Competition among the top ranked bank CDs has reached levels not seen for more than a year or two.  Over the past few weeks, rates have risen on the long end of the CD yield curve including the two year and five year maturities.  Now, rates are heating up on the shorter term CD accounts.  The end result is higher yielding savings options for investors and savers.

Prospects for savers generally become more enticing when the shorter term rates rise and the opportunity costs due to the potential losses that may avail themselves should interest rates rise significantly in the near future can be diminished.  A potential outcome that has become increasingly more likely as the US economy continues to improve and the Fed continues to scale back on monetary easing.

The opportunity costs referred to during a rising interest rate environment surfaces when an investor locks up funds in a long term CD only to see interest rates increase during that CD’s term and those funds are now not available to be invested in the new higher rates without incurring a significant early withdrawal penalty.  With shorter term certificates or midterm bank CDs, the opportunity costs that can arise from rates moving higher is diminished since the funds locked into the shorter term CD account has a smaller time horizon and can be more quickly reinvested at higher yields once the account matures.

Based on the most recent CD rate survey conducted by, all of the most popular CD terms saw rising interest rates among the top ten highest yielding CD accounts.  The average rate for the top ten best five year CD rates increased to 2.244 percent.  Two year CD rates moved up, on average, to 1.286 percent.  The best one year CD rates have an average yield of 1.103 percent.  And, the highest six month maturities have an average rate of 0.782 percent.

Even with these rising rates, CD rate shoppers have to remain vigilant.  While the best CD rates are certainly moving higher as the third quarter comes to a close, the average CD rate across the nation is hardly moving.  The spread between the best CD rates on the market and the average rates coming from the mega banks and local community banks has widened significantly.

A detailed list of the top CD rates available nationally by term can be found at the following bank rate tables; six month CD rates, one year CD rates, two year CD rates and five year CD rates.

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