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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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Long-Term CD Rates Continue to Decline


There have been several times in the last couple of years that I thought we may be nearing a bottom of CD rates, but unfortunately, rate cuts continue. Two popular internet banks just did rate cuts to their long-term CDs. Ally Bank reduced its 5-year CD APY from 1.84% to 1.79%. Discover Bank reduced its 5-year CD APY from 1.90% to 1.80% and its 7-year CD APY from 2.10% to 2.05%.

At least Discover Bank didn't cut its 10-year CD rate. That remains at 2.50% APY. Discover tends to change this 10-year rate less often than the shorter-term rates, but when it changes, it can be a big drop. For example, before the yield was cut to 2.50% in September, it had been 3.00% for almost a year.

So if you had been holding off opening a CD, these latest rate cuts are something to consider. It's another sign that CD rates continue to trend down.

Rates are holding up better at credit unions. You can see how long-term CD rates at two popular credit unions compare to Discover Bank's 10-year CD in my post Comparing the Best CD Rates After Early Withdrawal Penalties. I think it's likely that we'll see more rate cuts at these credit unions. Police and Fire Federal Credit Union (PFFCU) in Philadelphia had a good explanation in January how they were able to offer such competitive rates and why those rates had to fall. Here are excerpts:

Because our members have more deposits with us than loans, every new dollar deposited in PFFCU is currently added to our investment portfolio. We are very conservative in our investments, choosing only those investments that have a government guarantee. These guaranteed investments are currently only earning between 0.25% and 1.0%.
We made investments in 2008 and 2009 that are earning 4%. As these investments mature in 2010 and 2011, we must re-invest this money in the same safe investments discussed above that are only earning 0.25% to 1.0%. Our deposit rates have to reflect what PFFCU can earn on its investment portfolio so that PFFCU remains financially sound.

I believe this explanation is applicable to all banks and credit unions, and it shows why rates may continue to fall when Treasury yields are so low (Current 5-year and 10-year Treasury yields are 0.88% and 1.93% respectively).

To find the best CD rates, please refer to our CD rate tables. CDs can be filtered by state and by investment amounts. Please refer to this post to learn how to use the filter feature.

Related Pages: Ally Bank, Salt Lake City, Discover Bank, Salisbury, CD rates, IRA rates

Related Posts

  |     |   Comment #1
Went to a financial planning presentation locally recently.  Surprisingly, they recommended 7-and 10-yr. CD's and predicted low CD rates for at least two more years, not at the bottom yet they said.  May take a year or more to hit bottom, in their opinion, then flat, then very slow rise.  So it may be 4 to 5 years before there are 4%-5% CDs again. They made a very very strong case for going long right now, especially if you can still get 2%-3% safe return.  They also did mention avoiding shaky banks and CU's which, if dissolved, one could lose the rate.  Very surprising presentation but persuasive.
  |     |   Comment #2
Thanks for the post Helen. This miserable rate scenario will be a decade-long punishment for savers before everything is said and done.
  |     |   Comment #3
#2- I think you're right.  If you look at it from the beginning of the rate drops, to when it may pick up again, it may in fact be 10 years of time total.
  |     |   Comment #4
Big newspaper ads here from a local bank offering 0.50% short-term CD's.   We are living in very strange times.
  |     |   Comment #5
you all need to look at the small community banks.  In my local town my bank is giving 2.50% for a 5 year CD.  That is the best I've seen.  Not only do I get a decent rate but great service too!
  |     |   Comment #6
#5:  Could you possibly just give the name of your state.  I can then scrutinize all the main cities or towns and try to find your great community bank with that nice rate.  "Have car with travel" is my new motto for finding "any" banks or cus with decent rates!  Thanks for any info you can share.
  |     |   Comment #7
First Central Savings (in New York) - 2.20% 7 yr. CD; not bad for this environment. $500. minimum deposit.  Good service.
  |     |   Comment #8
To Helen....interest rates are never going to be 4-5% again.....NEVER. If you think that you are wasting your time.
  |     |   Comment #10
#8-- You're in a real minority opinion.  There WILL be inflation again, and then eventually, higher interest rates for car loans, mortgages, credit cards, and yes....CD's.  It will just take time.  All economic cycles repeat themselves.  They just do so in an irregular, unpredictable way.  There will 8% mortgage rates again, or higher.  If you don't think so, you are saying that the U.S. economy somehow has changed forever due to this mess we're in.  Doubtful as far as interest rate cycles.
  |     |   Comment #11
#8:  I was just passing on what was said at a presentation that I attended.  I have no idea what interest rates are going to do, I'm not an expert, economist, or anything.  Nastiness is not appreciated in this forum.
  |     |   Comment #9
Not even crumbs left at the bottom of the barrel to collect the interest jingle that Bernanke served on the savers.
Lets face it, no more retirement money to live off. When my principle is finished, here I go to the poor house.
How long I can last on the current savings?, not long enough to protect the principle I counted on when I deprived myself form luxury and expensive cars to save for rainy day,  well, the rainy days are here and I can not enjoy them now.
The savers were sacrificed to the wolves, don’t expect any better times ahead until we change the mentality of our Government.
  |     |   Comment #12
Easy there, Helen....I don't believe that #8 intended to be nasty at all. Your edgyness is completely understandable though......
  |     |   Comment #13
I just found a 5 year CD with a APR of 4.50%.  It was at...well...I forgot!  :-D
  |     |   Comment #14
Helen, your post #1 was fine and informative.  Anon #8's post is a rant.  Interest rates will go back to 4 to 5% at sometimes, we just don't know when.
  |     |   Comment #15
On April 21, 2016 the 5-year share certificate yield at Pentagon Federal Credit Union will be 4.25%. There, is everyone satisfied?
  |     |   Comment #17
Ken BDG,

#16 should be deleted, comments like that serve to discourage participation from readers like Helen or anyone else with constructive comments or opinions.  IMHO.

  |     |   Comment #18
I agree with EsteyH - #17, Thursday, December 22, 2011 - 9:24 AM. Personal attacks have no place on this site. Interestingly, it's always an "Anonymous" post.
  |     |   Comment #21
Prall.....I think the main point of that post is that FDIC insurance and Tbills are no longer 100% safe.......and if they are not......then what's the point? You may as well take a little more risk for better returns. Look at Greece. People bought government bonds thinking they were 100% guaranteed......well look what happenned. They are getting half of their principal back!!!......Look what Obama did to GM bondholders......changed the rules and gave the money to his union buddies and bondholders got like 20% of their original investment back.......just two examples of what the government interferance can do.....and it isn't right.


Hard to say what "smart investments" are now with obama attempting to destroy capitalism.....I would definitely stay away from banks and oil....those are most hated on his list. If he wins in 2012.....the entire energy sector will be targeted.....and that means those big dividends are gone. Actually.....I think life as we know it will be gone if he wins.
  |     |   Comment #22
Re:Anonymous - #19, Thursday, December 22, 2011 - 11:08 AM

Just one question for you Mr. Unknown Comic. Why are you even viewing this site, which primarily deals with "deposit accounts" as it's title implies? If you think that these products are so terrible just don't look and keep moving along dear chap. Oh, and happy holidays to you too. Later.
moo lah
  |     |   Comment #23
regarding good investments.  i think investing in pfizer or bristol myers squibb would be a pretty good bet over the long term (long term meaning the 5 years it will take for rates to return to 4 or 5%).  between those 2 companies you'll get about a 4% yield, and in the long run you'll probably make a lot of money when you sell them, on top of the earned dividends.  i avoided the stock market until this past autumn... but i was forced into it because of these horrible interest rates.  so far i've done really well, while being relatively conservative.
  |     |   Comment #24
to #23- problem with that strategy is, even a small drop in the stock market would impact those stocks and would more than wipe out any advantage of those dividends.  Plus, there have been a lot of very stable companies cutting their dividends over the past three years.  Hard to justify the risk of principal to get 4% in a stock vs. 2%-3% in a CD. Just my opinion.
  |     |   Comment #25
#24-I hear you, friend.....and you make a good point. But also the opposite is true. If you can get 4-5% on dividends....that may not sound like a lot but remember your are probably at a minimum doubling or if not tripling(even quadrupling) your return compared to lousy bank rates. When you think of it that way.....well.....that's huge.
  |     |   Comment #28
I wonder how people did following this dividend strategy if they used Citi, Wamu, or Indy Mac back in '07.  Probably thought it was good.  At least citi exists, abliet down 90% from then.
  |     |   Comment #29
my aunt had a decent amount of wamu stock, pd. a 5.5% dividend, raised it every year for decades.  The most boring, straight-laced investment in the world. Then they started cutting the dividends, then the stock went to 5 cents a share.  I can't see the logic to risk principal for a 4% return in a stock.  One bad day in the market, due to "worries over Europe," and your yield advantage is gone.  Just how I see it.
  |     |   Comment #30
Had a client who invested $250,000 in Walmat many years ago. I have since retired but the last I saw, when reviewing her portfololio, was that her $250M investment was worth about $15 million, and I suspect there are many similar stories. So, for all of you who who think that CD's are the ONLY answer, ...... 
  |     |   Comment #31
Anon #30, if so gung ho for stocks, you should Troll, err I mean post on a stock trading forum not hear.
  |     |   Comment #32
Seems like everyone is either 100% for safe bank deposits or 100% for stocks??? Well.....just mix it up some. Don't put your life savings in the market.....but maybe just what you could afford to lose. Remember......there is also risk in not seeking high returns as well........1% bank deposits(if you can find even that!!) are not going to pay many bills.
  |     |   Comment #33
I'm a CPA and see many of my clients pushed into stocks due to the 1% CD rates.  I don't know how that is going to work for them based on the volatility of the markets.  1% CD returns are definitely unacceptable, but I do see clients who put $100,000 in a basket of "safe" stocks or mutual finds yielding 4%-5% dividends, only to see the principal go down to $90,000-$92,000 due to a weak stock market.   That higher yield seems appealing, until the principal gets eroded.  Answers?
  |     |   Comment #34
TO #33,


  |     |   Comment #36
Bravo, Anon #31, great post....adds a lot to the stock vs CD vs mix discussion. Now, go somewhere and learn to spell....would make your posts even more compelling.
  |     |   Comment #37
Saul.....I hear you......but you have to start thinking a bit differently. Who says bank desposits or treasuries are even 100% safe???? Look at Greece.....those poor investors that bought government bonds are getting half their principal bank!!!  HALF!! I know USA isn't Greece......but also dont tell me it couldn't happen here. Because it could.
  |     |   Comment #38
The market drops in Aug, Sept, and Nov were very safe times to buy. I used limit buy orders for a dividend ETF and waited for the market to come down to my price. The Sept buys happened automatically while I was on vacation. I'm up over 10% and the 3.3% dividend payment will arrive next week. I kept a decent cash reserve ready in case the market had gone down even further and I needed to buy more at even lower prices to help offset the very temporary losses. It's like buying something on sale or clearance that you can sell back at full retail a few days or weeks later.
  |     |   Comment #39
How can one discuss finances without getting politics in the picture since bad politics decides what will happen with our interest rates and/or stock market or other investments.?  Diversification sounds good on paper until you look at your portfolio one day and realize your balance has crashed due to bad investments.  Somehow, I can't see the Federal Reserve being able to keep interest rates this low or lower since what they planned on happening, isn't happening!  People are afraid to borrow so if people don't borrow, the banks can't give us higher interest on our CDs!  I recently had a banker tell me over the phone that it would not do any good for me to expect to open up a CD (for a generous amount) and get a decent interest rate unless I brought in a "friend" who also wanted to borrow that same amount from the bank.  It was a good lesson in how the system works but the Federal Reserve people don't seem to understand Economics 101! 
  |     |   Comment #40
To me, low interest rates mean less spending and less income taxes to pay. Not sure the government has got it right by keeping interest rates low will help the economy.
  |     |   Comment #41
Anon #39.....Interesting......yet credit card companies are still able to charge huge interest is that possible? We get 1% if we're lucky in banks.....and credit cards are still zapping people with 29% if they dont pay in full. Hey listen I have no problem with credit cards doing's a free country(for now) and who can blame them for making huge profits if they can......I just wonder how they are able to with orther rates so low. I guess people like those min payments and that is in demand. Me? Credit cards dont make a dime and I actually make money from them. But I figure for every one of me....there are probably 50 people paying huge fees and interest rates.
  |     |   Comment #42
Some say the low interest rates is a conspiracy to force everyone into the market.....and then the market crashes and people are left with nothing. Then.....they turn to the government for help. The government steps in but at the expense of your freedom. You get dependent on government handouts and presto bang......the government controls you........communist revolution.  Comrade Chairman Obama.....Dear Leader.
  |     |   Comment #43
The investment advisors, and most investment brokers, etc., usually ask what your 'risk tolerance' is, as if to say 'would you mind losing your money a little bit or a lot'. That is a question that is meaningless except to imply 'investor beware'. Personally, I guess I have a low 'risk tolerance' but does anyone actually, and truthfully, have a high 'risk tolerance'? Thoughts? 
  |     |   Comment #44
#43-Me too....definitely low risk. But some people love the's almost like a drug.  But I would also add that there is risk in not taking risk(if that makes sense)........meaning......if you're getting a lousy 1% or less......that's risky b/c you're not making enough money, especially with inflation(although the government keeps telling us there is no inflation when you subtract out food,fuel, and everything else you buy.....what a joke!)......somewhere is the right mixture........For me maybe 25% in stocks,20% gold,20% annuities,35% bank deposits. Bonds? Forget it. Look what obama did to the GM bondholders.....they got something like $0.20 cents on the dollar.....the money was given to his union buddies. Never will I buy a bond............PS-with my %35 bank deposits there could also be some treasuries,T-Bills,etc.
  |     |   Comment #45
To all- my husband and I educated ourselves a little and have been getting a sold 7-10% annual return on rare US coins over the last 12 years.  You have to buy from a reputable dealer or dealers, many of whom can help the education process.  No gold coins, just rare US coins not tied to the gold and silver mkts.  Tons of demand from Japanese, European and other investors looking for a safe haven and better returns.   Unlike stocks, they hardly ever depreciate, but go pretty much straight up, although at varying rates based on the economy, demand, etc.  Pays looking into.
  |     |   Comment #46
Bette #45:  I love rare coins but unless you own enough to sell as you need income, how do you figure you get 7-10% annual return on them?  They are not in the same type of category for "income" as CDs.  You can't exactly get a monthly interest check from them.  I think they are great to have but not for someone who needs regular income from their investments.  The increase in their value is probably what you are referring to but wouldn't you have to have enough to keep selling them in order to get income from them?  I think rare coins are more of a "buy and hold" investment.  I may be wrong but I think the reason most of us in this forum are upset about the CD interest rates is because we get income from our CDs. 
  |     |   Comment #47
Agree with #46.......unless you're coin dealer.....I dont see much of an income potential there. Plus I don't like the idea of having to store them somewhere safe and when you want to sell there is a limited buyers I dont know a thing about them and would need experts to appraise......but dont get me wrong......they may be fine for you and maybe you have a way of making it work which is great. Coins are kind of cool....but I agree more of a hobby.......PS-Be careful with that "pretty much goes straight up" thinking........that's what they said about real estate a few very short years ago.
  |     |   Comment #48
You're both right-# 46 and 47--no income from rare coin investments, I'm talking about appreciation in the total value of the investment.  We are in our late 50's and still working part-time/full-time, so that's Ok.  Altho I guess that one could theoreticaly sell off some items for income if it is needed.  We look at it as more of a "core" item, like some may look at gold or silver.  No monthly income checks, that is true.  But the "straight up" issue is correct -- rare U.S. coins have not backslid in value over the last 50 years, if ever.  They just may have had some periods in time when they went up, say, 3-5% per year rather than 7-9% a year.  Good example: if you had a vintage 1960's Corvette car in mint condition -- would it ever go DOWN in value? Probably not.  It just would go UP slower or faster at different times.  Coins are like that.  So are some fine paintings and antiques.  But if you don't need the immediate income, and use them as PART of one's assets, I would recommend them.  $50,000 in well-chosen rare coins will be worth $55,000 in a year or 18 months; $50,000 in a CD will be worth -- $51,000 maybe???
  |     |   Comment #49
If you're requiring monthly income checks, things like coins and gold are not for you, but in this 1% CD environment, one has to be more open-minded.   Even stocks and real estae may not throw off monthly income.  But if something goes up 5% or 10% a year, if that preferable?    Things are so bad with bonds and Cd's that it may be worth considering something like coins.   If you need that monthly income though, then not.
  |     |   Comment #50
Disagree w/ #47 -- sold my uncle's coin collection three years ago - no "limited buyers market" for that.  Lots of buyers out there looking for quality US rare coins.  High quality coins are in ltd. supply and grabbed up, lots of foreign buyers looking for safe haven.  Things like US silver dollars, Mercury Dimes etc. never go begging and if it's quality stuff, has never dropped in value, never.
  |     |   Comment #51
Bette #48:  One most important issue to consider via coins versus CDs.  IF one needs extra money for an unexpected medical bill etc. and is forced to sell some coins to get the needed $1,000.00 or so, you get the money but the coins you sold are gone from your portfolio of investments.  With the CD, you get to use the $1,000.00 of interest and you still have the entire $50,000.00 to earn MORE stinky interest.  It may not be the way everyone wants to go but losing my "principal" (with the coins) is not an option for me unless there is no other way.  I don't think we are at that point "yet" but when we are, I would still be looking for some other way to earn "money" on my "money".  Just my opinion.
  |     |   Comment #52
To #51:  I don't get your logic.  If your rare coin portfolio starts at $50,000, then appreciates to $55,000, and you need $1,000 for bills, living expenses, etc. all you have to do is sell $1,000 worth of coins.  You are left with $54,000, which is much better (in my opinion) then a $50,000 CD which generates $1,000 a year in interest income.  Yes, with the coins you are "losing principal" by selling that $1,000 worth of coins, but you are left with $54,000 which seems good to me.  Seems the way to go to me.
  |     |   Comment #53
Bette:  Selling the coins, no matter how we want to look at it, to me, is the same as using the "principal" of a CD.  You are going by the fact that what is left from coins you don't have to sell is always going to appreciate.  I don't have that much trust as you do in these type of investments.  Nothing wrong with your way of doing it.  I just prefere my own way even if I have to ride the "ups and downs" of interest rates.
  |     |   Comment #54
I'd take a 5% return from a collectible (coins) over 1% from a CD any day. Classic American antique furniture, which my wife invests in, is similar.  Plus you get to enjoy your investment as it appreciates. #53 says:

"I don't have that much trust as you do in these type of investments. "

How much trust do you have in the stock market, or a 1% Cd that basically pays you "0" after taxes and inflation?  I'm not a big fan of silver or gold, but I see the point of investors in those items.  Collectibles, like coins, antiques, etc. do have a place in a portfolio, IMHO.


  |     |   Comment #55
"Different strokes for different folks".  As long as we can survive with what we prefere, that is the most important point here, imo.   Have a nice day, folks.
Pablo Savin
  |     |   Comment #56
I have some money in coins. I keep seeing the one percent Cd's mentioned here. What about the 2.75 cd's , they are everywhere. Not a great return, but better than one percent
  |     |   Comment #57
RE: #56--Ken keeps posting those 1.0-1.75% CDs which he says are very competitive, so what's the real deal???
  |     |   Comment #58
I think Ken is stuck on "short" term CDs but I can't accept those pitiful rates.  I agree that if we look hard enough and are persistant and willing to go out 5 years or more, we can do better than those nauseating 1%ers.  I am not thrilled with the credit unions but I will go there to get a better rate.
  |     |   Comment #59
Want to know more about this, thanks a lot!

<a href=>US rare coins</a>

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