Wednesday, July 13, 2016

CD Rates Falling, But Yield Premiums Still Attractive

Rates on several 5-year CDs I've been monitoring have fallen in recent weeks, but good CD (Certificate of Deposit) deals still are available, and the yield premiums of good CDs over Treasuries of the same maturities still are attractive. Ally Bank recently dropped its 5-year CD rate from 2.00% to 1.75% APY (1.70% if less than $25,000), and more recently Barclays Bank dropped its 5-year CD rate from 2.05% to 1.75%. The rate on the Synchrony Bank 5-year CD still is relatively attractive at 2.05% (2.00% if less than $25,000), but Synchrony recently increased the early withdrawal penalty (EWP) on its 5-year CDs from 180 days of interest to 365 days of interest, so even this CD is somewhat less attractive than it was before this change.