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 February 17, 2012


Survey of the Best CD Rates for February 17, 2012

The CD rate cuts slowed down this week. Only one institution on my short lists of nationally available CDs lowered rates this week. Fort Knox Federal Credit Union reduced its 3-, 4- and 5-year CD rates. Its new 3-year CD rate of 1.60% APY remains a rate leader, second only to Melrose Credit Union's 1.86% APY. So I've kept it on the 3-year list.

Digital Credit Union slashed its CD rates late last Friday. I did a late update to last week's survey to reflect these changes. Since the cuts were so severe, I removed all of Digital Credit Union CD rates from my lists. Before this last rate cut, Digital had the best nationally available 5-year CD rate. The top spot now goes to Andrews Federal Credit Union with a 2.30% APY.

One nice feature of Digital Credit Union's 5-year CD is a reasonable early withdrawal penalty of 6 months of interest. Due to that and the high 5-year CD rate, I had included the post-penalty yields of that CD in the shorter-term CD lists. It had the lead over Ally Bank for most of the terms (The Ally 5-year CD has the smallest early withdrawal penalty of only 60 days of interest). Due to the rate cuts, I've replaced Digital's 5-year CD with Pentagon Federal Credit Union's 7-year CD.

PenFed's 7-year CD has an early withdrawal penalty of one year of interest which is much larger than Ally Bank's penalty of 60 days of interest. However, with a rate that's over one percentage point over Ally's 5-year CD rate, it becomes a better deal when closed early starting between 2 and 3 years. For example, if you close the PenFed 7-year CD at year 3, the post-penalty 3-year yield would be around 1.83%. That's just a little below the best 3-year CD yield (1.86% APY at Melrose Credit Union), and it's higher than Ally Bank's 5-year post-penalty yield (1.64% APY).

I chose not include the post-penalty yields of Andrews FCU. It does have the best 5-year CD rate, and its early withdrawal penalty is only 6 months of interest. However, its disclosure gives the credit union the right to refuse an early withdrawal request (see my review).

Local CD Deals

I added a new 3-percent CD this week, but there's a catch. Belmont Savings Bank in Massachusetts is offering a special 5-year CD with a blended APY of 3.00%. The catch is that it requires the customer maintain an active checking account, and it takes some work each month to keep it active (see my review). Another downside is a maximum deposit of $100K.

I was planning to add another 3-percent CD this week. I reviewed Afena Credit Union (a small credit union in Indiana) on Tuesday and its 3.03% APY 5-year CD. That rate didn't last long. The rate fell to 2.52% APY on Thursday.

If we include Belmont Savings Bank's special 5-year CD, we now have a total of three institutions in the 3-percent club. The other two continue to be the 3.35% APY 10-year CD at San Antonio Credit Union (SACU) and the 3.03% APY 6-year CD at Tecumseh Federal Bank in Nebraska. You can find a few more institutions with 3.00%+ CDs in our CD rate tables, but these are small banks in low populated areas or small credit unions with very narrow fields of membership.

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.

The risks of planning for early withdrawals of long-term CDs was recently highlighted by another credit union which raised the early withdrawal penalty on existing CDs. The credit union is CEFCU which is based in Illinois. I have more details in this blog post. CEFCU is now the second credit union which has raised the early withdrawal penalty on existing CDs. Last year Fort Knox FCU did the same thing (see my 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 February 17, 2012

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.

Related Pages: CD rates
Ryan   |     |   Comment #1
This is good.  We have hit "rock bottom"  Nowhere to go but back up.

Anonymous   |     |   Comment #2
Ryan-You're so wrong. Interest rates will never go back up. In fact.....what you will soon see is banks chargeing fees to keep money in accounts. You will in essence be paying to keep your money at a bank and for having it insured. This will in effect be a negative interest rate. We have already seen this in other countries.  Interest rates are now, by definition, permanently zero. They will not be allowed to increase due to the massive debt. They cannot increase at all. It's over. Ballgame. Done.
Mayorquimby   |     |   Comment #3
Anon- I agree they cannot afford to let rates rise or the country goes bankrupt. But ultimately the Fed will have to exponentially grow its balance sheet to preserve exponentially growing expenditures. They won't let this happen so my guess is rates DO rise but the FDIC caps them for depositors. Iow...if rates rise due to default fears, no one will be a beneficiary of that increase.
Glen   |     |   Comment #4
Bernanke was already pronounced by the Wall Street Journal as being socialist and dictator for ordering near zero rates.
This can not be sustained do to the fact that the Dollar is international currency and most of the trades in commodities are done in Dollars.
What can happen dough, is the Dollar has to be debased from its current value and or locked on the gold standards. The second option is out of question since the nation is already unofficially broke and can not afford such standards anymore.
My opinion is the rates must rise to quench the incoming inflation which will make the interest rates moot, because they will always be under the ongoing inflation rates and the interest earned can not cover the devaluation and inflation at the same time.
There will be a period of dollar debasing which will make all of us poorer and unhappy for long time to come. 
The interest rates will go up, but those rates will not be sufficient to cover the inflation and debasing at the same time since debasing has same effect as hidden inflation.
Debasing has been going on for 4-5 years now and may continue for long time to come.
How we will know when the debasing has stopped?, Simple, when the purchasing power of the Dollar has increased and the prices are falling on every commodity out there and the whole world want to hold and purchase dollars instead of gold.
Ryan   |     |   Comment #5
Yes.  I think rates will go up.  The fed will have no choice to keep inflation in check. 
Anonymous   |     |   Comment #6
Bernanke is going to keep rates low.  He wants the value of money to go down and the stock market to go up and benefit all his wall street friends.  We need to end the Fed and do away with fiat currency and bring back the gold standard
Anonymous   |     |   Comment #8
Anon #6

"Bernanke is going to keep rates low. He wants the value of money to go down and the stock market to go up and benefit all his wall street friends. We need to end the Fed and do away with fiat currency and bring back the gold standard"

Not exactly.  He's more into inflating his own ego, by putting all the stuff from his text books into practice.  He's more interest in giving himself some sort of historical significance than even helping bankers and his own ego is much more important to him than the savers he's damaging.
Anonymous   |     |   Comment #9
If inflation takes hold Bernanke will not have the say so in rates, the bond narket will especially when countries that buy our bonds demand a higher interest rate. Time will tell!
I hate Fort Knox FCU
I hate Fort Knox FCU   |     |   Comment #10
History contains the correct answer about the future of interest rates.

Back in the Jimmy Carter days of the late 1970s, the feds mandated the max interst rates banks could give savers and kept this rate very low.  Eventually, the banks were unable to get enough $ deposited due to high inflation and other alternative investments paying much more interest like non-bank money market funds (not the same as mm accounts).  Back then, banks needed deposits in order to get matching $ from the feds.  Bernacke somewhat did away with this rule 'temporarily' now.

So eventually these banks interest rates were uncapped by the feds, with cds being totally free of restrictions by 1983.  That is when the present cd boom began, with banks overpaying during the 1980s and thousands of banks going bankrupt in 1989-90.

So bernake can only keep bank interst rates down for awhile until the banks need more deposits and the non-bank environment first paying much more than banks.  Yes, he can flood banks with $ and presently banks don't know what to do with $ they get,  But if lending and inflation picks up, all bets are off.

"To da moon, Alice"
Anonymous   |     |   Comment #11
We need Ron Paul as president.  He is the only candidate of either party who would cut the deficit in the first year.   He also would not do it on the back of medicare and social security.   And he favors a return to the gold standard.
Apache   |     |   Comment #12
#11:  I think Ron Paul seems like a great guy and a trustworthy one but I don't think he can take charge of the mess our country is in and turn it around like you seem to think.  If a Republican makes it don't you know that the Democrats are going to buck everything he wants to do for the country?  It's a "**** for tat" game with both parties now.  As for the gold standard, you had better hope no one tries to bring that back!  If you think our dollars are worthless now, what do you think will happen if they go to a gold standard?  Besides, the US does not have enough gold anymore to back up it's currency in gold.  Fort Knox seems to be a going "joke"!
Anonymous   |     |   Comment #13
There would less likely be inflation with a gold standard and the value of money would be preserved as opposed to a fiat currency the value of which Bernanke determines
Anonymous   |     |   Comment #14
#13:  If the dollar were backed by gold then the amount of dollars would have to shrink to meet the amount of gold there is. More dollars chasing goods is inflationary so less dollars would be disinflationary.
Anonymous   |     |   Comment #15
However you put it, I think those of us only holding "dollars" will be ****ed royally.  Any body got any matches??
Anonymous   |     |   Comment #16
Check out Melrose fcu early withdrawl penalty.  Very severe!!
Bozo   |     |   Comment #17
Folks, stop whining. If you want a better return on your investments, you need to diversify. My asset allocation is 35/65, equities to cash and bonds, but I would never think of 0/100, which is what some here think is "prudent".
Anonymous   |     |   Comment #18
Not sure why the Pentagon Fed CU 4 year CD rate is not shown above. The interest rate is 2% and the penalty for early withdrawl is 180 days instead of 365 days. I was looking at that one.
Anonymous   |     |   Comment #19
I think the PenFed 4-yr CD is good at 2.00.  I recently got a 4-yr Cd at Fort Knox for 2.2, but it has gone down to 1.8 now.  Melrose at 2/7 may be slightly better than Pen Fed, but I couldn't communicate w/Melrose--foreign accents and unknowlegable clerks.