Well it’s been almost 6 months since we started to see the 10 year treasury bill tick upwards. Last spring was a record low, with rates on 10 year treasury notes just under 2 percent. Now, however, as we approach Fall they’re sitting around 2.80%. A rate increase of nearly 50 percent in the last 6 moths.
This has left us deposit and fixed income investors rather optimistic about the future for our once-beloved CD rates, however, we haven’t seen the aggressive rate hikes we were hoping for despite rising mortgage and auto loan rates by consumer banks.
Yes, it’s frustrating, but things will change.
For 5 year CD rates, we’ve actually seen a bit of life. In the beginning of the summer it was all but impossible to find any deposit regardless of maturity hitting the 2% APY mark outside of maybe a few community-based local credit unions. Today, however, there is a bit of competition for these 5 year CDs which has lead a number of institutions to break that 2 percent threshold.
Before we shine a light on those institutions providing rates above that mark, it should be stated that you may still want to hold off on locking in a 2 percent, 5 year CD.
Within the next year all savings rates should begin to rise, at least modestly, and it may be a better play to sit on the side lines with a money market account until banks can provide a little more in the way of interest. After all inflation is currently sitting at 1.5% rendering the real interest earned on any 2.0% CD to be just 0.50%.
That being said, depending on your own individual circumstances, the 2 percent CD may an ideal fit for you at this time (still better than stashing cash under a mattress!). So without further ado, here are the top 3 CD’s yielding at least 2% APY.
1. Salem Five Direct – 5 year CD yielding 2.0% APY.
Salem Five Direct is an FDIC-insured online institution that can accept deposits from customers nationwide. Visit salemfive.com to open one of these 60 month deposits. The minimum deposit requirement for this account is $10,000.
2. State Farm Bank FSB – 5 year CD yielding 2.0% APY.
Better known for insurance, State Farm entered the consumer banking arena a few years ago and is usually on top of their game in terms of rates. Stop in a local state farm branch to lock in this CD. It comes with a minimum deposit requirement of $500.
3. EverBank – 5 year CD yielding 2.01% APY.
EverBank is determined to stay within the top 5% of all savings rates at any given time. This 2 percent CD takes into account the promotional 6 month period in which the rate is significantly higher. When you average out the interest over 5 years it comes to 2 percent annually. You’ll need at least $1,500 to open this account.