CD Rates Summary - December 2, 2020

We didn’t see a large surge of rate cuts with the start of December. We’ve seen a higher number of CD rate cuts for the start of previous months this year. I looked back at my CD summaries for the start of the last three months. In September and October, my CD rate change lists totaled 31 for each month. The count went down to 22 for the start of November. For this month, the total is only 17, and 4 out of the 7 credit union CD rate changes included rate hikes. This suggests banks and credit unions may be reaching their CD rate bottoms.

The four credit unions that had rate hikes included USALLIANCE Financial, Connexus, NASA FCU and Veridian. USALLIANCE Financial increased the rates of two of its CD specials to over 1%. Connexus increased its 5-year CD yield to 1.01%. The other two credit unions didn’t have new CD rates that reached 1%, but their short-term CD special rates increased to noteworthy levels.

We’re seeing fewer rate cuts from the major online banks. That’s another positive trend. However, the new CD rates are disturbingly low. These include 5-year rates of 0.60%, 0.50% and 0.35% at Discover, Live Oak and Citizens Access. I don’t see any reason to lock into these low rates for five years. We’ve been tracking Discover Bank rates for more than 10 years, and its 5-year CD rate had never been below 1.50% before 2020.

Live Oak Bank has been temporarily boosting some of its CD rates in the last couple of months. In October, it increased its 1-year CD rate from 0.60% to 0.80%. Three weeks later, the 1-year rate fell while the 5-year CD rate increased from 0.60% to 1.00%. Last week, the 5-year rate fell to 0.50% while the 2-year rate increased from 0.60% to 0.80%. Based on this pattern, expect Live Oak’s 2-year CD rate to fall to around 0.50% in December while another CD receives a temporary rate boost.

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:

• Discover Bank (5yr 0.70% → 0.60%, 1yr 0.60% → 0.50%)
• Live Oak Bank (5yr 1.00% → 0.50%, 2yr 0.60% → 0.80%, 1yr 0.70% → 0.50%)
• Citizens Access (5yr 0.45% → 0.35%, 1yr 0.30% → 0.20%, 11m NP 0.25% → 0.15%)

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

• First National Bank of America (4yr 0.90% → 0.85%, 1yr 0.70% → 0.60%)
• State Bank of India (4yr SC 0.90% → 0.85%, 1yr SC 0.65% → 0.60%)
• Limelight Bank (3yr 0.85% → 0.80%, 1yr 0.70% → 0.65%)
• KS StateBank (5yr 0.55% → 0.60%, 1yr 0.25% → 0.30%)
• MainStreet Bank (5yr 0.80% → 0.50%, 1yr 0.50% → 0.30%)
• MY Safra Bank (5yr 0.40% → 0.30%, 1yr 0.50% → 0.45%)
• BankUnitedDirect (3yr 0.35% → 0.25%, 1yr 0.60% → 0.50%)

Credit unions that have easy membership requirements:

• USALLIANCE Financial CU (3yr Spc 0.75% → 1.25%, 18m Spc 0.85% → 1.15%)
• Connexus CU (5yr 0.91% → 1.01%, 1yr 0.61% → 0.71%)
• NASA FCU (49m 0.80% → 0.90%, 15m 0.70% → 0.80%, 9m 0.65% → 0.75%)
• Consumers CU (20m Sp Jbo 1.20% → 0.90%)
• American 1 CU (5yr IRA 1.26% → 0.85%, 5yr 1.00% → 0.75%, 1yr 0.25% → 0.15%)
• US Senate FCU (5yr 0.60% → 0.55%, 1yr 0.40% → 0.35%)
• Veridian CU (1yr Jbo 0.95% → 0.55%, 7m Jbo 0.40% → 0.90%)

Brokered CD Rates

For non-callable brokered CDs, the rate changes were mixed, but there were more rate cuts than rate gains.

For CDs with terms of two years and under, the highest rates are either 0.05% or 0.10% at both Fidelity and Vanguard.

The highest rate for a 5-year non-callable CD is now 0.50% at both Fidelity and Vanguard. This is down 5 bps from two weeks ago.

For the longer-term CDs with terms over five years, rates have been rising. The highest is now 1.00% (10-year term at Fidelity). There were non-callable 7-year and 10-year CDs today at both Fidelity and Vanguard. The highest 7-year rate was 0.65% at both Fidelity and Vanguard. The fact that there were non-callable long-term CDs is a positive sign.

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

Barksdale Federal Credit Union had been the rate leader for most CD terms. After last month’s rate cuts, that’s no longer the case. Only its 5-year CD (1.45% APY) remains on top.

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.”

For more details on Barksdale FCU, its CDs and membership, please refer to my September Barksdale CD review.

Advancial Credit Union has CD rates at the top in several categories. Its Jumbo 5-year CD yield (1.42%) is just a little below Barksdale’s. Advancial hasn’t always made it easy to join and open CDs. Based on info received from Advancial in November, people in any state can still join the association Connex to qualify for Advancial membership. Also, new CDs are available to new members. I have more details in this Advancial CD review.

The best mid-term CD deals are currently available from USALLIANCE Financial Credit Union which came out with two very competitive CD specials on Black Friday. These include a 36-month CD that earns 1.25% APY and an 18-month CD that earns 1.15% APY. Minimum deposit is only $500. I have more details in this USALLIANCE Financial CD review.

Another good mid-term CD deal is the 30-month CD at INSBANK Online (1.15% APY). Minimum deposit is only $2,500. A few months ago INSBANK launched this online division. Some of their CD rates have fallen since they launched, but all of the rates remain competitive. The 30-month CD currently has the highest rate.

Savings and Money Market Accounts

There are currently only five institutions with liquid accounts that offer yields of at least 1.00% without any small maximum balance, activity/checking requirements or unusual withdrawal limitations.

Three of the five are actually fintechs that have partnered with banks to hold the deposits in FDIC-insured accounts. These fintechs are Affirm, Chime and T-Mobile.

The fourth is Merchants Bank of Indiana which offers a money market account with an APY that has been holding at 1.00% since March. According to the Bank, people from any state are eligible to open this account via the Bank’s online application.

The fifth institution is Advancial Credit Union. Its Premium Money Market account has a 1.01% APY for a minimum balance of $100k. For those interested in Advancial CDs, this is another reason to join.

For more details about these five accounts, please refer to my latest liquid account summary.

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 December 2, 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

*BHAP (Bank Hapoalim), ESSA (ESSA Bank & Trust), FFB (First Foundation Bank), IBC (International Bank Chicago), LOB (Live Oak Banking Company), LUASB (Luana Savings Bank), MBC (Merrick Bank Corp), NB5¢ (Newburyport Five Cent Savings), NYCM (New York Community Bank), PREB (Preferred Bank), TAB (Transportation Alliance Bank)

**New To Summary, as of December 2, 2020

CDs Removed Due To Low Rates Or Expired Specials

CDs Removed, New Accounts No Longer Available

CDs Removed, Rate Too Low