Long Term CD Rates Now Top Out at 2.05 Percent
We are starting to see an uptrend in long term CD rates because of higher long term bond yields. We've already seen an increase of over 0.25 percent on 5 year CD rates. Just last month, the best CD rates on 5 year certificates of deposit on our rate list were well below 2.00 percent at 1.73 percent. Now the best CD rates on our 5 year certificate of deposit rate list are at 2.03 percent with an APY of 2.05 percent.
While long term average CD rates are moving higher right now, short term rates are still stuck at low levels and will remain low for the foreseeable future. The highest CD rates this week in our rate database of 1 year certificates of deposit remain at 1.04 percent with an APY of 1.05 percent.
The bank offering the highest CD rate this week on our list is igobanking. Last month the highest rate at 1.73 percent was from EverBank. Whether or not this increase will start a trend remains to be seen. The driving factor keeping CD rates low, a federal funds rate at near zero percent, is still in place.
Fed Funds Rate and CD Rates
For the past couple of years, the Federal Reserve has stated that they plan to keep the fed funds rate near zero percent until the unemployment rate falls below 6.5 percent. The Fed believes the rate will fall below 6.5 percent sometime during 2015. The current unemployment rate is at 7.6 percent. The Fed may wait even longer to increase the fed funds rate if some Fed Governors have their way.
One Fed Governor, Narayana Kocherlakota, the President of Federal Reserve Bank of Minneapolis, believes they should wait until the unemployment rate falls below 5.5 percent to increase the fed funds rate. An unemployment rate of 5.5 percent probably won't happen until sometime in 2016 or 2017. If the Fed waits until then to increase the fed funds rate, we have another 3 or 4 years of low CD rates.
Long Term CD Rates
3 Year CD Rates
4 Year CD Rates
5 Year CD Rates
Short Term CD Rates
1 Year CD Rates
2 Year CD Rates
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