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Susan Tompor: CD rates slowly climb after years in the doldrums

Susan Tompor, Detroit Free Press on

Published in Home and Consumer News

Chase's website, for example, last week indicated that a 12-month CD has a yield of 0.02 percent for deposits less than $100,000.

Bank of America's web site stated that a 12-month CD with a minimum opening balance of $10,000 would have a yield of 0.07 percent.

Consumers should look at Internet-only banks, community banks and credit unions, which can have CD rates that are well above the averages, experts said.

The Capital One 360 one-year online CD has an APY of 1.65 percent. Capital One 360 has a five-year online CD with a yield of 2.45 percent.

Ally Bank has a no-penalty 11-month CD that has a yield of 1.5 percent with deposits of $25,000 or higher. The yield is 1 percent on that 11-month CD for deposits of less than $5,000. No penalties are charged for withdrawing the money before the CD matures after the first six days of putting money into the CD.

While CD rates are likely to gradually increase, many market watchers do not expect a dramatic increase in the next year or so.

"Banks that are currently paying a lackluster 0.1 percent on savings or 0.25 percent on CDs aren't suddenly going to hike rates enough to be competitive with the top payers," said Greg McBride, chief financial analyst for Bankrate.com.

"If you can live without the money for at least a year, the one-year CD is worth a look," McBride said.

The top promotional rates around 1.8 percent are solid and will give savers the chance to reinvest again 12 months from now in what is likely to be a higher rate environment, McBride said.

 

"What little additional yield is available in longer maturities isn't worth the trouble of the longer time commitment," McBride said.

He forecasts better rates on short-term CDs in 2018.

About The Writer

Susan Tompor is the personal finance columnist for the Detroit Free Press. She can be reached at stompor@freepress.com.

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