Top CD Rates

While the FDIC continues to close banks and the stock market pushes ahead, certificate of deposit rates held steady for the week ending August 21, 2009. 2009 has been a disappointing year for interest rate sensitive investors such as certificate of deposit holders as interest rates have been on a steady course that has led to declining yields. This week’s survey of the best CD rates available nationally performed by selectCDrates.com has indicated a possible bottom to the downward slide.

The average for the best one year CD rates actually gained ground week over week according to selectCDrates.com’s weekly national survey of bank CD rates. The one year CD rate ended the week at 2.07%, an increase of three basis points or 3/100 of a percent for the week.

The best two year CD rates remained unchanged for the week. Two year CD rates held at 2.36% to close the week according to the weekly survey.

Five year CD rates also gained on yield for the week. The best five year CD rate average increased by one basis point, ending the week with a yield of 3.37%.

The six month CD rates bucked the trend and moved modestly lower. The average of the best six month CD rates fell by one basis point, closing the week at 1.75% from the prior week’s average of 1.76%.

Whether this is actually the end of the slide in CD rates is not clear. With the Fed clearly indicating there will be no imminent interest rate hikes in the near future and the U.S. economy not likely to move at a brisk pace anytime soon, significant improvements in CD rates seems unlikely.

Forecasting the direction of interest rates is a daunting task during normal business cycles and is clearly more challenging during this unprecedented economic turmoil. Forecasting interest rate movements is always susceptible to changing events that can impact interest rate markets and forecasts, with record budget deficits, continued bank failures and consumers weighted down with excessive debts and mounting job losses, uncertainty looms larger than ever.

High CD rates are still available and can be found mostly at the state level. At the close of 2008, most high rate CDs were being offered by online banks, national banks or banks that were headed for failure. Now the list of banks paying the best CD rates can be found among the regional banks, state banks as well as community banks.

State Farm Bank is currently offering a fairly competitive 18 month CD  promotion. The rate is 2.71% APY for an 18-month term. There’s also a fairly competitive 1-year CD with a 2.54% APY. Minimum deposit on all of State Farm’s CDs $500. These rates are current as of 4/28/2009.

State Farm Bank’s CD Page has the details and the link to the Truth in Savings Disclosure. According to the disclosure, the early withdrawal penalty is 180 days of interest on the principal withdrawn.

You can apply online, but a printer is required, as you will be required to print, sign and mail the application to State Farm along with your initial deposit. You may also apply for an account by contacting State Farm Bank toll-free at 1-877-SF4-BANK (1-877-734-2265) or by contacting a participating State Farm agent.

State Bank of India in New York recently increased some of its CD rates. The competitive rates include a 4.42% APY 1-year CD, a 4.89% APY 3-year CD and a 5.30% APY 5-year CD. The minimum deposit is $5,000. In the past they used to have higher rates for larger deposits, but currently the rates are the same across for all tiers.

These CDs are offered through the bank’s New York branch and can be opened by mail.

Some important details:

• They are not currently offering in-trust-for, POD and trust accounts.
• For those who want interest payements, interest is paid quarterly to your transaction account at SBI.
• Early withdrawal penalty is 90 days of interest for 1 and 2-year CDs, 180 days for the 3 year CD, and 270 days for the 5 year CD. The bank reserves the right to refuse such withdrawals.
• 10 calendar day grace period at maturity of the CD
• If you’re a new customer applying by mail, you will need to provide a notarized copy of your driver’s license

They have often had competitive CD rates. This is the US operation of State Bank of India and is FDIC insured. State Bank of India is the largest bank in India, and it’s the second largest bank in the world measured by the number of branch offices.

Corus Bank made a large increase to its 12-month CD rate today. The 12-month CD yield was increased from 4.36% to 4.75% APY. There was a smaller increase in the 6-month CD yield, but the increase makes the CD the best nationwide 6-month CD from a bank. The new 6-month yield is 4.25% APY (up from 4.05%). The 3-month CD yield remained at 3.56% APY, and the money market account yield also remained the same at 4.00% APY. The minimum deposit is $10,000. More details are available at Corus’ rate table.

Corus has branches in Chicago, but accounts can be opened with an online application from any state. Initial funding must be done by check or wire transfer.

Like WaMu, it looks like Corus is in need of deposits. Corus Bank has been a big lender to condo developers in Florida, and the real estate slump has been taking its toll. However, this article makes the case that some of the grim predictions about Corus Bank may be too pessimistic.

Federal Trust Bank is offering a competitive CD rate of 4.50% APY on terms from 36 to 60 months. The minimum deposit is $500, and the early withdrawal penalty is 6 months of interest. Please see their rate table for more details.

It appears a branch visit is required to open the CD. Branches are located in several Central Florida cities including Winter Park, Sanford, New Smyrna Beach, Palm Coast and Eustis.

The bank isn’t in good financial shape. BauerFinancial gives it 0 stars based on 3/31/08 data. There’s an Orlando Sentinel article on its parent, Federal Trust Corp. According to the article, Federal Trust has been hit hard in the mortgage mess. It’s currently trying to raise $35 million in stock offering. Make sure you stay below the the FDIC insured limit.

Wachovia Bank is featuring a 4.75% C.D. with a 5 year maturity. The CD features:

• Minimum balance of $5,000
• FDIC insured
• Wachovia Security PlusSM
• Automatic renewal option
• Regular CD interest payments—monthly or quarterly

Aside from this 5 year promo CD, their other CD rates are quite low, ranging from 1.00% to 1.80%. These should definitely be avoided.

GMAC Bank has some great deals on several of their CDs, with yields of over 4.00% APY. 12 month, 2 year and 3 year CDs have rates of 4.10% APY, and 4 and 5 year CDs have 4.35% APY.

Minimum deposit on GMAC Bank CDs is $500. Deposit term will begin upon receipt of initial deposit. Your interest rate will be the one in effect on that date. Interest is compounded daily. Fees could reduce the earnings on account, and there are penalties for early withdrawal.

Wachovia is now listing its featured 4.75% APY 60-month CD on their website. You can see it listed at Wachovia’s Savings Accounts & CDs page. The minimum deposit is $5,000, and a checking account is required.

To see the rate, you still have to enter your zip code. It appears you can apply online, by phone or at a branch.

Countrywide Bank has recently raised their long term CD rates by several basis points. All CDs over 18 months have been increased. 18 month CDs now yield 4.10% APY, while 3-5 year CDs yield 4.50% APY, some of the highest rates available. Countrywide CD’s all have a $10,000 minimum balance and are FDIC insured up to $100,000.

• 91 days of interest early withdrawal penalty for terms under 12 months
• 180 days of interest early withdrawal penalty for terms of 12 to 60 months
• Grace period at maturity when you can close without penalty is 10 calendar days
• No hard credit inquiries for opening CDs or savings accounts
• CD funding options: mail a check, wire transfer, or drop off check at a CW financial center

Countrywide has had its share of subprime mortgage problems recently, and Bank of America is supposed to be buying out Countrywide. However, with continually deteriorating credit conditions, it would be wise to keep your deposits less than the FDIC insured amount.

Indymac Bank made some big changes on its Internet CD rates. The yields on all of the terms under one year (even the 4-month Internet Special) are now under 3%. However, they did raise the yield on the 12 and 18 month CDs. Both now have a competitive yield of 4.05% APY.

For those who have CDs maturing at Indymac, be sure you don’t let the CDs automatically renew. About 6 months ago, Indymac was offering 6-month CD yields of 5.70%. If you opened one of these last year and now let it automatically renew, you’ll be stuck with their new low rate of only 2.75% APY.