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CD Bonus Rates Index – August 2013

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It’s been a slow summer for CD rates, as most yields barely budged at all from their devastatingly low levels (even 5-year CDs average below 0.80%, according to the FDIC). We’ve reported before how promotional or bonus certificates of deposit can help overcome a poor interest rate environment by stashing your cash where banks and credit unions are incentivizing you to do so. On average, however, there’s little difference these days between what most banks are offering on a regular basis, and the rates that they advertise as their “specials.”

This isn’t to say that good deals aren’t out there, however, especially for anyone looking to change their primary financial institution. Many banks have CD promotions for new customers, in attempts to gain long-lasting relationships. This month we’ve seen a handful of comparatively good deals crop up with high CD yields. We’ve listed five examples below that you may be able to take advantage of if you move fast. For more information, checkout our tool to compare CD rates in your area.

Reference Table: What are average rates and how do they compare to average promotional rates?

Length of Term (months) Average Promo APY Average Reg. APY
3 0.37% 0.14%
6 0.57% 0.23%
12 0.33% 0.35%
18 0.41% 0.40%
24 0.46% 0.53%
30 0.59% 0.52%
36 0.75% 0.70%
48 0.85% 0.86%
60 1.09% 1.08%

CD rates that beat the average

Institution State Term APY Notes
Navy Army Community CU TX 30 months 2.30%  Min $1,000
iGobanking.com 5 years 2.05% Min $1,000
Firelands FCU OH 18 months 2.00%  Min $500
New $ Only
 M&T Bank PA 5 years 1.97% Min $1,000
New $ Only
HarborOne Bank MA 7 months 0.75% Min $1,000

Note: Promotional rates are subject to change. Make sure to confirm CD rates with your bank or credit union.

A Refresher: Why Promotional/Special Rates Make a Difference

CD rates are historically low, and are likely to remain so for the near future. Yields are primarily a product of two forces that are out of a consumer’s control: (1) economic environment and  (2) the fact that longer-term investments will demand higher returns.

There is however, one factor that offers more flexibility for consumers: individual banks and credit unions each have their own capital strategies, which cause them to offer different promotional rates for certain CDs (in an effort to drive  balances towards the most ideal deposit products for them).   Such promotional/bonus rates can easily outperform typical accounts of a comparable term and are worth looking for to help boost returns.

Bonus button image via shutterstock