TN & FL.

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 EWP, it's still a good deal when closed early even with the recent rate cuts. However, DCU's 5-year CD is the leader for terms over 18 months. The higher yield becomes more important than the smaller EWP.

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).

Another risk is that the institution will make use of a clause in its disclosure to disallow an early withdrawal request. Beware of institutions that have a clause like "an early withdrawal of principal can be done only with the consent of the bank." I have more details in my post Risks and Benefits of Long-Term 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. The Friday 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 Friday 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 many 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 October 21, 2011

Under 1-Year CD Rates

  • Noteworthy Local Deals

1-Year CD Rates

  • Noteworthy Local Deals

18-month CD Rates

  • Noteworthy Local Deals
  • Alaska USA Federal Credit Union - 1.60% ($100K) 1.40% ($10K) 18-month CD (San Bernardino County, CA; parts of WA & AK)
  • First Choice Bank - 1.50% ($50K) 1.45% ($2.5K) 541-day CD (Los Angeles & Orange County, CA)
  • Department of Commerce FCU - 1.45% 18-month CD (Washington DC)
  • Focus Bank - 1.31% 19-month CD (online application for MO, AR, KY, TN & parts of IL)
  • HAPO Community Credit Union - 1.30% 18-month CD (WA State)
  • Industrial Credit Union - 1.25% 18-month CD (Boston metro area)
  • Peoples Federal Savings Bank - 1.25% 18-month CD (online application for MA only)

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.

Related Pages: CD rates
Anonymous   |     |   Comment #1
Anonymous   |     |   Comment #2
Anyone really think that Ally will stick with their stated EWP, or even permit an EW, when rates finally make a turn and we rush to the exit door?
Lee (anonymous)   |     |   Comment #3
We're buying antiques and Depression glass on eBay.  If we're selective, we can buy slightly under market, and if we re-sell in a year or two, we can make 10% on an annual basis even after any expenses like postage or eBay fees.  It seems like the way to go now with these 1% to 2% CD's. 
Anonymous   |     |   Comment #4
Yes, it is barely worth the effort to sign up for them.  Then we are taxed on the miserable interest.  Here's to the New Year and hope things get better.  But thanks to this blog for all thehelp.
JIM (anonymous)   |     |   Comment #5
lets hope people still have money to buy things 2-3 years out !!
Anonymous   |     |   Comment #6
I used to be as stubbornheaded as many here about using banks, but banks aren't such a safe investment now given the low interest rates and a nontrivial risk of inflation. So, I've started to invest in high dividend equities like many "experts" have advised. Yeah the price might go down but I don't mind holding onto an ETF that pays over 3% in dividends. The drop in the market was a good time to buy, and the recovery has already earned 10% on paper. It helped to use limit orders to buy only when the price got below a certain point, and many of the buys actually happened while I was on vacation.
mak1118   |     |   Comment #7
What troubles me about buying dividend paying stocks is that when anybody(Beranke and the FED)is trying to push me to do something it is probably not the best thing to do.
operation twist
operation twist (anonymous)   |     |   Comment #8
mutual funds class C AND BONDS ARE THE WAY TO GO  50 percent of portfolio are there
Allison (anonymous)   |     |   Comment #9
Problem with buying dividend-paying stocks (and yes, some pay 5-6%, even now) is that one little hiccup in the market and your dividend plus more is wiped away.   Plus, of course, the dividend could be cut by the company or eliminated.  I don't know if it's worth it to risk principal to get 5-6% vs. lousy CD rates.  Any opinions??
plus (anonymous)   |     |   Comment #10
 with stocks you pay to buy and pay to sell to fund the illustrious brokers 7 figure retirement the matress will suffice for me
Anonymous   |     |   Comment #12
Matt Dillion recommends COP....and Festus, Doc, Ms. Kitty and Newly agree. Nothing wrong with 4% divideds while waiting for the triple.
nasuka (anonymous)   |     |   Comment #13
what does adam ben little jo ads hoss like ??
jacob   |     |   Comment #14
for allison: the notion of dividend yielding stocks was the topic of a very long thread discussion last month that I encourage you to read. The gist of it was that dividend yield is a very misunderstood topic and I can see by your comment you think that as a stockholder you receive a dividend with no impact on your stock investment. The fact is (yes fact) is that when a stock pays you a dividend, the stock price drops by the amount of that dividend so you as a shareholder have zero additional economic beneift from receiving the dividend. The reality is that your investment in a company is simply reduced by the amount of the dividend paid to you. I again encourage you to read the thread from last month and hope it can further help you and anyone else thinking dividend yield and cd investing are remotely comparable. 



Gabe (anonymous)   |     |   Comment #15

I have been in the stock market for 34 years as a broker, prinicpal and trader.  You are misinformed.  When a stock goes "ex-dividend" it is a temporary price adjustment which is then reversed.  Stock dividends are in fact 'real.'  The "reality" which you refer to is based on misinformation.  Call any brokerage firm and they will enlighten you.
jacob   |     |   Comment #16
We had this same discussion on the last forum and the same exact thing was said on that forum. I understand this is the common belief about the adjustment being temporary, but can you simply explain exactly  how does the stock price gain back the amount of the dividend exactly? Can you show me something, anything written on the internet or  anywhere that explains that the adjustment is "temporory" and the dividends are real. Anything....

Meanwhile, you must know people short stocks that pay dividends all the time. You can see the short interest of any stock at http://shortsqueeze.com/

Do you really think short sellers who have to pay these dividends dont make it back on the stock price dropping? Do you think they just eat 4, 5, 6% dividends and wiling to pay that tax to be short a given stocks?

Again, I know this is one of the most misunderstood concepts in stock investing , but if you are correct, you would have to understand why the price drop after a stock goes ex-dividend is just temporary and if that was true, why wouldnt you simply buy stocks after they go ex-dividend and sell them after the temporary adjustment is completed. 

I understand that stocks are volatile and they can go up or down on the ex dividend day so it is possible for the stock to make back the dividend price, but that is only if the stock goes up, had the stock not paid the dividend, it would have had the same percentage rise and the price would be that much greater had it not paid out a dividend. 
Alan M.
Alan M. (anonymous)   |     |   Comment #17

Maybe you should consider pulling some of "Jacob"'s posts.  He is taking a lot of blog space with misinformation.  I have been in the securites industry for 23 years, hold a CPA/CFP, private practice here in her DeKalb County for 17 yrs.  He is totally incorrect re: stock dividends.   Just a suggestion.  BTW, I enjoy and recommend your sites to clients all the time.

jacob   |     |   Comment #18
alan/ken, you are welcome to take down the posts, I have no vested interest in trying to explain the reality about dividends , the fact that people or atleast one person has taken offense to the posts is suprising and interesting at the same time. I dont profess to know it all and have no interest in spamming or wasting anyones time with posts. I have asked anyone on the board and also ask alan as well, show me something that explains how a stock investors dividends has no effect on the stock price and they truly get the dividend simply for holding the stock as a coupon payment so to speak. I have an open mind but everyone just saying the stock price adjustment is just temporary makes no logical sense, but ken, you run the discussion group, if you want to pull down the posts because you think they are useless and even disengenious, I dont take it personally if you disagree with me so strongly and want to pull them down. 
Anonymous   |     |   Comment #19
I can't see why this blog needs to take up valuable space to 'educate' Jacob.  He should read a book or call a stock broker.  Just my opinion. Ken?
jacob   |     |   Comment #20
alan, one more thing, maybe you should look at the yahoo finance link i posted below its that of a high dividend stock, in this case the ticker is LINE , but its for any stock, its a link for the historical stock prices and at the bottom of the page you will find the words "* Close price adjusted for dividends and splits", which means that they physically change the closing prices of their price data for dividends, can you explain why you think yahoo does this? In my opinion they do it because its a more accurate representation of the total return of the stock. So if a stock closes at 25 and pays a 50 cent dividend and closes the next day at 24.5, they adjust the priors day close to 24.5 reflecting the fact that there is no economic beneift to a holder of this stock in this example. This is fact, I am not making this up. 

I am not saying the dividends arent real, but they are not remotely comparable to a coupon payment from a fixed income investment which is the reason for this discussion in the first place, that being to point out that dividend yields and fixed income yields have nothing to do with eachother

http://finance.yahoo.com/q/hp?s=LINE Historical Prices
Brady (anonymous)   |     |   Comment #21
FWIW, and in IMHO, Jacob is simply trying to stirr the pot and suck someone into a meaningless and endless stream of drivel. A previous poster Lou fell for it the first time around and essentially ended up walking away while muttering to himself. Jacob, either you are right and everyone else is wrong, or vice versa....you figure it out. 
A.J. (anonymous)   |     |   Comment #23
I agree with Brady #22.  So do all 9 of my 9 colleagues here at a large brokerage in Teaneck, NJ who read his posts. Jacob is all wet on this issue and just plain wrong.
A.J. (anonymous)   |     |   Comment #24
sorry I meant Brady #21.
shabot shalom
shabot shalom (anonymous)   |     |   Comment #25
jacob take a hike
vag (anonymous)   |     |   Comment #26
aj 50 50 mix bonds and class c mutual funds you are your collegeagues agree ?
A.J. (anonymous)   |     |   Comment #27
vag #26

honestly, we're lighter on the mutuals now, partners are heavily recommending up to 50% cash, fist time I've ever seen that here in 5 years.


vag (anonymous)   |     |   Comment #28
gracias aj
ThriftyPerson (anonymous)   |     |   Comment #29
Honestly, I would steer clear of stocks in any shape or form.  I scanned a very popular book by a super well known and well respected stock market expert. He offers a fool proof stock picking formula that many have used and supposedly is absolutely fabulous.  He says in the book, however, that he will show you the formula but you are foolish to invest in the market. It should be left to experts only.  I agree with that. You can easily get burned in the market if you don't know what you are doing and even those who do run into a lot of problems.With CD's and this type of economy you need to use a lot of creative thrift to cut as much of your spending as possible. Keep cutting costs.  That will help.  Keep you risk low.  Risk can kill you ultimately both physically and mentally.  If you have absolutely no money but have a well planned out day with low risk and control of your life, you can survive and even be happy.  All this worry about investments and the economy is not worth it anymore!!  It has all been too negative for too long! 
Anonymous   |     |   Comment #30
I agree with #29 100%.  To lose principal in the effort to gain a few % pts. is not worth it.  Cutting spending is a good tactic on a personal level.  Hurts the economy though.
Anonymous   |     |   Comment #31
Although I am a conservative saver(investor), I've got to admit that, to be realistic, there are a lot more rich stock investors than rich CD investors...read the Warren Buffett types. Looking back, I personally have been far more conservative, investmentwise, than I should have been. So, if high dividend and high quality dividend stocks are appealing to any of you, just go for it. Or, if you don't need the income, try to grow a pair and find the next WalMart or Apple....no pain, no gain, huh?  
A.J. (anonymous)   |     |   Comment #32
The brokerage where I work has been pushing equities for most of the 5 years I've been here.  Last 6 months, the senior partners are heavily recommending cash allocations of up to 50%, depending on the client's circumstances.  They went to a big company-wide symposium in Hawaii in early Sept. and all the "experts" who spoke there were predicting tremendous market volatility through 2012.  Not for the cautious investor or someone who would be upset by that kind of thing.  We have a lot of conservative clients who would be better off with another year of low-yields than losing principal. 
HUH (anonymous)   |     |   Comment #33
AND I  repeat stocks cost to buy cost to sell stick with mutual funds and bonds  ty