Average CD rates were mostly flat this past week.

The average 1-year CD rate dropped slightly from 1.84% APY to 1.83% APY ove the past week. The top rate remains at 2% APY and is offered by First City Bank. First City is offering a great 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 1 basis points from 2.64% APY to 2.61% APY. Tthe top is currently USAA Federal Savings Bank with a 2.81% APY 3-year CD. The minimum deposit to get 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 remained at 3.34% APY and BankUnited continues to have the top rate at 3.50%. Acacia Federal Savings Bank is also offering an IRA only 5-year CD that pays 3.50% APY. Everbank continues to offer the next highest rate at 3.47% APY.

The chart below shows that CD rates have largely stabilized although there is still a slight drift down in short term rates and savings accounts.

As we note in this article (Spread Between Savings Rates and CD Rates Hits Record High), the spread between short term and longer term deposit accounts reached a record high last week.

The elevated ratio means it may be worth taking a look at a longer-term CD, especially one that doesn't have an onerous early-withdrawal penalty. You can now earn more than 1.5 percentage points more by opening a 5 year CD versus a 1-year CD. If interest rates stay low for the next couple of years, as is possible, then perhaps this elevated spread makes opening the account worth it.

Regardless of this analysis, CD laddering may be a good way to smooth out the return you receive from your CD portfolio.

The spread between savings rates and CD rates hit a record this week as savings rates and short-term CD rates continued to decline while longer-maturity CDs held their return.

Below is the chart:

In addition, the spread between 5 year cd rates and 1 year cd rates (the pink line) also reached a record high. The increasing spread indicates that banks are compensating longer-term deposits more now than ever before.

Investors may want to consider opening longer term accounts. While many analysts believe rates are poised to go higher in the next six months, this isn't necessarily pre-ordained. In his article, Inflation: Why There Won't Be Any, BestCashCow's Sean Riskowitz makes the case that a lack of bank lending will keep inflation and by extension interest rates low. This squares with my own analysis of Japan (Could Interest Rates Stay Low Despite Growing US Debt - Look at Japan), which shows that high government debt and "printing money" does not necessarily lead to inflation and high interest rates.

BankUnited of Florida is offering a competitive 3.25% APY 4-year CD and a 3.50% APY 5-year CD. These are some of the best cd rates for these terms according to the BestCashCow rate tables.

The minimum balance to obtain this rate is $5,000. The CDs are available nationally and can be opened online. Once an application is completed, BankUnited will send a signature card. This must be notarized and sent back along with a check for an amount over $5,000.

To withdraw funds once the CD has matured, a notarized letter must be sent to the bank requesting the funds. The will then be mailed back.

BankUnited is a large Florida-based bank tha was taken over by the FDIC in May 2009 and sold to a consortium of private equity investors led by WL Ross (see this overview of BankUnited).The new owners have recapitalized the bank by injecting over $600 million of their own money together with an estimated $4.9 billion in FDIC funds. All money deposited into BankUnited is insured up to FDIC limits.