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Are CD rates on the rise?

By Claes Bell, CFA · Bankrate.com
Tuesday, July 30, 2013
Posted: 4 pm ET

A few weeks ago, I wrote that rates on certificates of deposit may be at or near a bottom, thanks to the Federal Reserve's hints that it may soon ease up on quantitative easing. But some are going a step further and seeing rates rising. For instance, The Wall Street Journal ran a story last month about how banks are beginning to raise CD rates in order to fund loans and expand their customer bases.

That conclusion is somewhat at odds with Bankrate's data, which show CD rates have mostly held steady, with the exception of the average five-year CD rate, which ticked down 1 basis point last week. Of course, Bankrate's national average data mostly reflect rates at large banks, so it's possible there's a trend of smaller banks and credit unions raising rates.

On the other hand, there's been a small improvement in Bankrate's overnight averages, which are based on data from the institutions on Bankrate's rate tables, including small banks and thrifts. For one-year CD rates, the overnight average has ticked up from 0.52 percent to 0.6 percent in the last three months. The overnight average for five-year CD rate also has edged up slightly from 1.2 percent at this time in April to 1.25 percent now.

But overall, it seems a bit premature to proclaim an upward trend in CD rates, especially when you consider the fact that any economic stumble could send the Fed back to flooding global markets with monetary easing. While that would be a welcome change for savers, I wouldn't bank on it.

What do you think? Are CD rates on the rise?

Follow me on Twitter: @ClaesBell.

Senior banking reporter Claes Bell is a co-author of "Future Millionaires' Guidebook," an e-book written by Bankrate editors and reporters. It's available at all the major e-book retailers

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