By  Mon Feb 3, 2014

CD Rates Report Jan. 2014: Major Hike in 5-Year CDs Rates

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In January, the national rate averages for certificates of deposit (CDs) have generally increased, which comes at a time as the jobs market continues to improve. To the delight of savers, some online banks are offering increasingly attractive 5-year CDs.

CIT Bank’s 5-year CD rate jumped from 1.85% APY to 2.00% APY, while the online bank’s jumbo CD rate (deposits of at least $100,000) increased from 2.05% APY to 2.20% APY.

Barclays followed suit by hiking its 5-year CD rate from 2.00% APY to 2.15% APY, which is currently the top 5-year CD rate that is available nationwide with a minimum opening deposit of less than $100,000.

When it comes to projecting the path of CD rates, various sources are generating different outlooks, which result in mixed signals for savers who are watching for opportunities to boost their cash savings.

Following the last Federal Reserve board meeting, the central bank said it would continue to slow down its purchases of government bonds to $65 billion, down from $75 billion. The move is a response to an improving U.S. economy, warranting less downward pressure on interest rates.

But, late last year, the Fed added that rates are likely to remain low even after the unemployment rate fell past 6.5 percent. The December 2013 unemployment rate was 6.7 percent, down from 7.0 percent in the prior month.

Even though there may not be a clear direction for interest rates, banks are raising their CD rates — as seen by the general rise in national CD rate averages.

The table below shows the changes in national averages for CD rates from Dec. 31, 2013 to Jan. 31, 2014. The figures are based on the data acquired from banks that are tracked by MyBankTracker.

CD Term APY (as of 12/31/13) APY (as of 1/31/14) APY Change
6-Month 0.32% 0.31% -0.01%
12-Month 0.47% 0.47% 0%
24-Month 0.59% 0.61% +0.02%
36-Month 0.71% 0.74% +0.03%
48-Month 0.91% 0.95% +0.04%
60-Month 1.12% 1.16% +0.04%

Compare the top nationwide CD rates currently available:

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Savings Rates Report Jan. 2014: Major Online Banks Raise Rates

Rates Fell Significantly in 2013, Despite Year-End Rebound

How to Find the Best Mortgage Rates in Your State

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  • Charles Walker

    Based on the chart from the article, it appears that the majority of CDs are well under 1%. Why would anybody open a CD when there are simple savings accounts that offer much more without any of the disadvantages of locking your money?

    • Simon Zhen

      Charles, note that the table represents national averages for various CD terms. The 1-year CD rates at most banks do exceed the rates on their savings accounts (there are some banks with 1-year CD rates that are below their savings rates).

      • Charles Walker

        Even so, the fact is there are actually banks actually selling CDs below 1% at all. Why would somebody do this when ~0.90% is achievable without any restrictions at all? To exploit those who don’t do their homework?

        • Simon Zhen

          Unfortunately, it is true that some bank customers don’t make the effort to research better rates.

          But, some people might prefer to lock in their money in CDs for the psychological factor — they’re less likely to spend it.

          Another reason to go with CDs may involve some type of bonus. For instance, Ally is known for offering a rate bonus if you renew the CD. This offers a slight boost interest earnings.