Spread Between Savings Rates and CD Rates Hits Record High

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.

Today's Highest Online CD Rates

Bank	Product Term	Interest Rate (APY)
Finworth, a division of InsBank	1-Year	4.55% APY with $50,000 minimum
TotalDirect, a division of City National Bank of Florida	1-Year	4.50% APY with $25,000 minimum
Prime Alliance Bank	1-Year	4.45% APY with $500 minimum
Popular Direct	3-Year	4.10% APY with $10,000 minimum
Colorado Federal Savings Bank	3-Year	3.95% APY with $5,000 minimum
M.Y. Safra Bank	3-Year	3.90% APY with $500 minimum
Popular Direct	5-Year	4.10% APY with $10,000 minimum
Navy Federal Credit Union	5-Year	4.05% APY with $100,000 minimum
Synchrony Bank	5-Year	4.00% APY with no minimum

Bank

Product Term

Interest Rate (APY)

Finworth, a division of InsBank

1-Year

4.55% APY with $50,000 minimum

TotalDirect, a division of City National Bank of Florida

1-Year

4.50% APY with $25,000 minimum

Prime Alliance Bank

1-Year

4.45% APY with $500 minimum