Over the last year, long-term CD rates have fallen the most, and as a result, the best long-term CD rates are less than a percentage point above the best short-term CD rates. That's the case at Navy Federal Credit Union which just made some more cuts to its long-term CD rates. The rates still remain competitive. Below are the new rates for the $100K deposit tier. I've also listed the change in basis points. These rates are listed at the Navy Federal certificates rates page as of 1/7/2013:
- 2.00% APY 7-year CD (-15 bps)
- 1.90% APY 6-year CD (-10 bps)
- 1.74% APY 5-year CD (-11 bps)
- 1.60% APY 4-year CD (no change)
- 1.40% APY 3-year CD (no change)
- 1.20% APY 2-year CD (no change)
- 1.10% APY 18-month CD (no change)
- 1.00% APY 1-year CD (no change)
- 0.85% APY 9-month CD (no change)
- 0.75% APY 6-month CD (no change)
- 0.65% APY 3-month CD (no change)
These same rates also apply to IRAs and ESAs.
The smaller tiers had the same rate cuts. For example, the 7-year CD yield for a $1K minimum deposit fell from 2.00% to 1.85% APY.
It's interesting to see how these rates have changed over the last year. The long-term CD rates have fallen the most. In May, the top 7-year and 5-year CD yields were 2.75% and 2.25%. These are now 2.00% and 1.74%. The short-term CD rates are only 5 basis points lower.
Special EasyStart Certificate
If you review Navy Federal's certificate rate table, you may notice the EasyStart Certificate which has a 12-month term with a 3.00% APY. As you many have guessed, there are details that make this much less attractive. First, there's a maximum balance of $3,000. Second, it requires that you have a Navy Federal checking account and direct deposit of at least $300.
Early Withdrawal Penalty
The early withdrawal penalty for terms over 1 year and up to 5 years is equal to up to 180 days of dividends on the amount withdrawn. The penalty for terms over 5 years is up to 365 days of dividends on the amount withdrawn. The penalty won't eat into the principal if the withdrawal is made early into the term. In those cases the penalty will equal all of the accrued interest.
The early withdrawal penalty and other CD details are listed in the Navy Federal Combined Certificate Disclosure.
Unlike PenFed, there's no association that can be joined to qualify for Navy Federal membership. To be eligible to join Navy Federal, you must have some connection with the military. This includes Navy, Army, Marine Corps and Air Force. Please refer to their Eligibility Checklist for the full details.
Navy Federal Overview
Navy Federal Credit Union branches are located around the US and the world.
Navy Federal is the largest credit union in the nation with $51.6 billion in assets and $37.2 billion in deposits. It has an overall health score at DepositAccounts.com of 5 stars (out of 5) with a Texas Ratio of 5.82% (excellent) based on September 2012 data. Please refer to our financial overview of Navy Federal Credit Union for more details. The credit union is federally insured by the NCUA (Charter # 5536).
How These CD Rates Compare
Before these rate cuts, Navy Federal had the best deal for 7-year CDs for those with balances of at least $20K. With a $100K balance, you could get a rate 15 bps higher than PenFed's 7-year CD. Now Navy Federal has no advantage over PenFed which has a 2.00% APY 7-year CD with a $1K minimum deposit. For shorter terms, PenFed has higher rates.
To get a 2% APY from an internet bank, you'll have to go with a 10-year term at Discover Bank. You can still get 2% APY with a 5-year term at a few institutions that are available nationwide. A couple all-access credit unions still have a 2% APY 5-year CD. The largest is Mountain America Credit Union. One small bank in Florida, Citizens State Bank, is offering a 2.05% APY 5-year CD that's available online to anyone in the nation.
The above rates are accurate as of the morning of 1/7/2013.
Searching for Top CD Rates
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