Banks Finally Start Increasing CD Rates but Big Increases Won’t Come Until 2015
The good news is banks are finally starting to increase the rates they pay on certificates of deposit, the bad news is any major increases in rates won't come until sometime next year when the Fed increases the fed funds rate. The past couple of months many banks have increased their long term and intermediate term CD rates to lock in depositors at today's low rates.
About ten banks on our rate table are now offering 1 year CD rates at or above 1.00 percent. Three different banks have increased their 1 year rates and now have the best 1 year rate available on our list. GE Capital Retail Bank, Synchrony Bank and EverBank have increased their CD rates from 1.05 percent to 1.10 percent APY.
2 Year, 3 year and 5 year CD rates have also gone higher as banks are counting on locking in depositors into lower long term rates before rates move higher. After years and years of very low rates you might be enticed to jump on a longer term CD to earn a better rate but that would be a mistake.
For example, the highest 5 year CD rates right now are around 2.30 percent but by late 2015 or early 2016 we will probably see 1 year bank CD rates around 3.00 percent. Therefore it is better to stay invested in shorter term CDs with terms of 1 year or less. Listed below are the best 3 month, 6 month and 1 year CD rates available right now.