Short Term CD Rates Best Deals: Best 6 Month CD Rates Just Below 1.00 Percent
Short term CD rates are offer the best deals right now as compared to longer term CD rates. The best CD rates on 6 month certificates of deposit are just above 1.00 percent while the best CD rates on 5 year certificates of deposits are below 2.00 percent. For example, on our rate lists right now the best 6 month CD rate is at 0.90 percent while the best 5 year CD APY is at 1.80 percent.
Why lock in a 5 year rate that is only double the current 6 month rate? Granted if both 6 month rates and 5 year rates stay the same over the next five years the 5 year certificate of deposit will offer a better return but that won't be the case. Bank CD rates will move higher before 2018, the point at which a 5 year certificate of deposit will mature if you open one today.
The Federal Reserve expects to keep the Fed funds rate at almost zero percent until mid-2015. If that is the case CD interest rates will start moving higher than the Fed increases the Fed funds rate, which at this point is sometime in 2015, three years sooner than 2018.Rates might move higher before that point if the Fed acts sooner which is possible if the unemployment rate falls below 6.50 percent or if inflation moves above 2.50 percent.
No one knows exactly when interest rates will move higher but rates will go up sometime over the next three years which makes locking in a 5 year rate not worth it. Investing in certificate of deposits with terms of 2 year or less is best but again right now 6 month certificates of deposit have the best deals.
The highest 6 month CD rate on our list is from Doral Bank at 0.90 percent. The highest 12 month rate on our list is from three different banks at 1.04 percent with an APY of 1.05 percent, only 14 basis points higher than the best 6 month rate. The best 18 month rate on our list is from Salem Five at 1.14 percent with an APY of 1.15 percent, only 10 basis points above the best 1 year rate.
The highest CD rates on 24 month certificates of deposit on our list are from CIT Bank. Current CIT Bank CD rates on 2 year certificates of deposits are at 1.19 percent with an APY of 1.20 percent. As you can see the rate difference between the best 6 month rates, 12 month rates, 18 month rates and 24 month rates is minimal so going out longer term with your investments won't bring you a much better return.
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