3.0% Bank CD Rates: How long must you invest?

January 11, 2011 No Comments »

For those in the market for a bank CD, you’ve undoubtedly noticed the difficulty in tracking down a 3.0% APY CD in today’s economic climate. Back in 2008, 3% APY CDs were the lowest of the low for CD rates. Even 6 month CDs were yielding significantly more than that. Today, the average APY for 5 year CDs sits at a measly 2.25% and the best 5 year CDs (available nationwide) are providing an annual percentage yield of just over 2.60%.

Where can you turn? If you are eligible to join a local credit union, you may want to stop by a branch and check out their CD’s. Sometimes local credit unions can provide slightly higher CD rates than large national banks. For example, America Airlines Federal Credit Union (a credit union for employees of AA and their families) has a 5 year CD yielding 2.88% APY – still 0.12% under our goal of 3.0%. A couple weeks ago we were forwarded a tip on a credit union in Maryland which was offering a 3.10% APY 5 year CD, and at that time it was the best 5 year CD rate in the country. However for most of us, 3.0% APY CDs are unattainable with terms of 5 years or lower.

So what can you do to secure an FDIC insured (or NCUA insured) investment yielding at least 3.0%? In short, you’ll have to start shopping around for different types of investment vehicles. Unfortunately the certificate of deposit market isn’t quite ready to provide these returns on a nationwide basis, however some accounts may be able to. An account given much recognition here on BankVibe.com can usually provide APY’s generously above the 3.0% mark. These accounts are referred to as “rewards checking accounts.”

Noteworthy Rewards Checking Accounts From Around the Country:

(Rates accurate as of Jan 2011. Institutions listed below may be geographically exclusive.)

- Liberty National Bank (out of Oklahoma) has a “Kasasa Checking Account” yielding 4.11% APY on balances up to $10k.

- Consumers Credit Union (out of Illinois) has a “Rewards Checking Account” yielding 4.09% APY on balances up to $10k.

- Lake Michigan Credit Union has a “Max Checking Account“ yielding 4.00% APY on balances up to $15k.

- Inland Northwest Bank has a “Rewards Checking Account” yielding 3.80% APY on balances up to $25k.

- Evantage Bank has a “Rewards Checking Account” yielding 3.74% APY on balances up to $10k. We reported on Evantage Bank’s money market account in 2009 when they had a mega money market account yielding 3.10% APY (unfortunately this rate has been dropped considerably since then).

Keep in mind these “rewards checking accounts” have strict monthly requirements in which you must follow to earn the advertised APY. These requirements generally include: a specific number of debit card transactions each month (usually around 10), setting up an automatic recurring payment, and receiving e-statements. Check with the individual institution for their specific requirements.

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