By  Mon Dec 3, 2012

CD Rates Report: Long-term Rates Suffer, Again

Jack Everett / Flickr source

The rates on certificates of deposit (CDs) continue slip, especially on longer CD terms. This has been the trend since the Federal Reserve began releasing interest-rate projections in August 2011.

In November, the national rate averages for 48-month and 60-month CDs have each dropped 0.03% APY, according to bank data by MyBankTracker. The CDs with longer maturity terms are expected to experience larger rate cuts because shorter CD terms don’t have much room to fall (before they become less attractive than a high-yield savings account).

The nation’s four largest banks — Chase, Bank of America, Wells Fargo and Citibank — have slashed the rates on their long-term CD rates. Online banks EverBank and Ally Bank have done the same.

In mid-November, USAA cut the rates across its entire lineup of CDs and IRA CDs.

Maneuvering the low-rate environment

The Federal Reserve did not hold a board meeting to discuss monetary policy in November. Previously, the central bank projected that interest rates will remain exceptionally low until mid-2015. The minute of the Fed’s October meeting suggested that additional bond purchases may be used put more downward pressure on interest rates. The next Fed meeting is scheduled for mid-December.

Until the economy and interest-rate environment improves, savers are likely to gain a lower return on long-term CDs.

If you’d like to lock in higher CD rates from longer maturity terms, it would be best to do so as soon as possible. Otherwise, you can wait out the low interest rates with an online savings account or 1-year CDs. As always, we’d like to remind savers that Series I savings bonds are another way to maximize their savings.

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

CD Term APY (as of 10/31/12) APY (as of 11/30/12) APY Change
6-Month 0.38% 0.38% 0%
12-Month 0.55% 0.54% -0.01%
24-Month 0.68% 0.67% -0.01%
36-Month 0.87% 0.85% -0.02%
48-Month 1.04% 1.01% -0.03%
60-Month 1.25% 1.22% -0.03%

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