What are the Best and Worst Bank CD Interest Rate Offers?

April 9, 2023

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1:21 am

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20 comments

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Economics

Image courtesy of BankRate.Com, annotations by Mish.

There are a couple of great places to shop for deals. BankRate is one of the places.

As of April 7, Bankrate shows 10 offers of 5.00 percent or higher the highest is CFG Community Bank at 5.20 percent.

The message from Chase, Bank of America, and Wells Fargo is they either do not want your money or they are playing people for suckers for keeping it there.

Best 5-Year Rates

A search for “Best 5-Year CD Rates” brought me to Investopedia.

These rates can change everyday. And there is increasing competition now, so shop around.

Treasury Bill and Note Rates

Via TreasuryDirect you can buy bills, bonds, and notes directly.

I linked to the Treasury Notes page where offers are for 2, 3, 5, 7, or 10 years. Treasury Bonds (not the same as savings bonds) are available for 20 or 30 years. Bill are 1 year or shorter.

Money Market Rates

BankRate has a list of the Best Money Market Rates. The following to Tweets describes an exodus from banks to money markets.

In Search of Yield

Follow the money: “Bank deposits have fallen $363 billion to $17.3 trillion since the beginning of March, Fed data show. Assets in money-market funds have risen $304 billion to a record $5.2 trillion, according to Investment Company Institute data.” https://t.co/llUkSR9kph pic.twitter.com/H4U6UYLNMH

— James Picerno (@jpicerno) April 5, 2023

Money Flooding Out of Banks

“Depositors are noticing” the gap between what banks & what MMFs are offering in terms of interest rates. “We expect flows into money funds to grow by several hundred billion dollars, heating up bank deposit competition.” @Barclays @business pic.twitter.com/0ciU1gog44

— Danielle DiMartino Booth (@DiMartinoBooth) March 30, 2023

Implied CD Risk

Let’s return to CDs for a discussion of risk.

The 5-year treasury note currently yields 3.393 percent. However, there are at least 14 banks in the offering 4.35 to 4.68 percent for five years.

Those banks, for whatever reason, are relatively desperate for money.

One can surmise many reasons why that might be so.

One possible reason is fearing capital flight or losses from commercial real estate.

For discussion, please see The Next Bank Crisis Is Coming Right Up, Commercial Real Estate Implosion

But as long as you are at or below the FDIC limit, there is no risk to you.

This post originated on MishTalk.Com.

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20 Comments

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Seabee

1 year ago

Curious why you don’t include “I” Bonds – Inflation adjusted. They are currently at 6.89%.

2Flit

1 year ago

Interesting that GIC’s in Canada have been running at better rates than Cd’s in the USA

link to wealthonebankofcanada.com

5.25% at the moment

Dean2020

1 year ago

I’ve been slowly emptying my accounts for the last 6 months. The last brokered CDs I bought were 9-mo @5.35% and various term treasury bills around 5%. The added bonus with treasury bills is that they are not subject to state taxes. Since I’m in CA that’s a big deal.

Billy

1 year ago

Who wants a CD when you can get 7% on a checking account?

link to cnext.bank

Directed Energy

1 year ago

Navy Federal 15 months @5%

WarpartySerf

1 year ago

And 6 month CDs at CIT Bank 5.0% APY

Elevatorman

1 year ago

I was able to get a 15 month term 4.8% Guaranteed Investment Certificate (GIC) from a credit union.

Avery

1 year ago

Mainly avoid TBTF rats, even a coffee can is better than those hoodlums.

OPmoney

1 year ago

Timely Topic Mish. Prefer a short term high rate CD with “Relationship APY” and $5k min.

SEE: Wells Fargo Special Fixed 4 month term offer at 4.01% APY link to wellsfargo.com

Anyone see any better short term CD rates please post up.

Thanks Mish !!

whirlaway

1 year ago

I prefer buying brokered CDs from brokerages (Fidelity/TDAmeritrade/Etrade/Merrill etc.) instead of bank CDs where the principal cannot fluctuate. But if you can buy a 3-5 year brokered CD, there is a chance you can profit if (when?) the Fed drastically cuts rates in response to a market crash.

Of course, the Fed’s current strategy is to keep the markets high by doing QE whenever required (and by clearly broadcasting that to the markets), and at the same time, screwing the working class by keeping interest rates high. But at some point, these ginormously overvalued markets can become so unstable that just QE alone might not be enough to keep them going and the Fed will be forced to cut the rates at that time.

Lisa_Hooker

1 year ago

Reply to whirlaway

High interest rates only screw the working classes when the working classes are desperate to spend money they don’t have.

whirlaway

1 year ago

Reply to Lisa_Hooker

They are forced to spend money they don’t have i.e. take on debt, because of the extreme income inequality in the US (which is extreme by any measure – Gini, R/P 10%, R/P 20% etc.). Some 60% of US families cannot afford even a $1000 emergency without taking on more debt.

Zardoz

1 year ago

Reply to whirlaway

They are force to spend money that they don’t have because their peers drive up prices with money they don’t have.

Lisa_Hooker

1 year ago

Reply to Zardoz

Yup.

Buying things they don’t need, with money they don’t have, to impress people they don’t know.

hmk

1 year ago

Reply to whirlaway

“screwing the working class by keeping interest rates high” The exact opposite is true. By suppressing interest rates to levels never seen in human history they have widened the wealth gap and caused massive assets price inflation,( BTW not measure by the politburo in the CPI). Just one eg. home price inflation caused by artificially low interest rates have made homes, especially starter homes unaffordable to the middle class.

whirlaway

1 year ago

Reply to hmk

Well, the lowering of the interest rates enabled the crony capitalist (is there any other kind?) class, which had first access to the cheap money, to acquire those homes on very favorable terms.

As the prices shot up, the only way the working class buyers could afford to buy the houses was by signing up for ARMs.

Now, as the interest rates are raised, those ARMs will adjust upward, screwing the working class.

hmk

1 year ago

Reply to whirlaway

Well they could just of gotten a 30y with a 3% rate but unfortunately had to pay a much higher price for the home than otherwise. There is free market capitalism which has enriched more people than any other economic system in history. Unfortunately you are correct, what we have is a corrupt crony capitalist economic and political system. That has given us the best government money can buy. We are relatively wealthy here is the US and for the most part have a decent standard of living. This isn’t because of the government its in spite of the government. We are lucky so far but for how long I don’t know.

shamrock

1 year ago

I got an 11 month CD at Capitol One at 5% and a 15 month at the national credit union Navy Federal, also 5%. Currently available rates are a somewhat lower, 4.15 and 4.40. The 3 and 6 month Treasury yields look good.

Quagmire46

1 year ago

May I point out that while FDIC insures your deposit’s principle (up to the $250K), it does NOT insure any earnings on that deposit. If the bank has a particularly messy situation depositors may have to wait for quite some time to see their principle returned.

Many of the banks offering higher rates on CDs are internet banks. Good luck with customer service. They can stall you for weeks getting your money withdrawn upon maturity.

For the small difference above the treasury rates, I wouldn’t deal with an internet bank. I would much prefer to buy treasuries. They pay on time and I’m pretty sure they won’t go broke.

Aaron

1 year ago

Reply to Quagmire46

I also skip the highest yield internet banks because I don’t want the hassle of chasing my money down (Jeff Bank has the highest yeilds), but You can still get 5% or higher on CD’s from Chase and Charles Schwaab (I buy them through Fidelity). 2 weeks ago I got JPMORGAN CHASE BK N A CD 5.30000% 03/27/2024 – and this week will close my 1 year CD’s at a 5.1%: JP MORGAN CHASE 5.100000 04/11/2024 04/12/2023

What are the Best and Worst Bank CD Interest Rate Offers?

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