CD Rates Summary September 13, 2016

The next Fed meeting is only a week away. The FOMC statement and a press conference by Fed Chair Janet Yellen are scheduled for September 21st. I’m afraid the meeting is likely to be another disappointment for us savers. This Wall Street Journal article described why it’s unlikely we’ll see a rate hike next week:

It is a close call. But with inflation holding below the Fed’s 2% target and the unemployment rate little changed in recent months, senior officials feel little sense of urgency about moving and an inclination toward delay, according to their public comments and recent interviews.

If the Fed decides to wait again, it’ll have only two more times this year when it can raise rates. One of those times is at its November meeting (Nov 1-2) which is only a few days before the election. There’s also no press conference scheduled after the meeting so it’s unlikely we’ll see a rate hike at that time. The next best chance of a rate hike will be at the Fed’s December meeting (Dec 13-14).

The Fed funds future contracts indicate a slightly lower chance of a September Fed rate hike as compared to last week (down from 18% to 15%). Treasury yields of all maturities increased in the last week. The largest increases were on the long-dated bonds. According to this MarketWatch article, “some investors believe central banks are deliberately steepening the yield curve to aid banks that have been too reluctant to lend.” The following numbers are based on Daily Treasury Yield Curve Rates and the CME Group FedWatch.

Treasury Yields:

• 1-month: 0.25% up from 0.24% last week
• 6-month: 0.54% up from 0.45% last week
• 2--year: 0.80% up from 0.74% last week
• 5--year: 1.26% up from 1.13% last week
• 10-year: 1.73% up from 1.55% last week
• 30-year: 2.47% up from 2.24% last week

Fed funds futures' probability of at least one additional rate hike by:

• Sep 2016: 15% down from 18% last week
• Dec 2016: 56% up from 52% last week
• Feb 2017: 59% up from 54% last week

Certificate of Deposit Rates

Overall, CD rates had little movement in the last two weeks. Several additions were due to the inclusion of Achieva Credit Union IRA CDs, most notably the Jumbo 5-year IRA CD (2.55% APY). This requires an active checking account. Without the active checking account, the 5-year IRA CD rate with a $500 minimum is 20 bps lower (2.35% APY). Anyone can join the credit union by first joining the Achieva Foundation.

More additions and rate increases occurred on the shorter-term CDs. These include 12-month CDs at E-LOAN (1.30% APY), Popular Direct (1.30% APY) and at TAB Bank (1.27% APY), 15-month CD at NASA FCU (1.45% APY) and the 20-month CD at Credit Union of New Jersey (2.00% APY, $25k max).

An unfortunate and unexpected trend this year has been the slow decline of long-term CD rates. For example, in January, five internet banks were offering 5-year CD rates from 2.25% to 2.45% APY. Today, the highest 5-year CD rate at an internet bank is only 2.00% APY. Short-term CD rates have held up much better.

Finally, here’s my usual note about long-term CDs with mild early withdrawal penalties.

An alternative to short-term CDs is long-term CDs that have mild early withdrawal penalties. I include the effective yields of a few 5-year CDs when closed early in the tables below. All of these have competitive 5-year CD rates and an early withdrawal penalty of 6 months of interest or less. The combination of a high 5-year CD rate combined with a mild early withdrawal penalty makes these CDs pretty good deals even when closed early. If you want to compare the effective yields of other CDs after the early withdrawal penalties, please refer to our CD early withdrawal penalty calculator.

The risks of planning for early withdrawals of long-term CDs were highlighted by the deposit agreement change at Ally. The risks have also been seen at credit unions which have raised the early withdrawal penalties on existing CDs. I have more details in this blog post.

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. Since there aren’t a lot of rate changes, I’m now alternating these posts. This week I’ll just publish this CD summary. Next week I’ll just publish the savings/checking summary. For both summaries I’ll include the same economic overview. You can always get the latest rates for savings/checking accounts and CDs by using our rate tables. Just use the menu on top.

Here’s the link to last week’s savings/checking recap.

Yields Accurate as of September 13, 2016

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

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

9/14/16: Space City Credit Union 5-year Certificate Special no longer available.

9/14/16: TEXAR Federal Credit Union 12-month Share Certificate removed following rate drop.

9/14/16: HarborOne Bank 33-month Special CD added.

9/16/16: EverBank 1- and 1.5-year CD rates lowered.

9/16/16: Quorum FCU 17-month Term Savings CD no longer available.

9/16/16: Quorum FCU 13-month Term Savings CD rate lowered.

9/16/16: Quorum Federal Credit Union 24-month Term Savings CD rate lowered.