Five year bank certificate of deposit rates followed the lead of the other major CD maturities, the six month, one year and two year terms by closing the week with a lower average yield.  The average of the top ten best bank rates with a five year terms ended the week at 3.28% on January 8, 2010. 

The best five year CD rate available nationally now stands at 3.40%.  The highest five year CD rate is available form two banks, Acacia Federal Savings Bank and Atlantic Coast Bank. 

Ten basis points or 10/100 of a percent behind these two banks is the five year CD of One West Bank which has an interest rate of 3.30%.  Only one basis point lower is the five year CD from State Bank of India which yields 3.29%.

UFB Direct follows these three bank leaders with their five year CD that has an interest rate of 3.26%.  Discover Bank is one basis point behind this offer with a five year certificate at 3.25%.

Falling another three basis points back are the eight and ninth banks on the list.  Both Intervest National Bank and National Bank of Kansas City offer five year CDs with interest rates at 3.22% and hold the eighth and ninth spot.  The last bank on the top ten best five year CD rates comes from First Internet Bank.  First Internet Bank currently promotes a five year CD rate of 3.22%.

Longer term CD interest rates have not fallen as much as the shorter term CD rates in the past quarter.  Of course this will be little comfort to the investor who locks in the current five year rates only to see rates rise in the coming months as many economists expect. 

Longer term bank rates generally respond to the economy more than they do to the actions of the Fed and this may very well explain the firmer hold the five year term has had while short and mid term bank CD rates have dropped further.

When it comes to in long term CDs, managing interest rate risk is a key component.  Interest rate risk is elevated during periods of signifincat interest rate changes as many economists believe is coming, and investors need to thoroughly compare the long term and mid term CD rates both nationally and locally, within the enclosed state CD rates tables, to shop for the best CD rates before committing their funds.  In addition, in this market it is prudent to diversify CD holdings among various terms to cushion the impact of interest rate risk.

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