2014 Savings Rate Outlook

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Sol Nasisi, the President and Chief Rate Analyst at BestCashCow, provides his insight on what to expect savings rates to do in 2014. Helpful reading for anyone trying to decide where to put their cash in 2014.

Happy New Year! I thought I would use the inspiration provided by the New Year to take a look ahead and make some projections about what I expect to happen to rates over the next 12 months. First, let's see what I predicted at the beginning of last year and where things wound up. Last year I said:

"Savings rates will continue to drift lower for the next 12-18 months before beginning to move higher. How high and how fast they move will depend on the government's ability to stop bickering and put a sound budget in place, the continuation of a recent economic uptick, technological advances, and the ability of Europe to put its woes behind it and resolve its fiscal problems."

This is pretty much what happened. Longer-term CD rates did begin to move up slightly in June as the Fed began to signal an end to its taper program but savings accounts and shorter-term CDs stayed pretty flat. Overall, as the chart below shows, rates declined or remained flat.

One year average CD rates started the year at 0.405% APY and finished the year at 0.348% APY. Five year CDs averages started at 1.159% APY and despite the second year rally, finished down at 1.083% APY. For the second straight year, online savings accounts held their own, dropping the last, from 0.737% APY to 0.712% APY.

Looking Ahead to 2014

The biggest rate news for 2014? We are in a rising rate environment. Rates are not going to spike to 5% anytime soon, but barring a major calamity they are moving up. Why do I say this? Let's look at the general rate environment.

General rate environment

Six reasons interest rates will rise in 2014:

  • The economy is growing and is expected to gain additional momentum in 2014. American finances have improved and housing sales continue to be strong. In addition, the drag from cuts in government spending will abate with the new budget passed in December 2013.
  • Europe has stabilized and started to grow. Europe didn't fall apart in 2013 as many expected and some countries, such as the UK, have actually begun to grow again. Europe is a huge market and a healthier continent on the other side of the Atlantic will help boost growth.
  • Government paralysis bottomed out and is improving. The government shutdown in November marked a low point for government paralysis and since then both Republicans and Democrats have shown a bit more flexibility, even agreeing to a two year spending resolution. Keeping the government out of the headlines is a positive boost to the economy.
  • The Fed has committed to keeping rates exceptionally low as long as unemployment is above 6 1/2 percent. It currently stands at 7.0% and by the middle of 2014 will reach the 6.5% range. The only caveat to this is that the Fed recently announced it may keep rates low even if unemployment hits its goal, if inflation remains below 2%. The inflation rate through November 2013 was 1.2% (December 2013 data has not been released yet).
  • I project steady but moderate economic growth of around 2.5% in 2013.
  • The banking sector has largely recovered from the crash of 2008. The sector is now better capitalized. According to FDIC data, equity to assets in the banking sector has increased from 9.36% in December of 2008 to 11.17% in September 2013. In addition, the average Texas ratio of all U.S. banks, a signal of banking sector distress has dropped to a five year low of 14.21% after being as high as 22%. As the economy improves and rates rise, banks will begin to lend more aggressively, further stimulating growth.

There are still a few headwinds to the global economy that will constrain growth and rates.

  • Deleveraging. This refers to both financial firms and individuals reducing debt. In the process of doing this, money that would have been borrowed and spent on purchasing cars, houses, and other goods is instead spent on paying down debt. This saps demand and economic growth. According to Gary Shilling, deleveraging after a financial crisis generally takes 10 years, leaving us with four more years to go. I think this analysis makes a lot of sense and until we have worked off the binge of debt acquired in the 2000s it's hard to see very robust growth.
  • Demographic trends are unfavorable. Unfortunately, the United States has entered a demographic slide. As the large baby boom generation ages and retires, this puts a large strain on the country's productivity and spending. I believe that demographics is a general driver of economic development. A young population lifts all boats. An aging one will leave quite a few boats stranded and make it difficult for the others. Japan and Europe have even worse demographic problems and their economies reflect that. As China's population ages, look for its growth to ebb. This demographic slide will be a factor for the next ten to twenty years, not stopping growth, but certainly acting as a headwind.

When you put all of this together, I see an improving U.S. and world economy, held back by demographics as well as a lingering hangover from the debt binge of six years ago as well as an uncertain U.S. government fiscal situation.

My outlook: Savings account rates will stay flat through 2014 although online savings account rates may increase by 20-30 percentage points. I project the highest online savings account next year will yield 1.75% APY. Short term savings rates will edge up slightly but longer term CDs (3-5 year) will continue the trend we have seen over the past six months and continue to move up. I expect we'll see the biggest increases in these longer duration CDs. We already have one credit union (PenFed) offering a 3%+ APY five year CD. Look for this trend to continue.

There is always a chance of a major shift in rates should an unforeseen event occur - like 9/11. Since these are unpredictable, I just say that savers and investors should always be aware of these types of risks. In general, cash in a FDIC insured account is must more immune to these types of shocks than money invested in the stock or bond markets.

Savings Accounts or CDs?

Like last year, the data still show that opening a savings account is a better bet than a 1-3 year term CD and I expect this to hold through 2013. In fact, as the chart below shows, the spread between the average interest rate on an online account and a one year CD is at an all-time high. Longer maturity CDs (3 years +) though are becoming more competitive and while I warned savers away from them last year, now I think they are something to consider, especially if you can get a CD with a rate above 3%.

So for now, here are my recommendations:

For money you want to keep liquid, go with online savings accounts. They offer better rates than 1-3 year CDs and have shown good rate stability over the past year.

For longer-term money, look to open 4-5 year CDs at local community banks or larger credit unions. BestCashCow research has shown that community banks and larger credit unions offer the most competitive rates on longer-maturity CDs.

I believe this is the best and easiest strategy for keeping your cash liquid and maximizing your savings over the next year.

Earn the Most You Possibly Can

For the fifth straight year, yields on savings and CDs are pretty abysmal. We like to say the best you can do is make the best out of a bad situation. By shopping around, a saver can earn an extra half to full percentage point. On $100,000, that's $1,000 in extra cash per year. Remember, even in today's environment, there is competition for your cash.

As always, I welcome your thoughts and comments.


Bank Saver Update - Top CD at 3.04% APY, Averages Dip

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We're closing in on the end of 2013 and while rates have ticked up a bit, the operative word is still "low yield" for savers. Next week I'll post my thoughts on 2014, and while I do think rates will move up a bit more, we're not looking at any kind of great thaw. The cold, harsh winter of low rates will continue.

Over the last month, we've received some encouraging economic indicators, with GDP beating expectations, holiday spending up, and unemployment down to 7%. The Fed has even hinted at withdrawing a bit from the bond market. Despite this, the rally in deposit account rates seems to have stalled.

From one month ago, 12 month average CD rates decreased by two basis point from 0.349% to 0.347% APY. Average 3 year CD rates dropped from 0.713 to .711% APY. Five year average CDs, the product showing the largest rate increases several months ago dropped form 1.079% to 1.073% APY. The bright spot? Online savings accounts which ran from 0.685% to 0.702% APY. Online savings accounts continue to hold up, having moved very little over the past two years.

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The chart below shows the trend in average rates since October 2012.

Top Rate Recap

During this period, top savings and CD rates have inched up a bit, reflecting the increase in average rates from the prior couple of months. These rates will come down if the averages continue moving lower.

  • Online Savings: My Savings Direct, EBSB Direct, and iGobanking.com all have moved into the top rate position with a 1.00% APY online savings account. My Savings Direct has a $1 minimum balance while the other two ask for substantially more money.
  • 1 Year CD: GE Capital Bank and CIT Bank jointly hold the top spot with a 1.05% APY. Both have minimum balances of $25,000.
  • 3 Year CD: Pentagon Federal Credit Union has retains the top spot but has significantly increased its rate from 1.51% APY to 2.02% APY. This is significantly higher than the next best rate from CIT Bank at 1.40% APY.
  • 5 Year CD: Pentagon Federal Credit Union retains the top spot with its 3.04% APY CD. This is almost one percentage higher than the next best rate.
  • Rewards Checking: Hope Credit Union and Money One Federal Credit Union both have the top rewards checking rate of 3.01% APY for balances up to $10,000. Both credit unions are open to members from across the country.

It was possible in the past to find some rates on local CDs that beat the online rates. But PenFed is now head and shoulders above almost every bank out there - online or brick and mortar for the 3,4, and 5 year terms. If you don't like opening accounts online, then you can find some attractive rates by searching our comprehensive local rate database located here.

Online Saving and CD Spread

The difference between average 1 year CD rates and average online savings rates rose to a new high last week, continuing to enforce the benefit of keeping money liquid in an online savings account. On average, online savings account rates pay 0.355 percentage points more than 1 year CDs, up from 0.23 percentage points more at the beginning of last year and up from last week's previous high of 0.355% APY. In addition to paying more than 1 year CDs, online savings rates pay almost the same as 3 year CDs. Iin a rising rate environment, it makes more sense to stay liquid with an online savings account than to lock money into a low rate CD.

General rate environment

In many ways the economy appears to have turned a corner in the last couple of weeks. The government is on the eve of passing a two year budget deal that would put the threat of another shutdown in the rearview mirror - at least for two years. Unemployment has dropped to 7%, just half a percent above the level the Fed has indicated is needed to begin raising rates. The stock market continues to remain high and GDP growth came in at an annual rate of 3.6% in the third quarter - the highest level since the start of the financial crisis.

But for every give their seems to be a take. Let's take the budget deal. Yes, it is a step forward from a shutdown, but it does little to tackle the country's long-term financial problems. The drop in unemployment to 7% wasn't accomplished due to job growth, but mainly because individuals have left the labor force, either due to retirement, or because they have given up looking for a job. The latter indicating a stubborn problem in long-term unemployment. And that 3.6% growth? It came about not because of increases in consumer spending, but because of a lack of it. U.S. GDP increased because businesses stockpiled inventory. Almost 50% of the increase in GDP came from this increase in inventory. But an increase in inventory is not consumer spending, which powers the economy, it is goods and services sitting in a warehouse.

Holiday spending at least looks to grow a bit. The National Retail Federation expects holiday sales to increase 3.9 percent this year to $602.1 billion. The ten year average holiday sales growth is 3.3 percent. So, at least some of that inventory may get worked down in December. Are you buying more this year?

So if we look at the scorecard:

  • Taxes & Government: Increasing - drag on growth. Neutral
  • U.S. economic growth: Slow to moderate. Economy muddling along, not really creating jobs and not really losing them: Neutral.
  • Europe and the world: Europe leaving recession; Japan mixed growth; developed world slowing but still growing. Overall, world picture is improving. Positive
  • Technology: Gas prices at the pump coming down and plentry of natural gas for the cold winter months due to fracking and other extraction innovations. Slightly Positive.

My outlook: Going into the new year, the damage from the govenment shutdown should fade. Unless Obamacare falls off the tracks, consumer confidence should continue to tick up. Look for deposit rates to begin heading higher again soon. The Fed will increase the Federal Funds rate within the next 12 months. Savings rates will hover in the 2-3% range by the end of next year.

Savings Accounts or CDs?

The data continues to show that opening a savings account is a better bet than a 1-3 year term CD and I expect this to hold through 2013. Online savings accounts have held the line over the past year and even though CD rates have stabilized and ticked up, the premium is still not enough to jusity locking the money away. While the premium for opening a 5 year CD over a 1 year CD has increased over the past six weeks, it is still only at 0.722 versus over 1 percentage point in October 2011. In a rising rate environment, it does not make sense to tie up money for 5 years with only a 30 basis premium.

Is it worth it to go long and open a 5 year? I don't think so any more. I think the 5 year CD rates are just too low and that you'd be better off putting your "safe" money into an online savings account and waiting for rates to rise. I spoke to one banker several weeks ago who said that "no one was investing in long-term CDs." Keep your powder dry.

For money you want to keep liquid, go with online savings accounts. They offer better rates than 1-3 year CDs and athough several banks have dropped rates in the past month, they have still offered decent rate stability over the past year and a half.

Make the best of a tough savings situation in 2013

Yields may be low in 2013 but a savvy saver can boost the return with no increase in rate by rate shopping. By shopping around, a saver can earn an extra half to full percentage point. On $100,000, that's $1,000 in extra cash per year. Remember, even in today's environment, there is competition for your cash.

Get Our Weekly Rate Update E-mail Newsletter

If you haven't already, sign up for the BestCashCow Weekly Rate Update Newsletter and get the best rates from your state or from around the country delivered right to your email box. It is free and takes 30 seconds to do. Sign up.


7 Financial Things To Do Before the End of the Year

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The end of the year presents a good time for savers and investors to take stock of their financial position not only because it is a reflective period but because there are some very real financial deadlines associated with December 31. Missing them or not being aware of them could cost you a bundle. Here are a few things that every saver should do in the next couple of weeks, if you haven't done them already.

The end of the year presents a good time for savers and investors to take stock of their financial position not only because it is a reflective period but because there are some very real financial deadlines associated with December 31. Missing them or not being aware of them could cost you a bundle. Here are a few things that every saver should do in the next couple of weeks, if you haven't done them already.

Estimate your tax burden

The Turbo Tax Taxcaster 2013 allows you to enter some rough calculations to get an estimate of how much you might have to pay or owe. It also shows how items like charitable giving might impact tax situation. Knowing how much you might owe or receive as a refund can help you plan out your next moves going into the next year.

Make any tax deductible gifts that you want.

The holiday season puts people in the mood of giving, which is why there are so many charitable solicitations arriving in the mail. Charitable contributions can be effective in lowering your tax bill, so if you are looking for any last-minute tax deductions, open your wallet or purse and give to your favorite causes.

Consider selling investments that have lost value.

If you need some extra losses to offset gains or income, and have some bad investments that aren't going up anytime soon, then consider selling them before year-end. This year, harvesting losses on can be an even more effective strategy for high-income individuals because of increases in the top income bracket and in long-term capital gains rates:

  • The increase in the highest tax rate on long-term capital gains from 15% to 20%.
  • A new 3.8% Medicare surcharge for high-income taxpayers that effectively pushes the highest tax on long-term capital gains to 23.8%.
  • The increase in the top tax bracket to 39.6% from 35% for ordinary income, nonqualified dividends, and short-term capital gains. With the Medicare surtax the top rate can be as high as 43.4%.

This article from Fidelity has helpful information on tax harvesting strategies.

Use the money in your flexible spending accounts

Don't forget to use the money you have set aside in your flex spending accounts. Now is the time to get that cavity drilled or a new pair of eyeglasses if you have money left over. Any money left over at the end of the year is gone.

If you are over 70 1/2 take your minimum required distribution

If you are over 70 1/2 and have a qualified retirement account (IRA accounts, 401Ks, 457 plans, or other tax deferred plans) then you must start withdrawing money or you will be penalized heavily by the IRS. The amount that you withdraw is determined by an IRS table (view the worksheet here to calculate your required distribution). The penalty for not withdrawing the money is stiff, 50% on the amount that was not withdrawn on time.

Max out your 401K, Roth IRA, or other tax advantaged savings account

Tax deferred or tax free investment vehicles have annual contribution limits. For example, the annual 401K limit is $17,500 while the annual Roth IRA limit is $5,500 ($6,6500 if age 50 or older).  Depending on your employer's plan design, you might be able to make additional contributions to the plan to bring it up to the limit, or change your percent of salary steered towards your retirement account. Speak to your HR department to investigate this further.

Check to make sure your savings accounts are earning you the most income.

The end of the year is also a great time to review money held in savings accounts, CDs, and checking accounts to be sure you are earning the highest returns. The same is also true of fixed rate IRA CDs. BestCashCow lists the best rates on various bank accounts the site's Savings Booster Calculator shows how much extra money you can earn by moving your money to a higher paying account.

Taken together, these seven steps will help close out the year on a positive note and ensure that you haven't left any money on the table as you begin the new year.


PenFed Offers Five Year CD at 3.04% APY

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Pentagon Federal Credit Union (PenFed) upped the rate on its 5 and 7 year money market certificates (CDs) to 3.04% APY, the first return to 3% in a long while for the 5 year term.

Pentagon Federal Credit Union upped the rate on its 5 and 7 year CDs (called money market certificates by PenFed) to 3.04% APY, the first return to 3% in a long while for the 5 year term. That is by far the best 5 year CD rate (check table) with CIT Bank offering the next highest rate at 2.05% APY. The 3% rate is also available in a 7 year money market certificate. In general, I have been arguing against longer-term CDs because I believe that rates are on the rise and it doesn't make sense to lock-in for a long term at a lower rate. But 3.04% is pretty attractive and savers looking for a little extra yield may find this worthwhile. The average 5 year CD rate is 1.079% APY and the BestCashCow Savings Booster Calculator shows that moving money into the PenFed 5 year CD will result in an additional $8,255 in savings on $50,000 over a 10 year period.

Try calculating the extra money you would generate putting money into a PenFed CD.

Almost anyone can join PenFed. Membership is open to those serving in the military or veterans as well as those belonging to a qualifying organization. In general, anyone can become a member by joining one of the participating organizations for a nominal fee. Organizations open to all individuals include National Family and Military Association ($20 one-time fee) or Voices for America's Troops ($15 one-time fee). This is a two for one as you can join worthy organizations and also be eligible to become a PenFed member and take advantage of their competitive rates.

Share Certificates can be opened online, via phone or at a PenFed branch

Pentagon Federal Credit Union is the third largest credit union in the United States with over $15 billion in assets. All deposita re NCUA insured up to the limit of $250,000 per individual.

Thanks to Shorebreak for letting us know about this rate increase!

 


Bank Saver Update - CD Rates Flat, Online Savings Up in mid-November

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The rally that we saw in CD rates over the past four months appears to have pretty much exhausted itself. Short term and long term CD rates have remained flat over the past month. Online savings account averages have bumped up a bit as several banks have raised rates. The recent budget battles, botched health care roll-out, and signals from Fed Chairmwoman-to-be Janet Yellen that she plans to keep rates low have all contributed to squelching the mini rally we saw in the spring and summer.

From one month ago, 12 month average CD rates decreased by one basis point from 0.349 to 0.348% APY. Average 3 year CD rates dropped from 0.714 to .713% APY. Five year average CD rates remained flat at 1.079% APY. Online savings accounts averages moved from 0.664% to 0.685% APY.

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The chart below shows the trend in average rates since October 2012.

Top Rate Recap

During this period, top savings and CD rates stayed pretty much status quo.

  • Online Savings: GE Capital Bank retains the top spot at 0.90% APY.
  • 1 Year CD: GE Capital Bank has moved into the top spot with a 1.05% APY rate, replacing Nationwide Bank that had a 1.06% APY rate but with a $100,000 minimum balance.
  • 3 Year CD: Pentagon Federal Credit Union has increased its rate to 2.02% APY, with the next closest rate being CIT Bank at 1.40% APY (thanks to Shorebreak for alerting us on the rate increase with PenFed).
  • 5 Year CD: CIT Bank moves into the top spot with a 2.05% APY CD, replacing iGoBanking.com, which had a 2.05% APY rate also but has dropped its rate down to 1.65% APY.
  • Rewards Checking: Hope Credit Union and Money One Federal Credit Union both have the top rewards checking rate of 3.01% APY for balances up to $10,000. Both credit unions are open to members from across the country.

It's possible to find even better rates at local banks and credit unions (especially for CDs). You can search for better local rates here.

Online Saving and CD Spread

The difference between average 1 year CD rates and average online savings rates spiked up over the last two weeks with the increase in online savings account averages. As the chart below shows, the difference between online savings accounts and CDs has remained relatively consistent over time. It's my opinion that online savings accounts represent the best place to park your cash at the moment, as they offer a high rate, relative rate stability, and liquidity should rates begin to rise in the future. Certificates of deposit just do not pay enough premium to justify keeping money locked in them.

General rate environment

The shutdown augered the start of a slow patch in the economy. That, combined with the botched healthcare rollout have stolen the headlines and taken some of the wind out of the sale of consumer confidence. Maybe someday, the government will get out of its own way.

Janet Yellen, nominated to succeed Ben Bernanke as the next Chairperson of the Fed also made it clear that she will continue the quantitative easing program. The result has sent the Dow soaring and put a further damper on any rate gains for longer-term instruments. In addition the Euro-zone reported slowing growth, further depressing growth prospects for the global economy and demand for U.S. goods and services.

At this point, any economic uptick is obscured by all of this other noise. It will be interesting to see how sales come in this Holiday season. A blockbuster season woutl auger well for economic growth. Still, I remain optimistic that economic growth has not stalled out and that once the dust settles from the shutdown and bickering in D.C., the debut of Obamacare, and Ms. Yellen's arrival (assuming she is confirmed) some sense of growth and optimism will return.

So if we look at the scorecard:

  • Taxes & Government: Increasing - drag on growth. Negative
  • U.S. economic growth: Slow to moderate. A protracted fight on the debt ceiling has hit growth and lowered rates. While this was improving last month this month we'll call it: Neutral.
  • Europe and the world: Europen and Japanese growth slowing. China prospects improving. Overall, world picture is improving. Neutral
  • Technology: Gas prices at the pump coming down and plentry of natural gas for the cold winter months due to fracking and other extraction innovations. Slightly Positive.

My outlook: The government shutdown and default embroglio and healthcare rollout have taken some wind out of the economies sales. Still, as long as the politicos are not back at it in 3 months the damange should be relatively short. Short term rates will continue to fall for a bit longer even as longer term rates continue to rise. The Fed will increase the Federal Funds rate within the next 14 months. Savings rates will hover in the 2-3% range by the end of next year.

Savings Accounts or CDs?

The data continues to show that opening a savings account is a better bet than a 1-3 year term CD and I expect this to hold through 2013. Online savings accounts have held the line over the past year and even though CD rates have stabilized and ticked up, the premium is still not enough to jusity locking the money away. While the premium for opening a 5 year CD over a 1 year CD has increased over the past six weeks, it is still only at 0.722 versus over 1 percentage point in October 2011. In a rising rate environment, it does not make sense to tie up money for 5 years with only a 30 basis premium.

Is it worth it to go long and open a 5 year? I don't think so any more. I think the 5 year CD rates are just too low and that you'd be better off putting your "safe" money into an online savings account and waiting for rates to rise. I spoke to one banker several weeks ago who said that "no one was investing in long-term CDs." Keep your powder dry.

For money you want to keep liquid, go with online savings accounts. They offer better rates than 1-3 year CDs and athough several banks have dropped rates in the past month, they have still offered decent rate stability over the past year and a half.

Make the best of a tough savings situation in 2013

Yields may be low in 2013 but a savvy saver can boost the return with no increase in rate by rate shopping. By shopping around, a saver can earn an extra half to full percentage point. On $100,000, that's $1,000 in extra cash per year. Remember, even in today's environment, there is competition for your cash.

Get Our Weekly Rate Update E-mail Newsletter

If you haven't already, sign up for the BestCashCow Weekly Rate Update Newsletter and get the best rates from your state or from around the country delivered right to your email box. It is free and takes 30 seconds to do. Sign up.


Are Bump-up CDs Worth Considering?

Rate information contained on this page may have changed. Please find latest cd rates.

Are bump-up CDs a worthwhile addition to a savings portfolio? Should you consider opening one? What exactly is a bump-up CD?

I am not a big fan of long-term CDs right now. I think the rates are very low, especially compared to more liquid online savings accounts, and that they do not compensate enough for the risk of rising rates and inflation sometime in the future. The other day, a user on BestCashCow asked what I thought about bump-up CDs. 

For those not familiar with Bump-up CDs, they generally provide the depositor with the ability to increase the rate a specified number of times during the length of the CD. On a five year CD for instance, the depositor might be able to raise the rate one or two times during the five years. The idea is that if interest rates do rise significantly sometime during the term, the CD rate can reset at a higher rate, taking advantage of this rise in rates. At the same time, if rates decline, the CD can remain at its original rate. 

In theory, the concept is sound. Bump-up CDs allow depositors some flexibility so that if rates rise, they won't be stuck in a low yielding CD. 

The main criticism of a bump-up CD, as stated in this Kiplinger article, is that the interest rate on a bump-up CD can be substantially lower than on a regular CD to compensate for this flexibility. I did some analysis of bump-up rates versus regular CD rates and surprisingly found them relatively close and sometimes better than their regular counterparts.  For example, Bank of America has a bump-up product that it calls its Opt-up CD.  The starting rate on the 18-month CD is 0.16% with a $10,000 minimum deposit (it's a pathetic rate) but the regular rate on an 18 month CD was actually worse at 0.07% APY. Likewise, CIT has a bump-up that pays 1.20% as its initial rate while the regular rate is 1.09%. And Ally Bank, which has spent enormous sums of money promoting its Raise Your Rate CD pays 1.30% APY for a 4 year bump-up versus 1.50% APY for a 5 year regular CD (it doesn't offer a regular 4 year CD). While Ally's bump-up rate is lower I'd take the bump-up in exchange for giving up 20 basis points. A quick survey shows that many bump-ups are actually beating regular CD rates in some cases, or coming close to regular rates, even with the added flexibility. 

Banks are offering such comparable CD rates because they really don't expect interest rates to rise very much over the next couple of years. As rates have fallen over the past five years, bump-ups have beena good marketing ploy but the rate-increase feature hasn't been used. But now that rates seem to be on the rise, albeit a very gentle rise, I expect depositors will be more eager to seek out bump-ups. I also expect banks will begin to offer less yield on their bump-ups. Before that happens, depositors might have a short window of opportunity to both get a good rate and the flexibility to bump-up to even higher rates in the future. 

Some Select Bump-Ups to Consider (these rates may be old. Please check our rate tables for updated rates).

CIT

1-Year Achiever CD: 1.00% APY

2-Year Achiever CD: 1.20% APY

You can increase your rate and add additional funds once during the term of the CD.

Ally Bank

2-Year Raise Your Rate CD: 1.00% APY

4-Year Raise Your Rate CD: 1.30% APY

You can raise your rate once with a 2-year CD and twice with a 4-year CD if rates go up during the term period.

Digital Credit Union

Jump-up regular certificate 27 months: 1.13% APY

Jump-up jumbo certificate 27 months: 1.23% APY

Jumbo certificate has a $25,000 minimum balance. Depositors can jump up the rate once per term.

 

If you find any more good bump-ups post them below and I'll add them to the list.