CD Rates Summary September 10, 2019

CD rate cuts have continued. The big online banks have been steadily cutting their CD rates. A couple of credit unions have come out with noteworthy CD specials, but the best ones don’t last long. An example was the 3% 18-month CD special at AgFed Credit Union. That special lasted less than a week. AgFed’s 18-month CD rate is now down to 2.20% APY.

The interest rate environment slightly improved last week with Treasury yields gaining and the odds of future Fed rate cuts falling a bit. If the Fed follows through next week with a 25 bp rate cut and suggests that more cuts are to be expected, this rate environment improvement may not be the start of a trend. Until we see several weeks of rising Treasury yields and falling odds of Fed rate cuts, it’s likely that we’ll see a continuation of CD rate cuts.

In the last two weeks, noteworthy cuts have occurred at the following banks. A couple of the CDs had multiple cuts in the last two weeks. The totals of the cuts are listed below.

• Barclays (5yr fell 15 bps to 2.45% APY)
• Live Oak Bank (1yr fell 5 bps to 2.40% APY)
• Synchrony Bank (5yr fell 5 bps to 2.55% APY)
• Discover Bank (7yr fell 5 bps to 2.55% APY)
• Ally Bank (5yr fell 10 bps to 2.50% APY, 18mo fell 5 bps to 2.45%)
• Popular Direct (5yr fell 5 bps to 2.40% APY, 1yr fell 5 bps to 2.20% APY)
• State Bank of India (IL) (Senior Citizens CDs: 5yr fell 41 bps to 2.48% APY, 1yr fell 20 bps to 2.43% APY)
• Vio Bank (5yr fell 5 bps to 1.95% APY)
• Citizens Access (5yr fell 25 bps to 2.45% APY, 1yr fell 25 bps to 2.25% APY)
• Live Oak Bank (5yr fell 20 bps to 2.50% APY)
• ableBanking (4yr fell 30 bps to 2.30% APY, 2yr fell 10 bps to 2.25% APY)

We have also seen more CD rate cuts at credit unions. However, there were two noteworthy new specials. The credit union rate changes are as follows:

• USALLIANCE Financial Credit Union (New Special: 15mo at 2.70% APY)
• USALLIANCE Financial Credit Union (New Special: 9mo at 2.50% APY)
• AgFed Credit Union (Special: 18mo fell 80 bps to 2.20% APY)
• PenFed (5yr fell 25 bps to 2.05% APY)
• Thrivent Federal Credit Union (5yr fell 40 bps to 2.60% APY)

Brokered CD Rates

Only a few of the brokered CD rates went down from two weeks ago. For the top non-callable brokered CDs, the top 1-year rates remained the same: 1.80% at Vanguard and 1.75% at Fidelity. The top 5-year rate fell 20 bps at Fidelity (1.70%). There were no non-callable 5-year CDs at Vanguard this morning.

Parts of the yield curve for brokered CDs continue to be inverted. At both Fidelity and Vanguard, the top 3-month rate (1.95%) is well above the 5-year rate at Fidelity (1.70%) and well above the 4-year rates at Fidelity (1.75%) and Vanguard (1.80%).

Brokered CD rates tend to lead direct CD rates. That would suggest that we could see direct CD rates continue to fall with all direct CD rates heading to below 2.00%.

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

Non-callable CDs continue to be rare for terms of five years and above. That’s an indication that banks think rates will be falling. 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.

Direct CD Rates and Deals

For nationally available CDs, there were only two new noteworthy CD specials. Both are being offered by USALLIANCE Financial Credit Union. One is a 15-month CD (2.70% APY), and the other is a 9-month CD (2.50% APY).

One CD special appeared soon after the last CD summary on August 29th, but it lasted less than a week. AgFed was offering a 3% APY CD with an 18-month term. The rate is now down to 2.20% APY.

Navy Federal CD Deals

Fortunately, Navy Federal is still offering its three Certificate specials: 9-month (2.50% APY), 18-month (3.00% APY), and 5-year (3.25% APY). The 5-year CD rate had been 3.50% APY, but that was reduced on August 19th. That was disappointing, but 3.25% continues to be an exceptional yield that exceeds what’s available at other credit unions and online banks. With Navy Federal being the largest credit union in the nation with over $100 billion in assets, it’s reasonable to expect that these CD specials will last a while. Nevertheless, I’ll be surprised if these 3% rates continue into October.

Minimum deposit for all three of Navy Federal’s Certificates is $1k, and there is no maximum deposit. All three are also available as IRA Certificates. Unlike past Navy Federal specials, these do not allow add-on deposits.

Technically, Navy Federal’s CDs are not nationally available since a military connection is required to join. However, there’s a good chance you are eligible. You only need to have a family member who served in the military at some time in the past. I have more details in my Navy Federal Certificate review.

CD Rates That Became Competitive By Not Falling

Most of the good CD deals in today’s summary are due to rates that have held steady while others have fallen.

One example of this is the 18-month 360 CD at Capital One (2.55% APY). The rate may seem low based on past CDs, but only one bank has a higher nationally available 18-month CD rate, and that CD has a yield that’s only 1 bp higher with a $25k minimum deposit (Merrick Bank). Capital One 360 CDs have no minimum deposit requirement, and Capital One is well known for its easy online CD application and management.

Another example of a CD that became very competitive by the rate holding steady is the 3-year CD at Hughes Federal Credit Union. The 3-year CD has the following rate tiers: 3.10% APY ($99k minimum), 2.99% APY ($50k minimum), and 2.88% APY ($1k minimum). The corresponding IRA CDs even have higher rates. These CD rates have been available since June. Hughes Federal makes it easy for people in any state to join and open these CDs via an online application.

Savings, Money Market Account and No-Penalty CD Rates

The rate leader continues to be FitnessBank’s Savings Account, but the top rate has fallen 25 bps to 2.75% APY. This isn’t the typical savings account. After the first month, you must qualify for the rate by linking a step-tracking app to the account and maintaining a minimum average daily number of steps.

For savings accounts without activity requirements, the top rate is 2.52% APY. This is available at Vio Bank. I doubt this rate will last too long. Vio Bank has been cutting its CD rates since February. Its current 5-year CD rate (1.95% APY) is now much lower than the savings account rate.

There is no longer any bank offering a top rate with a rate guarantee. Northern Bank Direct had been offering a money market account with a 2.50% APY that was guaranteed to last through 2019. This offer ended in August.

Another useful alternative in a falling interest rate environment is the no-penalty CD. This offers the rate lock of a CD and much of the liquidity of a savings account. The downside is that the rate isn’t as high as a standard CD with a similar term. Only a few online banks are offering them, and like other CDs, their rates have been falling. Last week, Ally Bank reduced the rate of its 11-month No Penalty CD rate by 10 bps. The top tier rate is now 2.10% APY for a $25k minimum deposit. Marcus by Goldman Sachs currently offers the best no-penalty CDs (2.25% APY, 7-month; 2.20% APY 11-month; 2.15% APY, 13-month - $500 minimum).

A no-penalty CD is most useful if you already have a savings account at one of these banks. In those cases, it’s easy to open the no-penalty CD with money from the savings account. If rates keep declining and you don’t need that money, just leave the money alone in the no-penalty CD. If you find a better deal or if you need the money, close the CD without penalty and transfer it back into the savings. It’s an easy way to earn more on your savings with little hassle and with no significant loss of liquidity.

My next update on all of the top savings and money market accounts will be next week. 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.

Federal Reserve and Interest Rate Summary

This is my new weekly summary with the Fed review 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.

Yields Accurate as of September 10, 2019

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

* BHAP (Bank Hapoalim), BoA (Bank of America), BoDF (Bank of Deerfield), CATH (Cathay Bank), CBRI (Citizens Bank NA Providence RI), CELT (Celtic Bank), ENER (Enerbank USA), GSB (GS Bank), MRBI (Merchants Bank of Indiana), NYCM (New York Community Bank), WFB (Wells Fargo Bank)

**New to Summary

CDs Removed Due To Low Rates Or Expired Specials

CDs Removed, No Longer Available - Nationwide

CDs Removed, No Longer Available - Local

CDs Removed, Rate Too Low - National

CDs Removed, Rate Too Low - Local

Post Publication Edits

9/13/2019: Capital One 18-month CD APY lowered to 1.90%