CD rate forecast for 2016



Savers with certificates of deposit have been waiting for interest rates to rise for years. Now that the Federal Reserve's move to incrementally raise the federal funds rate is in place, those savers can anticipate a tiny upward bump in CD rates.

"We expect the Fed to increase the benchmark rate by quarter-point increments at every other meeting during 2016 for a total of 1 percentage point by the end of the year," says Mike Schenk, vice president of economics and statistics for the Credit Union National Association.

Schenk predicts that by the end of 2016, 3-month CD rates will rise from 0.23% to 0.48%, 1-year CDs will rise from 0.52% to 1.02%, and 5-year CDs will go from 1.61% to 2.21%.

Of course, can help you find the best CD rates in your area.

Chris Bertelsen, chief investment officer of Global Financial, says most of the big banks are already sitting on plenty of deposits and don't need to boost their totals by offering better CD rates. However, some smaller community or regional banks might offer promotions if they're aggressively lending and want to increase their deposits.

Greg McBride, CFA, senior vice president and chief financial analyst at Bankrate, says most banks are likely to raise interest rates on loans while keeping CD rates low.

"Don't expect higher interest rates to just land in your lap. You'll have to shop around for higher yields," McBride says.


Show Bankrate's community sharing policy

Connect with us