CD Rates Summary - September 22, 2020

In the last two weeks, there have been fewer notable CD rate cuts at banks and credit unions compared to previous months. When October begins next week, we’ll see if this trend continues. It has now been over six months since the Fed took the federal funds rate to near zero (the start of the zero-bound period). At some point, we should reach a bottom for CD rates.

The latest two major online banks to take all of their CD rates below 1.00% are Capital One and Synchrony. Capital One was the first. It slashed its 5-year CD yield from 1.00% to 0.60%. Synchrony Bank had a less severe rate cut. Its 5-year CD yield fell from 1.00% to 0.90%.

Ally Bank lowered several of its CD rates to 0.75%. However, it held on to 1.00% APY on its 5-year CD. Ally is now one of the few online banks that is offering CD yields of at least 1.00%.

Several credit unions now have higher CD rates than any of the online banks. However, their rates have also been falling. That’s especially the case at the credit unions with easy membership requirements. Three of these credit unions that lowered their CD rates in the last two weeks still have rates higher than what the online banks offer. The one that doesn’t have higher rates is now PenFed. Its 5-year CD rate is now only 0.80%, down from 0.90%.

Noteworthy CD rate changes from two weeks ago are included below (All percentages are APYs).

I’ve separated them into three groups: 1) the popular banks, 2) the less well-known banks that have been rate leaders, and 3) the credit unions with easy membership requirements.

Popular Online Banks:

• Synchrony Bank (5yr 1.00% → 0.90%, 0.75% → 0.60%)
• Discover Bank (5yr 0.95% → 0.80%, 1yr 0.70% → 0.60%)
• Ally Bank (4yr RYR 0.80% → 0.75%, 1yr 0.80% → 0.75%)
• Capital One (5yr 1.00% → 0.60%, 1yr 0.50% → 0.30%)
• Live Oak Bank (18m 0.65% → 0.60%, 1yr 0.65% → 0.60%)

Less well-known banks that have been rate leaders in the past:

• First National Bank of America (7yr 1.30% → 1.25%, 5yr 1.20% → 1.15%, 1yr 0.90% → 0.85%)
• Colorado FSB (5yr 0.90% → 0.80%, 1yr 0.80% → 0.65%)
• Comenity Direct (2yr 0.85% → 0.75%, 1yr 0.80% → 0.60%)

Credit unions that have easy membership requirements:

• Wheelhouse CU (5yr 1.45% → 1.35%, 3yr 1.10% → 1.00%)
• Pen Air FCU (4yr 1.30% → 1.25%, 1yr 1.00% → 0.90%)
• Greenwood CU (5yr 1.50% → 1.10%, 3yr 1.20% → 1.00%)
• PenFed CU (7yr 1.00% → 0.90%, 5yr 0.90% → 0.80%)

Brokered CD Rates

For non-callable brokered CDs, rates may have reached a bottom. At both Fidelity and Vanguard, there were many more rate increases than decreases from two weeks ago. However, all of the brokered CD rates remain low, especially for terms under four years. For those terms, the highest rate is only 0.20% (2-year CD at Fidelity and Vanguard.)

This morning, the top 1-year brokered CD rate at Fidelity was 0.10% (same as two weeks ago). At Vanguard, the top rate was 0.15% (up from 0.10% two weeks ago).

For the 5-year term, the top rate increased from 0.45% to 0.50% at Fidelity. At Vanguard, the 5-year term was the only one that had a rate decline. The top rate fell from 0.50% to 0.35%.

The non-callable 7-year CDs were back this morning. The top rate was 0.65% at Vanguard and 0.55% at Fidelity. Two weeks ago neither Fidelity or Vanguard were listing any. For the non-callable 10-year CDs, both Fidelity and Vanguard continue to offer a 0.85% rate. This has remained the same for the last month.

The callable feature gives the bank the right to redeem a CD early. That can save the bank money when interest rates fall. However, the CD holder loses out if rates fall and the CD is called early. When banks offer more callable long-term CDs, it’s a sign that they think rates are heading down. When the number of callable long-term CDs decline, banks may think rates have reached a bottom and will eventually be rising.

Brokered CD rates tend to lead direct CD rates. Since brokered CD rates are quite a bit lower than the top direct CD rates, that would suggest that direct CD rates will continue to fall, at least at the online banks that haven’t slashed rates to levels far below 1%.

Falling brokered CD rates was a trend that began in November 2018 when the top 5-year rates reached as high as 3.60%.

Direct CD Rates and Deals

I have two new-to-summary (NTS) banks to mention.

First is a bank that used to be a regular in the CD summary. It’s The Federal Savings Bank. It has long offered a very competitive promotional 5-year CD. The Bank was delisted from the summary last month when its promotional CD rates became only available for renewals. This has recently changed, and now the promotional CDs are available to both new customers and customers with CD renewals. All three of the promotional CDs have very competitive rates (1.50% APY, 5-year; 1.20% APY, 3-year; 1.10% APY 18-month). Please refer to this blog post for more details.

The second bank is a small Tennessee-based bank called INSBANK. The Bank has just launched online CDs and a money market account that are available nationwide via its new online section of its website, that’s called INSBANK Online. Its 1-year CD earns 1.00% APY, which is the highest 1-year rate that’s nationally available from a bank. Its 30-month and 3-year CDs also have a very competitive rate (1.15% APY). I’ve spoken with the COO, and I’m trying to get several account details that DA readers will want to know before they decide to apply. One nice aspect of INSBANK Online is that they’ve assigned private bankers to provide customer assistance by phone instead of outsourcing this to customer service personnel. I plan to have a CD and bank review when I receive more account details.

Barksdale Federal Credit Union remains the CD rate leader for terms of one, two, three, four and five years. The rates range from 1.21% APY (1-year CD) to 1.71% APY (5-year CD).

It’s easy to get rates 10 basis points higher at Barksdale by strategically opening Barksdale’s Plus Point Certificates. These require that you open five certificates with terms from one to five years as if you were starting a 5-year CD ladder. As DA reader Anon456 noted in the comments, they “do require $1,000 each for the 5 year ladder, but you can do more and they do not have to be equal. You can do higher amounts in any of them and they do not have to match the others, as long as you do the minimum $1000 in each.” For example, you could fund the 1-, 2-, 3- and 4-year CDs with $1k each and the 5-year CD with $200k.

Membership in Barksdale FCU is not open to everyone, but Barkdale’s field of membership is similar to that of Navy Federal in that former members of the US military (and their immediate family) are eligible to join. As stated on the online application, those who qualify for membership include “Honorably discharged or retired veterans or immediate family members who served in a branch of the Armed Services of the United States.” As DA reader Ltssharon noted in the comments, “a grandson on active duty qualified me.”

For more details on Barksdale FCU, its CDs and membership, please refer to my July Barksdale CD review. Thanks to the DA readers Anon456, Ltssharon and others who provided valuable comments on Barksdale. DA readers MikeG62 and evansears shared their experiences on applying for and funding Barksdale’s CDs and IRA CDs. If you’ve joined and opened CDs at Barksdale, please share your experiences in the comments.

Security measures at Ally and Marcus impact CD customers

Both Marcus and Ally continue to offer the best deals for no-penalty CDs. Both are in the summary for top rates for terms under one year. CD customers at these banks should be aware of recent actions by these banks that have impacted customers.

In the case of Ally Bank, readers had reported that Ally was no longer allowing customers to close CDs early via Ally’s online software. At the early withdrawal page of the CD management section, it now says “We're only processing early withdrawals by phone right now. Call us at 1-877-247-2559. We’re here 24/7.”

My Ally contact emailed me the following official response to this issue:

Ally Bank offers service that is unique in the industry, and we take our customer commitment seriously. We constantly balance both convenience and security measures. We have temporarily taken our CD close and ACH transfer feature offline to strengthen the security for our customers. In the meantime, with just a call, Ally’s customer care team can complete the same process on behalf of our CD customers in under five minutes. Customers are encouraged to check wait times, which are posted online or via the mobile app, prior to calling.

Balancing customer convenience and security is a common issue at banks. Often the security measures implemented by banks can cause much more inconvenience to customers than the above action by Ally Bank.

One example of a very problematic security measure is when banks lock accounts (that prevent customers from accessing their money) and when banks close accounts. At least three DA readers have reported having their no-penalty CDs at Marcus closed early (Their savings accounts were also locked and later closed). In addition, they reported receiving no helpful information explaining why the accounts were closed. Marcus, like many banks, has an account agreement that gives them the right to close accounts for any reason. The agreement includes a representative list of reasons: Many are security related. It’s impossible to know how many times innocent customers have had their accounts closed. The risk may be higher than we realize. For CDs that were opened when rates were higher, having your CD closed early can be costly in terms of loss interest. I’ll have more on this issue in a future blog post.

Local CD Deals

Since CD rate declines have slowed a bit, the local CDs have been added back into the summary. With CD rates as low as they are, I don’t want readers to miss any opportunities to earn a higher rate. Also, local deals are sometimes more widely available than we realize. Banks may sometimes choose to allow out-of-state applications, and credit unions sometimes tweak their fields of membership to make it easier to join.

I have three local 2% CDs to highlight. These are the same ones I highlighted two weeks ago. Unfortunately, I don’t have any new 2% CDs to report.

The highest CD rate in the summary is still 2.27% APY at Arbor Financial Credit Union which has a field of membership that includes everyone who lives, works or worships in Michigan. The downside with this rate is that it requires a 10-year term with a minimum deposit of $250k. You can still get 2.12% APY with a $125k minimum deposit. The 7-year and 5-year CDs earn 2.02% APY and 1.97% APY, respectively. These also require a $250k minimum deposit.

The only other two CDs with yields of at least 2% are a 5-year CD (2.10% APY, $100k minimum) at Navigator Credit Union and a 10-year CD (2.00% APY, $25k minimum) at State Nebraska Bank & Trust. Navigator’s field of membership includes parts of Alabama and Mississippi. State Nebraska Bank & Trust offers CDs to customers in the northeastern region of Nebraska.

Savings and Money Market Accounts

As I described in last week’s liquid account summary, I decided to highlight a top rate for each of three categories of savings and money market accounts. The three category leaders haven’t changed from last week.

The first category includes accounts that have balance limitations and/or activity requirements. For this category, Affinity Plus Federal Credit Union continues to hold the top rate spot with its Superior Money Market account that earns 2.02% APY. This has an important balance limitation: the 2.02% APY only applies to balances up to $25k. The rate falls to 0.70% on balances over $25k. Second, there are activity requirements to qualify for this top rate: a monthly direct deposit of at least $500 is required.

The second category doesn’t have balance limitations or activity requirements, but the accounts have large minimum balance requirements to earn the top rate. The leader of this category is Connexus Credit Union’s Money Market Account which has a 1.15% APY for balances of at least $100k. Lower tiers include 1.00% APY ($50k), 0.75% APY ($20k), 0.60% APY ($10k), and 0.50% APY ($1k).

The third category has no activity requirements, odd limitations or large balance requirements. Two institutions share the top spot for this category. Affirm and First Foundation Bank currently both offer 1.00% APY on their savings accounts. Affirm Savings has no balance requirements. First Foundation Bank Online Savings account also has no balance requirements to earn the 1.00% APY, but there’s a minimum opening deposit of $1k.

Safety of the Banking System and Your Deposits

Even though the banking industry is in a much better position now than it was in 2008, the crisis is stressing the financial system. Weak banks and credit unions will have a higher chance of failing over the next year. Thus, this is the time to be extra careful that your deposits are within the FDIC and NCUA limits.

Federal Reserve and Interest Rate Summary

The Fed and economy review is now split off on a separate blog post. My weekly summaries will now be focused entirely on deposit rates and deals. Please keep all discussion about the Fed, the economy and politics to my Fed/Economy review blog post.

Here's the link to last week's savings/checking account summary. You can always get the latest rates for savings/checking accounts and CDs by using our rate tables, available via the navigational menu on top.

Yields Accurate as of September 22, 2020

Under 1-Year CD Rates

Noteworthy Local Deals - Under 1-Year CDs

1-Year CD Rates

Noteworthy Local Deals - 1-Year CDs

18-month CD Rates

Noteworthy Local Deals - 18-Month CDs

2-Year CD Rates

Noteworthy Local Deals - 2-Year CDs

3-Year CD Rates

Noteworthy Local Deals - 3-Year CDs

4-Year CD Rates

Noteworthy Local Deals - 4-Year CDs

5-Year CD Rates

Noteworthy Local Deals - 5-Year CDs

Over 5-Year CD Rates

Noteworthy Local Deals - Over 5-year CDs

*BBSSB (Beal Bank SSB), BBUSA (Beal Bank USA), BHAP (Bank Hapoalim), BMW (BMW Bank), BoC (Bank of China), ENER (Enerbank USA), HAMNI (Hamni Bank), HGIS (Hingham Institution for Savings), JMRSH (John Marshall Bank), LUASB (Luana Savings Bank), MWB (Minnwest Bank), MZTB (Mizrahi Tefahot Bank), SAFB (Safra Bank), SBoI (State Bank of India), SBoIIL (State Bank of India IL)

**New To Summary, as of September 22, 2020

CDs Removed Due To Low Rates Or Expired Specials

CDs Removed, New Accounts No Longer Available

CDs Removed, Rate Too Low