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

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.

Related: Check out our archive of 3.0% bank CDs.

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.

Best 5 year CD rates inching over 3.0% APY

You wont find any online banks offering 5 year CD rates over the 3.0% APY threshold, however, your local credit union may be able to lift your interest rate above that mark. An example of this was sent in yesterday by BankVibe.com reader Ian who noted a substantial offer from his local credit union. If you happen to be able to take advantage of First People’s Community Federal Credit Union of Maryland’s 5 year CD rates you could currently lock in an APY of 3.10%. Although we wouldn’t recommend locking in a long term CD rates in today’s market given the historically low interest rate levels, we still thought we’d make note of this offer considering the national average for these products sits at a measly 1.80% APY.

A slight draw back with First People’s Community Federal Credit Union’s 5 year CD is that their is a fairly steep minimum deposit requirement of $5000. Compare this with most online banks and you’ll find that the online institutions offer much more leniant minimum deposits (if they even make such requirements at all).

If you looking for slightly shorter maturities from FPCCU they also have a 21-month CD special earning up to 2.10% APY) and a 39-month CD earning 2.60% APY.

Who can join First People’s Community Credit Union?

First Peoples Community Federal Credit Union serves any persons who live or work in Allegany County, Maryland, Garrett County, Maryland, Somerset County, Pennsylvania or Mineral County, West Virginia. Membership is also available to Verizon employees that headquartered in the counties of Frederick, Washington, Allegany, and Garrett in Maryland.

Check out the best 5 year CD rates from our database to find available products near you.

Long Term Bank CD’s (certificates of deposit): Should I Invest?

Although we’ve seen long term CD rates tick upward ever-so-slightly over the last month or so, we still maintain the stance that you should resist the urge to move forward with these products based on tiny rate hikes. Many banks have been throwing their net out into the plentiful sea of eager savers in an attempt to catch a fresh batch of customers using their small rate hikes as bait. Sure, earning an FDIC insured 3.0% per year might seem favorable to those looking for the best CD rates – even if it means keeping your money tied down for 3-5 years, but you must look beyond the short term gains. While the highest yielding long term CD’s might seem attractive for the first year or two, the latter years will leave you with very little (if any) gains.

Why?

First, almost all financial analysts suggest we are headed towards a time of rather steep inflation (not to mention a 3% inflation rate is considered average by most analysts). The only debate on this matter is WHEN it will kick in. Second, taxes paid on interest and investment gains stand to eat at your more handsome looking profits in the short term. And third, we are at the end of a steep valley in savings rates. And as a general rule of thumb, you normally want to lock in long term CD’s when the market has peaked and is beginning to trend downward, not the exact opposite – which is what we are currently enduring.

Not convinced? Still think long term CD’s are a good investment strategy? Take a look at Chuck Jaffe, of MarketWatch.com’s article entitled “Stupid Investment of The Week: Don’t go long on CD rates now” for further evidence.

In the article he suggests seeking a “Rewards Checking Account” if you are looking for an FDIC insured investment vehicle with phenomenal returns and decent flexibility – a suggestion we made early this year by proclaiming Rewards Checking Accounts as the best FDIC insured investment vehicle of 2009.  After you’ve learned the basics of those accounts you can stack them up against the current 5 year CD rates to help you make an educated decision.

Additional Note: We also think Cash Back Checking Accounts are a great way of having your money work for you by providing monthly dividends in the form of cash back.

City National Bank’s interest checking account: No maximum balance

City National Bank has an impressive rewards checking account that is fairly different than all the other high interest checking accounts currently available.

Their rewards checking account pays a relatively unimpressive 3.28% APY, however there is NO CAP on maximum balances and it is available throughout the nation (no geographical restrictions). Typically these rewards accounts come with a high interest rate, usually a lot higher than 3.28%, and a maximum balance amount in which you can earn the advertised rate. Most accounts have maximum balances of between $10k – $50k and in some cases up to $100k, but this is the first deal to come to our attention with no cap restrictions.

In general these accounts are offered by credit unions and local or regional banks whom serve a specific community and reject outsider applicants. This one is available to anyone.

Features of Rewards Checking with City National Bank:

(as seen on their website)

• 3.28% APY on all balances
• foreign ATM refunds (aka free ATM use nationwide)
• $100 minimum with no maximum
• available nationally
• Visa Debit Card issued
• free online banking and bill pay

Requirements, terms and conditions:

• Available to personal accounts only
• Minimum monthly activity required:(10) Visa debit card POS (Point of Sale) transactions (excluding ATM transactions)
• Receive monthly statement electronically
• Provide a valid email address
• Monthly direct deposit of payroll or government benefit

Best 24 month certificate of deposit found at Broadway Federal Bank

Broadway Federal Bank tops our best 24 month CD rates list with a sweet rate of 3.05% APY. The national average for 2 year CDs sits at around 2.0% APY. Although Broadway Fed is located in Las Angeles, their products are available nationwide. This particular product comes with a minimum deposit amount of $1000 and is only available online.

Who is Broadway Federal Bank:

They are a community bank providing banking products to customers in the LA area (where their branches are located) as well as a online savings products available to anyone in the country. They have 87 full time employees, 5 offices in California and approximately $439 million in total assets (as of March 31, 2009). They are a wholly owned subsidiary of Broadway Financial Corp. which is a publicly traded company on the NASDAQ small-cap market under the ticker BYFC.

24 month online certificate of deposit terms and conditions:

• $1,000 minimum deposit required
• Only available online
• Interest rate is guaranteed for the initial term of the account. The initial term is the day of the initial opening deposit. Early withdrawal penalties may apply
• Member FDIC

They also have two other featured online products. One is an online “free checking account” the other is an online savings account. Their free checking account comes with unlimited check writing, no monthly maintenance fees and a free debit card. The online savings account requires only $50 to open but has a variable interest rate that is subject to change without notice.

3.0% Savings Rate found with “CommonCents” account

Forum Credit Union is back on our radar today with another great savings account rate as well as a very unique “Savings Challenge”in which the winner could earn $5,000!

Forum CU’s high yield savings account is called the “CommonCents Savings Account” and it comes with an APY of 3.00%. The rate became effective on 6/01 and is subject to change without notice.

The “Save It Up Challenge” started last February and is going on until October 31, 2009. With this challenge Forum Credit Union hopes to not only challenge their customers/contest participants to save money, but also rebuild spending habits.

Forum CU is a not for profit credit union in Indiana which strives to provide excellent rates for savings accounts as well as educational resources for customers to use in order to reach their financial goals.

Melrose Credit Union’s CD rates

Thanks to BankVibe reader FarmerFrank for revisiting the phenomenal CD rates still being offered through Melrose Credit Union out of New York. Although this credit union is headquartered in the Bronx, it still offers it’s superb CD (certificate of deposit) products to customers nationwide.

Last month we looked at Melrose Credit Unions 12 month CD rate (3.03% APY!). This month I wanted to post all of their available CD rates since they are considerably higher than the current national average.

Melrose Credit Unions Current CD Rates

(as seen on their rates page)

Melrose Credit Union’s 12 month CD rate

Still looking for a 12 month CD yielding a >3.0% interest rate?

Well, we just got tipped off on a sweet 1 year CD offer from a credit union in Queens New York called Melrose Credit Union. Currently they have a 12 month certificate of deposit yielding 3.03% APY (roughly twice the national average).

Although they are a smaller credit union, they still offer their certificate of deposit products to banking consumers nationwide (as long as you’re willing to pay the small “one-time membership fee” of $1.00).

Terms and Conditions:

An early withdrawal penalty applies to all Share Certificate Accounts. All new share certificate purchases and renewals will compound dividends quarterly. The interest rate will be determined in the same manner as other share certificates, however due to the compounding there will be an APY on share certificates which is different than the rate. Please note that members will still have the option of having their quarterly dividend transferred to another share account. The minimum purchase for Share Certificates is $5,000. The minimum purchase for IRA Share Certificates is $4,000. (Additional limitations and regulations apply to IRA accounts. Please contact a Member Service representative for further information and disclosures).

Rates good as of April 2009.

Broadway Federal Bank’s Online Savings Account

Many thanks to BankVibe reader Paul for pointing out a phenomenal savings rate offered through Broadway Federal Bank. Currently they have an “Online Anniversary Savings Account” yielding a whopping 3.05% APY!

This marks the third 3.0% plus APY savings account in which BankVibe has covered this month. Hopefully this is a trend that is here to stay. With the rate of inflation heading downward, these 3.0% interest rates are becoming even more attractive.

One thing to note before opening one of these accounts is that these are variable interest rates and are subject to change at anytime without notification.

Current 3.0% (plus) APY Savings/Money Market Accounts:

Darby Direct – Online savings account available nationwide. Variable interest rate of 3.05% (currently).

AmericaNet Bank – Money Market Account available nationwide. Variable interest rate of 3.10% (currently).

Evantage Bank – Money Market Account available nationwide. Variable interest rate of 3.10% (currently).

Redneck Bank – Money Market Account available nationwide. Variable interest rate of 3.10% (currently).

Broadway Federal Bank Online Savings Account Requirements:

(as seen on their website)

• What you need: To apply for an account online, you must be a U.S. Citizen or resident alien, have a U.S. address and be 18 years or older. You also must have a social security number and a State issued Drivers license or Identification card
• Opening Time: It takes approximately 10 minutes to complete the new account application process. If you are interrupted and leave one screen open longer than 20 minutes you will be asked to start the process over from the beginning.
• Verification of your identity: We will need to verify your identification and require that you send a copy of your driver’s license or ID. This will assist in preventing anyone else from opening an account in your name.
• Agreement: Once you read and accept the agreement, you are agreeing to the terms and conditions of Online Banking. You will receive a complete packet of disclosures by mail shortly.
• Fund your Account: You will be asked how you wish to fund your new account. If you are an existing customer you can identify a Broadway account and have the funds transferred to the new account. If you are a new customer you will be asked to mail a check along with the new account application or you can identify an account at another Bank that you would like the funds withdrawn. In order to complete this process you will need the information at the bottom of one of your current checks.
• Deposit: Once the funds are received you will be mailed a receipt and may begin using your new account.

9 month CD rates – Where to find the best rate?

Find the best 9 month CD rates below. Keep in mind that 9 month CD’s are an odd maturity time and are therefor not a common savings product offered through many banks and credit unions.

What makes the 9 month CD unique though is that many times when you see it offered it is actually a promotional rate.

Back in Feburary, Flagstar Bank was running a promotional 9 month CD rate which was available to anyone nationwide. This promo lasted several weeks and came with a lucrative rate of 3.25% APY!

Today, the best 9 month CD rates (promotional and non-promotional) are as follows…

Massillon Area Credit Union – 9 month CD yielding 3.0% APY (the national average for 12 month CD’s is less than 1.50% APY)

First Priority Credit Union – 9 month CD yielding 3.0% APY. This is a promotional rate and is subject to change without notice. First Priority came out with this promo last month (March 5, 2009).

Check with these individual institutions for exact terms and conditions. Promotional rates are frequently accompanied with deposit caps (meaning you can only invest X amount in that particular CD).

Some BankVibe readers suggest taking these CD rate offers to your local bank and credit union to see if they would be willing to match the rate. If you have a long standing relationship with your bank or CU this may be a decent route to take.