CD Rates Plunge - 5-Year CD Averages Drop Most Since March 2009

Last week the Fed reaffirmed its commitment to keep rates low and that seems to have opened the floodgates for banks to lower rates.

Average CD rates were down significantly over the past week, with some terms showing declines not seen since the height of the recession. Despite the drop in averages, top rates remained the same for 1 and 3 year CDs while the top 5 year CD followed the average lower.

The average 1-year CD rate dropped by 12 basis points from 1.83% APY to 1.71% APY. That's the steepest drop in the average since March 13, 2009 when the average declined by 14 basis points. Despite the decline in the average, the top rate remains a 2% APY CD from First City Bank. First City is offering a top rate but be sure to stay under FDIC insurance limits - it is rated as 0 stars according to Bauer Financial for its safety and soundness.

The average 3-year CD rate dropped by 5 basis points from 2.62% to 2.57% APY. USAA Federal Bank continues to have the top rate with a 2.81% APY 3-year CD. The minimum deposit for that rate is $175,000. While you need a military connection to quality for their loan and insurance products, you do not need one to take advantage of USAA deposit products. In the banking world, USAA is highly regarded for its banking products and services.

The average 5-year CD plummeted 13 basis points from 3.31% APY to 3.19% APY. That's the largest drop since March 2009 when the average dropped 19 basis points. That period also marked the low point in the stock market.

In terms of top 5-year CD rates, BankUnited dropped its rate from 3.50% APY to 3.25% APY. As a result, USAA now also has the top 5-year CD rate at 3.41% APY. Everbank has also dropped its rate and now sits at the #2 spot with a 3.33% APY CD (last week it was paying 3.47% APY).