The speculation that the Federal Reserve will soon scale back its bond-buying program appears to be contributing to volatile CD rates. Last month, long-term CD rates were the spotlight as a few online banks boosted their 4-year and 5-year CD rates. While some of those have dropped, other online banks have raised their long-term CD rates.
In July, we pointed out the extremely attractive 5-year CD rate of 2.06% APY that was offered from EverBank. But, given how enticing that rate was, it didn’t last long for long as the online bank has since reduced the rate down to 1.86% APY.
However, Barclays responded with a rate hike — pushing its 5-year CD rate from 1.65% APY to 1.90% APY, which is now the leading nationwide 5-year CD rate.
CIT Bank, GE Capital Retail Bank and Nationwide Bank have also increased the rates on their 5-year CD offerings.
Rate increases on long-term CDs may be more common due to the impending increase of rates in general. With more savers likely to use short-term CDs and savings accounts until rates rise, there could be a lack of interest in long-term savings vehicles. Making long-term CD rates more competitive is one way to bring in new deposits.
All eyes remain fixed on how the central bank views the recovering economy, especially the jobs market. In its last board meeting, the Fed reiterated its target unemployment of 6.5 percent, which would tell the Fed that it is time to start raising interest rates. The last jobs report from the Bureau of Labor Statistics revealed an unemployment rate of 7.4 percent in July, down from 7.6 percent in June.
The table below shows the changes in the national averages for CD rates from July 31, 2013 to Aug. 30, 2013. The figures are based on data acquired from banks that are tracked by MyBankTracker.
|CD Term||APY (as of 7/31/13)||APY (as of 8/30/13)||APY Change|
If you’re interested in the top CD rates currently available, refer to our comparison table below: