The average of the best one year CD rates available nationally took another drubbing this week. One year CD rates ended the week at 2.38%, down seven basis points or 7/100 of a percent, from 2.45% the previous week. This drop nearly matches the rate drop seen last week when CD rates fell six basis points.
The best one year CD rate continues to be the product of Hanmi Bank which offers a one year CD with an interest rate of 2.53%. Hanmi Bank has 26 bank branch locations in California and offers this rate as an online only product. Wilshire Sate Bank follows with a one year CD that yields 2.52%. 14 basis points lower is the one year CD of State Bank of India that earns a rate of 2.38%. Four banks offer one year CDs just three basis point below this offer. Ally Bank, Stonebridge Bank, Amboy Bank and Corus Bank market one year CDs with interest rates of 2.35%. Ascencia promotes a one year CD at 2.34%. The top ten banks end with Nexity Bank and AIG Bank; both banks have identical one year CD rates at 2.31%.
CD rates have been falling precipitously in the past six weeks. Last week alone, Corus Bank reduced its one year CD rate from 2.63% to 2.35%. At the end of May, Ally Bank was the group leader with one year CD at 2.80% and now promotes this CD at 2.35%, 45 basis points lower in just two weeks.
The one bright spot in the market is low inflation. The consensus forecast is for higher rates and higher levels of inflation but thus far this year the CPI has been inching along from up .4% on February to down .1% in March and then unchanged in April. Overall the CPI in the past three months is increasing at a compound annual rate of .90%. With low inflation, low interest rates on a short term secure investment are a little easier to chew on.
Many local and regional banks are once again offering CD rates above the best national rates. Local bank rates are dropping as well, however the amount of the decline in state rates is not keeping pace with the national rates, leaving plenty of opportunity for higher yields on the local and regional bank level.
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