Who would have thought 5 years ago that it would now be difficult to find CDs with yields of at least 2.00%. Even when rates were very low in the early 2000's, ING DIRECT's Orange savings account was paying 2.00%. Two years ago I reviewed the few remaining savings accounts that were still offering 2.00%. Rates have continued to fall, and now the list of 2-percent CDs is small.
It may seem unwise to lock into a CD with such low rates, but no one knows how long these low rates will last. If you have always maintained CD ladders, it's hard to argue that CD ladders no longer make sense.
If you want a CD with a yield of at least 2.00%, you will probably need a maturity of at least 5 years. There are still several small credit unions and banks offering 5-year, 7-year and 10-year CDs with yields of at least 2.00%. You can see what's available by using our CD rate table. Use the "Filter Accounts" button to see what's available in your state. Unfortunately, many of these small credit unions and banks are not widely available and are not in many of the large states.
In this post I'll just review three sizable banks that still offer 2% CDs.
Rates accurate as of 8/20/2012
BBVA Compass - This is the only sizable bank that I'm aware of that still offers a 2% APY 5-year CD. I first reported on this in February. My last review was in June. Even though BBVA Compass is a large bank, their CDs are not available nationwide. When I last checked with the bank, I was told that they require new customers to live within 60 miles from a branch. BBVA Compass branches are located in Alabama, Arizona, California, Colorado, Florida, New Mexico and Texas.
Third Federal is smaller than BBVA Compass, but it allows new customers to open accounts online from any state. The downside with Third Federal is that you'll need a 6-year term to get a 2.00% APY. My last review of this CD was in July.
Discover Bank - Unlike the other two banks, you can't open a Discover Bank CD at a branch. Discover Bank is an internet-only bank. Also, unlike the other two banks, you'll need a 7-year term to get a 2.00% APY. It also has a 10-year CD with a 2.10% APY. That's not much of a premium for 3 more years. One nice feature of these long-term CDs is a mild early withdrawal penalty. I described the benefit of this in my last long-term CD comparison post.
There are more credit unions than banks offering 2% CDs, but 2% CDs have also become hard to find at credit unions especially for terms under 7 years. You can see these credit unions in our 5-year CD rate table and 6+ year CD rate table.
By default, the table shows those credit unions that are nationally available and have "easy restrictions" for membership. That means they provide an easy way to qualify for membership. For example, joining an association that's open to all will qualify you for the credit union membership. Several of these credit unions allow you to join the association and apply for credit union membership in an online application.
To see more credit unions, select the "Filters Accounts" button at the top of the table. You can change the credit union selection from "Easy restrictions only" to "All". This will expand the list of credit unions to include those which have eligibility limitations. One example is Navy Federal Credit Union which is primarily limited to those who have some military connection. Also on the list is American Airlines Credit Union and Wings Financial Credit Union. Both are primarily limited to those who work in the air transportation industry. Wings Financial is also open to those who live in parts of Minnesota and Washington State.
If you're lucky, you may find that your state has many credit unions offering 2% CDs. Texas and Iowa are two states that have the best CD rates. You can see what's available in your state by selecting "Local" in the "Filters Accounts" box, and then selecting your state. Please note that just because a credit union is listed for a state, doesn't mean all state residents are eligible to join. We list all credit unions with branches in the state. The credit unions may limit membership to residents of certain cities or counties. Also, many credit unions limit membership based on employer groups.
Future CD Rates?
One of these days we will finally see a turn-around in CD rates. I'm going to be careful in declaring that we have reached a bottom since there have been many false alarms over the last few years. I sure hope that I won't have a future post with the title "Remaining Large Banks Still Offering 1% CDs".