By  Thu Nov 1, 2012

CD Rates Report: Long-term Rates Continue Their Fall

Corrie Barklimore / Flickr source

After the Federal Reserve announcement in September, saying that interest rates are likely to remain low until mid-2015, the rates on certificates of deposit (CDs) with longer maturity terms have continued to slip.

In October, the national rate averages for 48-month and 60-month CDs have dropped 0.02% APY and 0.03% APY, respectively, according to bank data by MyBankTracker.

ING Direct, Ally Bank and CIT Bank are some of the online-banking giants that have slashed rates on their long-term CDs. Even big banks, including Bank of America, Wells Fargo and Citibank have made similar rate changes to their CD products.

As we said in our September CD rates report, long-term rates may be suffering the most because short-term CD rates are already so low that they don’t have much room to fall anymore.

The Fed did not announce in changes in the dismal interest-rate outlook after its October board meeting. We can expect the trend to continue in the coming months (or years).

The leading nationwide 1-year CD rate is 1.10% APY at Bank of Internet. The top nationwide 60-month CD rate is 1.80% APY, offered by Nationwide Bank and CIT Bank.

In the short-term, savers should consider Series I savings bonds. These bonds will have an effective APY of at least 0.88% if they are redeemed after 12 months. If inflation picks up over the next six months, which is likely, the return on I-bonds will improve.

The table below shows the changes in national averages for CD rates from Sept. 30, 2012 to Oct. 31, 2012. The figures are based on data acquired from banks that are tracked here on MyBankTracker.

CD Term APY (as of 9/30/12) APY (as of 10/31/12) APY Change
6-Month 0.38% 0.38% 0%
12-Month 0.54% 0.55% +0.01%
24-Month 0.68% 0.68% 0%
36-Month 0.88% 0.87% -0.01%
48-Month 1.06% 1.04% -0.02%
60-Month 1.28% 1.25% -0.03%

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