The seemingly relentless drop in certificate-of-deposit (CD) rates appears to have ceased, at least for now. In May, the national averages for CD rates were unchanged or increased compared with the prior month. For savers who have been watching interest rates fall month after month, this may be a moment of relief, however short it may be.
Although the halt is a relatively good sign, there is still roughly one and a half years before the Federal Reserve expects to raise interest rates in late 2014. Going forward, there is no saying how CD rates will move or if they move at all.
Even with national averages unchanged, individual CD rates can experience large fluctuations that do not align with the trend. This month, Incredible Bank made drastic rate cuts to its entire line of 9-, 13- and 19-month CDs — from 0.90% APY to 0.65%, 1.05% APY to 0.80% APY and 1.20% APY to 1.00% APY, respectively.
Meanwhile, the online banking division of Barclays officially launched (despite having been live and accessible since March) and even raised the rates on all of its CDs, which have maturity durations ranging from three months to five years. Barclays boasts the top nationwide 5-year CD rate of 1.80% APY with no minimum opening deposit requirement. Its other CDs are highly competitive as well.
Savers who are seeking a CD for the short term may consider the 1.15% APY 12-month CD from Doral Bank Direct. The rate beats that of most online savings accounts and the CD duration is short enough for savers to keep an eye out for rebounding interest rates. Currently, the top online savings rate is available through TIAA Direct at 1.25% APY.
The Federal Reserve’s next board meeting will take place on June 19 and 20. Changes to the Fed’s projected rate-increase timeline is not outside of the realm of possibility — the central bank has extended its timeline before. However, the potential of seeing interest rise earlier is highly contingent on improvement of the U.S. economy.
The table below shows the changes in average national CD rates from April 30, 2012, to May 31, 2012. The figures are based on data acquired from banks that are tracked by MyBankTracker.
|CD Term||APY (as of 4/30/12)||APY (as of 5/31/12)||APY Change|
Remember that the above table displays national averages — compare individual CD rates to boost your savings.