By  Thu Feb 28, 2013

CD Rates Report Feb. 2013: Watching the Worsening Jobs Market

City of Marietta, GA / Flickr | http://www.flickr.com/photos/mariettaga/6193163886/

City of Marietta, GA / Flickr source

Although it’s still early in the year, there’s a chance that February may go down as the worst month of the year for certificate of deposit (CD) rates. The national rate averages for long-term CDs experienced some of the largest monthly drops compared to those in the past several months.

The rate averages for CD terms of 36, 48 and 60 months fell by at least 0.05% APY while the rate averages for shorter CD terms suffered declines of less than 0.02% APY.

In the past month, USAA Bank, AIG Bank, State Farm Bank and HSBC have made across-the-board rate cuts on their CDs. AIG Bank actually slashed their rates in January already and continued to do so in February.

At this pace, savers will be less and less likely to invest their cash in long-term CDs because interest returns on different CD terms will not vary by much — the earnings potential is not great enough to justify a longer CD commitment.

Currently, Barclays Bank continues to hold the top 60-month CD rate of 1.85% APY. Savers will have to decide whether an online savings account, which can earn roughly half the return of the best 60-month CD rate (held by Barclays Bank at 1.85% APY), is the smarter choice. With accessibility cash, savers can weather financial emergencies and have the flexibility to jump into more profitable investments.

Unemployment rate ticked upward

Ever since the Federal Reserve revealed that it would raise interest rates when the unemployment rate falls, savers may have been keeping an eye on the jobs market.

From December 2012 to January 2013, the unemployment rate increased from 7.8 percent to 7.9 percent, according to the Bureau of Labor Statistics.

The central bank wants the unemployment rate to drop to 6.5 percent.

The trend will stick

We continue to project that long-term CD rates will be subject to the largest rate cuts because they have the most room to fall. Short-term CD rates are already comparable to today’s leading savings rates.

The table below shows the changes in the national averages for CD rates from Jan. 31, 2013 to Feb. 28, 2013. The figures are based on data acquired from banks that are tracked here on MyBankTracker.

CD Term APY (as of 1/31/13) APY (as of 2/28/13) APY Change
6-Month 0.37% 0.37% 0%
12-Month 0.52% 0.51% -0.01%
24-Month 0.64% 0.62% -0.02%
36-Month 0.81% 0.76% -0.05%
48-Month 0.99% 0.92% -0.07%
60-Month 1.17% 1.12% -0.05%

The national rate averages track the movement of CD rates across the country. Check out the table below for banks that offer higher-than-average CD rates.


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