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CD Interest Rates: Best 5 Year APY at 1.80%
 

CD Interest Rates: Best 5 Year APY at 1.80%

Depositors have been suffering with the lowest CD interest rates in a generation. 5 year CD interest rates which top out at 1.79% right now are lower than 1 year CD rates were just a few years ago. 1 year rates at banks and credit unions are mostly under 1.00% these days.

The national average rates are even lower. With the FDIC's rate cap financial institutions have been forced to lower rates to say within the cap of a maximum of 75 basis points above the average rates. Many banks have been forced to lower rates as a result.



Third Federal Savings and Loan is offering one of the best CD rates around for a 5 year certificate of deposit. Current 5 year rates at Third Federal are currently offered at 1.78% with an APY of 1.80%. While this rate is considerably lower than it was a few years ago it's still better then the national average of 1.10%.

Other national banks offering rates far above the average for a 5 year CD include Discover Bank and Barclays Bank at 1.73% with an APY of 1.75%. All these banks rates are within the FDIC's 5 year rate cap of 1.85%. Discover has a minimum opening deposit of $2,500 and Barclays has no minimum.

Ally Bank CD rates on 5 year CDs are being offered at 1.68% with an APY of 1.69%. There is no minimum opening deposit for this rate and yield at Ally Bank.

Many investors face a conundrum when investing in CDs right now. Just when you think rates can't go any lower they do. Investors might be enticed to lock in a 5 year rate right now to avoid riding the rate wave even lower. 

While I don't know where rates will be in 5 years I do recommend going with a bank that has a lower early withdrawal penalty. If rates go up in the next 5 years you can cash in your CD, pay an early withdrawal penalty that doesn't sting as bad and still take advantage of rising rates.
Author: James Martin
May 8th, 2012