Melrose Credit Union CD Rates Drop in Early 2012

We regularly hype Melrose Credit Union’s CD rates here on BankVibe.com simply because this not-for-profit, Bronx, New York, based credit union is almost always crushing the national average when it comes to deposit rates. However, as of the beginning of this year, we’ve seen Melrose Credit Union finally scale back on some their featured CD rates.

Is this surprising? Not at all. After FED Chairman Ben Bernanke came out with his latest statement reminding Congress and the general public that they plan on keeping interest rates at these record low levels through 2014, it seems like most banks and credit unions are doing exactly what Melrose did. And although Melrose lowered their CD rates, we gotta hand it to them for holding out for so long. The last time they cut their rates was at the end of the summer of 2011, and interest rates in general have fallen slightly since then, with almost every major bank and credit union making some additional cuts to their FDIC insured savings products.

Related: See how much banks borrowed from the FED in 2008.

Melrose Credit Union’s CD Rates (Feb 2012):

(Visit Melrosecu.org for further information regarding interest rates.)

To put the above CD rates in further perspective the current national average for 6 month CD’s, 12 month CD’s and 3 year CD’s sit at roughly 0.40% APY, 0.60% APY and 0.95% APY, respectively.

If you’d like to take a quick look back at the history of Melrose Credit Union’s CD rates check out further articles from our archives noting their premium savings products.

They were featured in our 2011 round-up of the best CD rates from credit unions with their 3 year CD’s pumping out a return of 1.91% APY in the beginning of May of last year. And if you take a look even further back you’ll see they were once featuring the best 12 month IRA CD rates in the nation (during the end of 2010).

3 Year Certificates of Deposit Worth Considering Currently

One could make a valid argument currently for 3 year CD’s as being a decent investment vehicle in today’s landscape for those on the hunt for FDIC insured bank deposits.

Why 3 year CD’s?

Because interest rates are horrendous and are expected to remain this low for the foreseeable future. We made a similar argument based on this reasoning for 2 year CD’s a short while ago but we believe the same could likely apply for 36 month deposit products as well.

Basically the FED has made it quite clear that interest rates are not going to rise anytime in 2012 or 2013. And as a hunch, we see it completely rational to assume that key rates could also remain at these historically low levels even through 2014 as well.

A number of economical factors must change (and rather dramatically at that) for anything significant to change on the interest rate front for savers within the next 3 years. First, regardless of the record low mortgage rates for both new home purchases and refinancing, there is still a vast supply of homes on the market (and in foreclosure) that simply aren’t selling. This dynamic gives the FED absolutely zero incentive to increase rates when homes can’t even sell with the lowest mortgage rates we’ve seen in decades. Second, the jobless rate is still sitting at an unprecedentedly high rate which means there is a shortage of potential home buyers to soak up this plethora of real estate on the market. So while these factors need to make a positive turn for interest rates to begin to rise we find it highly unlikely.

That being said, rates will inevitabley rise again. So for those looking to lock in the most optimal rates for our current economic conditions, which then free up these funds at a time when savings rates could be on the rise again, we find the 36 month deposit as one of the best FDIC insured savings product to take advantage of in 2012.

2 year deposits may be optimal term for CD’s at this time

With the Fed going so far as to say rates may sit at these levels throughout 2013, many deposit investors have been flocking to lock in 2 year CD’s so that their maturities are up at the precise time key rates may begin to rise again. This is, of course, speculation and rates could remain this low for a significantly loner time or begin to rise in the nearer future if economic conditions make a turn for the better.

Here at BankVibe.com, we’ve seen an increase in interest amongst these products lately (in both 2012 and towards the end of 2011). With search queries for the highest two year deposit rates seeing more activity than previously seen in recent memory.

As of 2012, we have a new leader in 2 year CD rates (CiT Bank) which features a 1.26% APY based on a 1.25% interest that is compounded daily. The minimum deposit is rather steep at $25,000, however, you should always check with your local credit union to see if they can at least match the interest rate and perhaps be a little more lenient on minimum deposit requirements.

One more thing to note before hopping into one of these products is that the interest rate you’d receive from even the best two year CD’s is still barley above the interest rate you’d receive from some of the top 12 month CD rates or even liquid money market rates. So don’t feel the need to lock your funds away for 24 months if you feel there may be a more productive opportunity for your savings in the near future.

Other 2 year CD rates topping our charts (view complete list here):

- Virtual Bank featuring a 2 year CD yielding 1.21% APY with a minimum deposit requirement of $10,000.

- USAA Bank featuring a 2 year CD yielding 1.20% APY with a minimum deposit requirement of $1,000.

- Discover Bank featuring a 2 year CD yielding 1.20% APY with a minimum deposit requirement of $2,500.

What to Expect From CD Rates in 2012?

Probably more of the same – flat lining rates from credit unions and online banks and continued near zero interest from the nation’s largest banks.  And just like with anything, it helps to look in the past when trying to predict the future.

The endless decline in CD rates throughout the last year has left little room for optimism of any upward trend arising in 2012, but if the economy strengthens we may see rates at least bottom out.

For CD rates from the nation’s large powerhouse banks things went from terrible to pathetic. Citibank somehow managed to cut their 6 month CD rates from 0.25% APY during the beginning of last year (March) to 0.15% as of today, according to our 2011 survey. They also managed to slash their 5 year CD’s in half from 2.0% APY to just 1.0% APY currently.

Bank of America’s CD rates fell last year but to a lesser degree. Their 6 month CD rates stayed at a paltry 0.30% APY throughout the year, while their 5 year CD’s dropped to 1.21% APY from 2.0% according to this 2011 survey.

Both Chase Bank and Capital One encountered flat lining rates on their deposit products.

Capital One’s 6 month and 5 year rates both remained at 0.25% APY and 1.25% APY, respectively, and Chase Bank’s 6 month CD’s remained the same as well (according to this survey) while their 5 year “CD rate Specials” dropped from 2.25% to 1.55% APY.

CD rates from credit unions dropped a little more last year simply because they had more to lose. However, if you’re a new saver then continue to keep your eyes peeled from promotions like this one. For those that don’t recall the offer, NuVision Federal Credit Union of southern California, was featuring a 10 month CD yielding 10% APY on deposits up to $1,000. We know a $1k maximum deposit doesn’t do much good to a lot of people, but if you’re new to saving and don’t have too much to stash away it’s certainly worth it to stay on the hunt because lucrative promotional rates are still out there.

Navy Federal Credit Union also kept their popular “Easy Start” CD promotion available throughout the year without dropping the rate. This promotion features a 12 month CD yielding 3.0% APY on deposits up to $3,000.

In general, I wouldn’t hold my breath for any substantial change in CD rates in 2012. If the bleeding were to stop across the board and rates were to simply flat line, I think this would be a step in the right direction. The biggest factor going into 2012 shaping the landscape for deposit rates is going to be the overall strength of the economy. When/if the economy grows stronger this year will signal the FED that they can begin raising rates, however, until this happens we’re likely going to be in the same spot we were last year.

CD Rates from Jacksonville, Florida Banks and Credit Unions

The highest interest rates on certificates of deposits offered from local Jacksonville, FL banks and credit unions are struggling to match those of top nationally available institutions online. In our most recent survey isolating Jacksonville area banks and credit unions and comparing them with the top online and nationwide banks from our database, we found that rate-hunting consumers were better off going with the online ones.

We first surveyed the top ten 6 month CD rates with Jacksonville area zip codes and compared them with the top 10 from our database and found that not one local credit union or community bank was amongst them. There are certainly plenty of deals on CD rates from local institutions in Florida (when compared to the national average), but when you narrow that down to just the Jacksonville area, local institutions are scarce and not at all competitive with their rates.

After surveying 6 month CDs we moved on to 1 year CDs, and all the way up to 5 year deposits. Below are the local banks offering rates that could hang with our top ten rates from online banks and nationally available institutions from our database.

Noteworthy Local CD Rates (Jacksonville, Florida):

- Compass Bank (Orange Park) has a 2 year CD yielding 1.25% APY requiring a $5,000 minimum deposit.

- Navy Federal Credit Union (Jacksonville, FL) has a 3 year CD yielding 1.45% APY requiring a $1,000 minimum deposit.

- Urban Trust Bank (Orange Park) has a 3 year CD yielding 1.45% APY requiring a $500 deposit.

- 121 Financial Credit Union (Jacksonville, FL) has a 5 year CD yielding 1.95% APY requiring a $500 deposit.

- VyStar Credit Union (Orange Park) has a 5 year CD yielding 1.91% APY requiring a $10,000 deposit.

If you live in the Jacksonville area and know of a better CD rate in your neighborhood, please share by leaving a comment!

Maine CD Rates – Locally Based Credit Unions Offering Top APY’s

If you happen to live in the upper northeast (Maine to be specific) and are hunting for long term CD rates to invest in, you have several options from some local credit unions serving residents of the state. In our most recent survey of Maine’s top CD rates we found that the small community credit unions in the area are providing higher yields than the top online FDIC insured CD rates from our database on long term durations ONLY. If live in Maine and are looking for something with a smaller term, you’re better off applying for a certificate of deposit from one of the nationally available institutions.

As we conduct these surveys regularly, we generally point to the common trend that small banks and credit unions are usually on top for annual percentage yields, however, this trend does is not consistent with every state in the country (Maine being one of them). In fact, if you’re looking to lock in any CD with a term under the 60 month mark, you’ll be hard pressed to find a locally based bank or credit unions out of Maine that is able to compete with online banks. However, for 5 year CD’s, Maine’s credit unions have the top interest rates on lock down.

Top 5 year CD Rates in Maine:

(The interest rates listed below are time sensitive in nature and are accurate as of November 2011. Visit our 60 month CD rate database to compare APY’s, minimum deposit requirements and bank ratings.)

- Maine Savings Federal Credit Union (North Vassalboro, ME) is offering a 5 year CD with an APY of 2.36% with a minimum deposit requirement of $500.

- Maine State Credit Union (Waterville, ME) is offering a 5 year CD with an APY of 2.30% with a minimum deposit requirement of $500.

- New Dimensions Federal Credit Union (Waterville, ME) is offering a 5 year CD with an APY of 2.30% with a minimum deposit requirement of $5,000.

- Brewer Federal Credit Union (Brewer, ME) is offering a 5 year CD with an APY of 2.274% with a minimum deposit requirement of $500.

- Bangor Federal Credit Union (Brewer, ME) is offering a 5 year CD with an APY of 2.270% with a minimum deposit requirement of $500.

The top 5 year CD rates from institutions nationwide are:

- Nationwide Bank with an APY of 2.05% and a minimum deposit requirement of $500.

- First Internet Bank of Indiana with an APY of 2.00% and a minimum deposit requirement of $1,000.

- Discover Bank with an APY of 2.00% and a minimum deposit requirement of $2,500.

To put the offers above in perspective the national average for 5 year CD’s sits at roughly 1.70% APY as of November 2011.

Long term CD rates (and specifically 5 year CD’s) have fallen sharply since the summer due to the FED purchasing long term treasury notes, effectively lowering the rates offered on longer term bank deposits. These rates are expected to remain flat through most of 2013 and potentially into 2014 depending on economic conditions. FED Chairmen Bernanke made this announcement in his latest Jackson Hole, WY meeting two months ago.

Should you go long on CDs?

Here at BankVibe.com we recommend holding off on the purchase of long term CD’s due to the current unfavorable landscape for savers. If you’re looking to obtain a bank deposit, we would suggest looking into 6 month – 3 year CD’s at this will free up your funds in a time when interest rates should begin to rise. As a general rule of thumb, long term CD’s provide optimal utility when they are purchased at the end of a high rate cycle before rates begin to decline, thereby allowing the consumer to lock in high rates before the downward trend begins.

Local Idaho Banks and Credit Unions Can’t Keep up With Top National CD Rates

Here’s another state that is getting left in the dust – Idaho. Idaho’s local banks and credit unions can’t seem to keep their CD rates competitive when compared to the top offers from national institutions.

If you haven’t been following CD rate trends or have just recently entered the market for one of these instruments, you may think this is to be expected – but it isn’t. Almost every week we conduct surveys to get a feel for local CD rates and how they stack up against nationally available products. And in many cases, local credit unions and even small community banks can issue slightly higher rates. Credit Unions have the upper hand in this matter because they are typically not-for-profit institutions which pass along profits back to the members in the form of higher savings rates (and lower loan rates). In Idaho’s case, however, things are a bit backwards.

The top CD rates residents in this state can currently find are going to be the same CD rates anyone in the country can obtain – such as offers from Ally Bank, CiT Bank, Popular Community Bank, etc. And while the rates on those products certainly aren’t to be discredited (they actually beat the national average by significant margins) we just expect more from locally community based institutions, not just in Idaho, but throughout the country.

Rundown for best APY’s on Deposits Available to Residents of Idaho:

6 month CDs:

- Alostar Bank of Commerce 0.86% APY requiring minimum deposit of $1,000. Available Nationally.

- Virtual Bank 0.85% APY requiring minimum deposit of $10,000. Available Nationally (Online Only Bank).

12 month CDs:

- CiT Bank 1.15% APY requiring minimum deposit of $25,000. Available Nationally.

- Popular Community Bank 1.15% APY requiring minimum deposit of $10,000. Available Nationally.

24 month CDs:

- American Express Bank 1.30% APY requiring minimum deposit of $1.00. Available Nationally.

- Potlatch No 1 Federal Credit Union (Saint Maries, ID) 1.26% APY requiring minimum deposit of $10,000. Local Only.

- Lewis Clark Credit Union (Idaho) 1.256% APY requiring minimum deposit of $500. Local Only.

As you can see the only locally based credit unions out of Idaho attempting to meet the bar set by the nationally available banks at this point are Potlatch FCU and Lewis Clark CU – and they still fall a tad short. If you live in Idaho and happen to know of a better CD rate offered through your local bank, please share by leaving a comment!

Capital One CD Rates in 2011 – 6 months to 10 years

Capital One Bank, based out of Virginia, is the 28th largest bank in the United States and is relatively new when compared to the nation’s other well known banking institutions. After being founded in 1994, it has since grown to employee roughly 8,777 people while controlling roughly $70.51 billion in assets as well as originating over $53 billion in loans.

Capital One’s savings account and CD rates (certificate of deposit) while a step up from the likes of Bank of America, Wells Fargo, CitiBank and Chase are still much lower than national averages and drastically lower than the CD rates you can find from online banks and, on occasion, local credit unions. Capital One’s deposit products also feature a higher minimum deposit requirement than most other banks we survey.

Capital One Bank CD Rates (October 2011):

(Visit our savings account center to compare updated interest rates from institutions around the country).

- 6 month CD yielding 0.25% APY with a minimum deposit requirement of $5,000.

- 12 month CD yielding 0.30% APY with a minimum deposit requirement of $5,000.

- 18 month CD yielding 0.40% APY with a minimum deposit requirement of $5,000.

- 2 year CD yielding 0.40% APY with a minimum deposit requirement of $5,000.

- 30 month CD yielding 0.45% APY with a minimum deposit requirement of $5,000.

- 3 year CD yielding 0.45% APY with a minimum deposit requirement of $5,000.

- 4 year CD yielding 0.75% APY with a minimum deposit requirement of $5,000.

- 5 year CD yielding 1.25% APY with a minimum deposit requirement of $5,000.

- 7 year CD yielding 1.80% APY with a minimum deposit requirement of $5,000.

- 10 year CD yielding 2.50% APY with a minimum deposit requirement of $5,000.

Capital One Bank’s Growth and Overall Health:

Capital One has seen significant deposit growth over the last few years despite declining interest rates throughout the industry. During the last year Capital One increased its deposits by roughly 34% or $9.4 billion. They also recently released news of their $9 billion dollar deal to acquire ING Direct USA. This will be the largest acquisition Capital One has ever conducted. With the deal, Capital One’s online banking business will grow to the tune of 3x its current size to $109 billion (adding $80 billion in deposits from ING Direct). They will also gain 7 million customers from ING in the deal.

Health Statistics:

Interest Income: $4.3 billion

Return on Equity: 41%

Return on Assets: 3.85%

Net Interest Margin: 11.45%

AloStar Bank of Commerce Review(s) and CD Rates

AloStar Bank of Commerce, based out of Birmingham, Alabama was originally founded to supplement the “bedrock” of the American economy by focusing it’s efforts on two major segments of the US population – deposit savers and businesses.

Important Note about AloStar Bank: AloStar Bank was formerly Nexity Bank. They are just one of several online FDIC-insured banks that have changed their name after the 2008 bank collapse due to negative consumer associations with their brands as well as problematic and/or failed businesses. When Nexity Bank went under in April, AloStar Bank was formed to take over all of their assets.

By making their bank CDs available across the country (48 states) through online CD accounts, AloStar Bank of Commerce can attract consumers from varying geographic locations with their above average CD rates and ease of account opening and funding. With their depositors cash they then fund businesses with $5 million to $150 million in revenue who need a variety of commercial lending products.

They are the 9th largest bank in Alabama (despite being able to service savers throughout the nation) and the 774th largest bank in the United States.

CD Rates available at AloStar Bank of Commerce:

(Rates accurate as of September 2011. Compare these rates with the best CD rates of 2011. AloStar Bank of Commerce provides varying yields on their certificates of deposit depending on the consumer’s deposit amount. A minimum deposit of $1,000 is required to open one of their CDs.)

- 30 day CD 0.26% APY with a minimum deposit of $1,000 required.

- 90 day CD yielding 0.76% APY with a minimum deposit of $1,000 required.

- 6 month CD yielding 1.05% APY with a minimum deposit requirement of $1,000. * Avg. rates for 6 month CDs currently sit at roughly 0.45% APY.

- 9 month CD yielding 1.03% APY with a minimum deposit of $1,000 required.

- 12 month CD yielding 1.27% APY with a minimum deposit of $1,000 required.

- 24 month CD yielding 1.37% APY with a minimum deposit of $1,000 required.

Team Behind AloStar Bank of Commerce:

The financal executives in charge with setting forth the direction of AloStar are Michael Gillfillan and Andrew McGhee. Together, Gillfillan and McGhee have 66 years of experience in banking and private equity.

Gillfillan spent 26 years at Wells Fargo and ended his tenure as chief credit officer and vice chairman. Most of his experience lies in bank governance and commercial finance management.

McGhee was a co-founder at Archway Equity Partners, an Atlanta-based private equity firm, in 2008. Before that he spent 12 years with SunTrust Bank and served as their managing director of three business units before becoming vice president.

If you have experience in banking with the newly formed AloStar Bank of Commerce, please share by leaving a comment below!

12 month CD rates don’t change much after FED meeting

Last week’s Jackson Hole, Wyoming, meeting with FED chairman Ben Bernanke appeared to have little effect (at least so far) on short term CD rates. QXJ973NB28XB While still at historically low levels, we’re pleased to see that they didn’t dip even further with both 6 month and 12 month CD rates remaining consistent with their levels from the previous week.

Below are the national averages for 6 month to 3 year CD rates for the last week of August (2011):

(These averages are calculated based on deposits available nationwide. Small community banks and credit unions may not be included in these figures.)

6 month CDs currently averaging 0.53% APY (last week’s average sat at roughly 0.54% APY)

* highest 6 month CD rate coming from Aurora Bank with an APY of 1.03% requiring a $1,000 minimum deposit. Almost twice the national average!

12 month CDs currently averaging 0.85% APY (last week’s average sat at roughly 0.84% APY)

* highest 12 month CD rate coming from AloStar Bank of Commerce with an APY of 1.27% requiring a $1,000 minimum deposit.

3 year CDs currently averaging 1.23% APY (last week’s average sat at roughly 1.26% APY)

* highest 3 year CD rate coming from Aurora Bank with an APY of 1.64% requiring a $1,000 minimum deposit.

If you’re strictly after the best annual percentage yields, you’ll want to cross reference the interest rates above with CD rates available at credit unions and local community banks in your area. Credit unions are not-for-profit institutions which can occasionally offer better rates than national banking institutions. Credit Unions, however, come with membership requirements and are frequently exclusive. You may need to work for a selected employer or live in a certain county to join.