The Federal Reserve’s plan to keep interest rates low as long as possible is keeping a lid on any improvement in long term CD yields.  Investors have endured painfully low yields on certificates of deposit for almost all of 2009 and now that pain shows no sign of abatement.  After comments from the Fed regarding the outlook for prolonged low Fed Funds rates and a lack of concern for elevated inflation expectations bank rates continued to slide on the long end of the curve.

The average for the best five year CD rates dropped five basis points or 5/100 of a percent to end the week at 3.60%.  Early in the week, Shelter Bank reduced their term leading five year CD from 3.85% down to 3.45%, moving it off the top ten five year CD rate list altogether.  The best five year CD rate now stands at 3.80% and is available from Acacia Federal Savings Bank, a subsidiary of Acacia Life Insurance Company.  This week all ten financial institutions offered CD rates at or above 3.50%. 

The second best CD rate is at 3.65% and is offered by Tennessee Commerce Bank, One West Bank and State Bank of India.  Three basis points below the rate offered by that trio is the CD rate of Intervest National Bank at 3.62%.  Discover Bank has a five year CD rate that follows at 3.60%.  A full nine basis points down from here is the five year CD product of Goldwater Bank that yields 3.51%.  The top ten bank rates in the five year term ends at 3.50% which can be found at several banks including; Ally Bank, Dime Direct and First Trade Union Bank.

Although bank CD rates remain low, certificates of deposit continue to be a reliable means to save for the future with varying maturities and competitive rates available relative to alternative investment choices especially among the promotional rates found in the state and regional bank CD rate offers.

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