CD Rates Summary August 14, 2018

The July Consumer Price Index (CPI) report that was released on Friday supports the continuation of the Fed’s policy of gradually raising interest rates. Core CPI which excludes food and energy “rose 2.4 percent for the 12 months ending July; this was the largest 12-month increase since the period ending September 2008.”

This CPI news and recent economic news on unemployment and GDP should keep the Fed hiking rates at a gradual pace, which will likely be once a quarter. That would mean rate hikes at the Fed’s meetings in September, December and March. These rate hikes should drive short-term rates higher, but long-term rates may not move much which could result in an inverted yield curve. That could discourage the Fed from additional rate hikes. Next year’s Fed meetings should be interesting if short-term rates start to bump up against long-term rates.

Long-term Treasury yields continue to have difficulty exceeding 3% in a meaningful way. Since last week, the yield of the 10-year Treasury Note has fallen 9 bps to 2.89%. The 30-year Treasury Bond fell 6 bps to 3.06%. With the target federal funds rate currently set to 1.75% to 2.00%, it won’t take too many more Fed rate hikes before short-term rates reach 3%. If long-term yields can’t move much past 3%, we may see an inverted yield curve, which often portends a recession in a year or two.

Why has long-term Treasury yields remained under 3%? This 24/7 Wall St. article offers 10 reasons.

In the last week, both short- and long-term Treasury yields declined, with long-term yields declining the most. Economic concerns over new trade tariffs and a currency crisis in Turkey have increased demand for the safety of Treasury securities, which has contributed to falling Treasury yields. Since long-term rates fell more in the last week than short-term rates, the yield curve has narrowed. The 10-2 spread has shrunk with the difference in yields between the 2-year and 10-year Treasury Notes falling to 26 bps.

Treasuries continue to be a competitive alternative to CDs, especially for terms of 2-years and under. They become even more competitive when the tax advantages of Treasuries are considered. For more discussion on the pros and cons of Treasuries Notes compared to CDs, please refer to this DA Forum thread and this DA blog article.

The following numbers are based on Daily Treasury Yield Curve Rates and the CME Group FedWatch.

Treasury Yields:

• 1-month: 1.96% same as last week (0.95% a year ago)
• 6-month: 2.25% up from 2.23% last week (1.13% a year ago)
• 1-year: 2.44% down from 2.45% last week (1.23% a year ago)
• 2--year: 2.63% down from 2.68% last week (1.33% a year ago)
• 5--year: 2.77% down from 2.84% last week (1.77% a year ago)
• 10-year: 2.89% down from 2.98% last week (2.22% a year ago)
• 30-year: 3.06% down from 3.12% last week (2.81% a year ago)

Fed funds futures' probabilities of future rate hikes by:

• Sep 2018 - up by at least 25 bps: 96.0% same as last week
• Dec 2018 - up by at least 50 bps: 67.0% down from 70.2% last week
• Mar 2019 - up by at least 75 bps: 35.4% down from 42.4% last week

Certificate of Deposit Rates

The above graph shows the rate trends of the average CD rates. These average rates are based on all the rate data that we have collected over the years. This is an interactive graph. You can choose the term of the CDs (from 3 months to 5 years) and the look-back period (from 3 months to 5 years). As you can see in the graph, average CD rates for all terms have increased in the last year, but the largest gains have been on the short-term CDs.

Best Nationally-Available CD Rates

We continue to see more 3%+ CDs with shorter terms. However, 3%+ short-term CDs are popular, and they’re not lasting long or they’re not easy to open.

One example of a 3%+ short-term CD that didn’t last long was at Home Loan Investment Bank. They were offering a nationally available 3.15% APY 18-month CD. That only lasted about two weeks, and is no longer available. They’re still offering a Jumbo 3.15% APY 14-month CD, but that requires a branch visit to one of their three Rhode Island branches.

Two credit unions have been offering great 3%+ deals on 30-month CDs. However, they’re not making it easy for everyone to open these. First, Freedom Credit Union in Pennsylvania is still offering a special 30-month CD that earns 3.56% APY. I just learned today from a top credit union official of membership restrictions. There are now residency requirements for ACC members to be eligible for Freedom Credit Union membership. Please see this blog post for details.

The other 30-month CD special is from Greenwood Credit Union. The rate is lower, but with a 3.25% APY, it’s still a very good deal. This credit union continues to be open to everyone, but this 30-month CD special is only available at their branch. This CD special should be available soon in the credit union’s online application. However, this was stated more than a week ago. As of now, this CD special is considered to be a local deal.

The shortest CD term that’s nationally available with a 3%+ APY is 24 months. Two institutions are offering these 24-month CDs. The one with the highest rate is Justice Federal Credit Union which has a certificate special that earns 3.35% APY for a $100k minimum and 3.25% APY for a $500 minimum. These rates require that the member open and maintain a checking account. Without a checking account, the rates are 10 bps lower. More details are available in this blog post.

CD Bank is the other institution. It’s offering 3.00% APY on a 24-month CD. I have more details about CD Bank and its CDs in this blog post.

CDs with terms around 12 months are approaching 3%. The latest internet bank to offer this is Synchrony Bank which has started to offer a 13-month CD special that earns 2.65% APY. Almost nine months ago, Synchrony Bank’s old 13-month CD special was earning only 1.75% APY. That’s a good example of how rates have increased this year. More details about this new 13-month CD is available in this blog post.

The top 12-month CD rate that’s nationally available continues to be 2.80% APY at United Texas Bank. Just below this rate is the 9-month Certificate at Andrews Federal Credit Union. This 9-month Certificate continues to earn 2.75% APY.

For nationally available 5-year CDs, two institutions are offering rates near 3.50%. The first is the easy-to-join United States Senate Federal Credit Union with 5-year rates that range from 3.41% APY for a $1k minimum to 3.53% APY for a $60k minimum. The second institution is First Financial Northwest Bank. It’s now offering a 60-month CD with a 3.50% APY. Minimum deposit is $100k (3.25% APY for a $25k minimum). Both of these 60-month CDs have a hefty early withdrawal penalty of one year of interest.

Earlier this year we had an institution offering a 4% CD (Sharonview FCU). That has long ended, but we have a new institution with a 4% IRA CD. It’s Achieva Credit Union, and it continues to offer 60-month IRA CDs earning up to 4.20% APY. This requires a $75k minimum deposit. The rate falls to 4.10% APY for a $25k minimum and 4.00% APY for a $500 minimum. It’s an easy membership credit union (see our overview page).

Savings & Checking Account Rates

In the past, I’ve covered savings and checking account rate changes in another weekly summary post. Each week I would publish one post with a recap of savings and checking account rate changes and another post with a recap of CD rate changes. I’m now alternating these posts. 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 August 14, 2018

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

*ALLY (Ally Bank), APEX (Apex Bank), BH (Bank Hapoalim), BMW (BMW Bank), BoA (Bank of America), BRKL (Brookline Bank), BU (BankUnited), CCB (Comenity Capital Bank), CITI (Citibank NA), CRES (Crescom Bank), DIS (Discover Bank), ENER (Enerbank USA), FDB (Fidelity Bank), GSB (GS Bank), IBLA (Iberiabank Louisiana), IBSH (Investors Bank Short Hills), LDRB (Leader Bank MA), MBC (Merrick Bank Corp), MBPA (Meridian Bank PA), MCBMN (Midcountry Bank MN), META (Meta Bank), MSPB (Morgan Stanley Private Bank), SANT (Santander Bank NA), SFBT (Stifel Bank & Trust), SMB (SallieMae Bank), UBS (UBS Bank USA), VNB (Valley National Bank), WSF (Wilmington Savings Fund)

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

None

CDs Removed, Rate Too Low - Local