Bank CD Rates: June 30, 2009

Bank CD rates were mixed this past week with longer term CD rates increasing and shorter term CD rates continuing their slide down. The increase in longer term CD rates wasn't much but at least rates are headed in the right direction.

Certificate of deposit rates are not expected to increase by much until the economy recovers and the Fed starts raising interest rates.

I wonder if there is a chance CD rates will increase at banks that payoff the funds they borrowed from TARP. Banks that do payoff TARP might be compelled to increase deposit rates if the economy takes longer to recover and they have to write off more bad loans as a result. The other option is to borrow again from TARP which is a lot less appealing than raising CD rates.

Banks that have won approval from the Treasury Department to pay back TARP funds include, JP Morgan Chase, Goldman Sachs which became a bank holding company last fall to survive during the credit crises, Bank of New York Mellon, State Street, Capital One, BB&T, U.S. Bancorp, Northern Trust and Morgan Stanley.

CD Rates

The average rate for a three month certificate of deposit rates decreased to 0.765 per this week, down from the previous week's average rate of 0.774 percent. Ally Bank is offering one of the best CD rates on a 3 month CD, their rate is currently 1.24 percent with an annual percentage yield of 1.25 percent.

Six month certificate of deposit rates are averaging 1.068 percent this week, down from the prior week's average CD rate of 1.076 percent. Aurora Bank is currently offering one of the highest CD rates for a 6 month CD, their rate is at 1.75 percent with an annual percentage yield of 1.7654 percent.

The average CD rate for a 12 month CD declined to 1.348 percent this week, down from last week's average CD rate of 1.358 percent. First Fed Direct is offering a 12 month bank CD yield of 2.30 percent.

18 month certificate of deposit rates were down this week to 1.491 percent, down from the prior week's average CD rate of 1.503 percent. OneWest Bank is offering a promotional CD rate of 2.37 percent with an APY of 2.40 percent for an 18 month CD.

The average rate for a two year CD was up this past week to 1.751 percent, up from last week's average CD rate of 1.749 percent. Tennessee Commerce Bank is offering one of the best CD rates for a two year CD, their rate is currently at 2.62 percent with an APY of 2.65 percent.

Three year CD rates at banks increased to 2.016 percent, up from the prior week's average rate of 2.005 percent. Melrose Credit Union is offering one of the top CD rates for a three year CD, the CD rate is currently 3.00 percent with an APY of 3.03 percent.

The average rate for four year CD is up to 2.231 percent, up from the previous week's average rate of 2.221 percent. Intervest National Bank is currently offering a rate of 3.49 percent with an annual percentage yield of 3.55 percent for a four year CD.

Five year CD rates averaged 2.469 percent this week, up from last week's average rate of 2.467 percent. Pentagon Federal Credit Union if offering an annual percentage yield of 4.00 percent for a five year CD, you will have to join the credit union to receive the rate.