Legacy Bank of Milwaukee is offering a 25-month CD for 2.95% APY. That's far higher than the highest 24-month CD rate of 2.30% and even higher than the best 36-month CD rate of 2.81% APY.

I called and spoke to a CSR who confirmed the rate and said it was going to be good through the month of April. This bank wants to bring in deposits!

Other important items she told me:

• The rate is available nationwide
• Applications can be taken online and a signature card will be sent via mail. Applicants must sign and return with proof of ID.
• Funding can be done via check or wire.
• Rate locks when application is received.
• Early withdrawal penalty of 6 months.
• Funds can be withdrawn via a certified letter at end of term.
• Minimum balance is $2,500.

In addition to the 25-month CD, the bank is also offering a competitive 1.90% APY 13-month CD and a 1.75% APY on money market account fund with a minimum balance above $10,000.

Legacy Bank has one branch and assets of $236 million. It is a small bank so look for it to be overwhelmed once this offer catches on. Get in early if you are interested and be prepared for some delays. The bank is FDIC insured and is rated 2 out of 5 starts for its safety and soundness according to Bauer Financial.

I just spoke to a woman from the FDIC regarding Indymac CDs and she told me that holders have several options. They will have six months to cash out the CDs with no penalty or they can keep them at the bank. If they keep them at the bank the FDIC will continue to pay the contract interest rate. But, if another bank comes in and buys Indymac, as I'm sure the FDIC hopes, the bank has the right to adjust the rate paid on the inherited CDs. In that case, the new bank will send a notice to all remaining CD holders. She said it wasn't clear if CD holders would have an opportunity to cash out their CD penalty free at that point.

Savings rates showed little movement last week while CD rates continued to fall. Longer-term CDs led the decline.

Savings Rates

Average rates dropped slightly from 1.32% APY to 1.31% APY. The top non-promotional rate remains East Boston Savings Bank at 1.55% APY. One month ago, the top rate was 2% APY. So, in four weeks the top rate you could get on a savings account has fallen significantly. For promotional rates, Everbank remains on top with their 3-month introductory bonus rate of 2.25% APY. After the three-month period, the rate drops down to 1.26% APY for a blended one year APY of 1.51% APY.

CD Rates

The average 1-year CD dropped slightly from 1.57% APY to 1.55% APY. First City Bank continues to hold the top spot with a 1.80% APY CD. First City is in bad financial shape and has been operating under a FDIC Cease and Desist Order since 10/09. CNB Bank moved into the second sport with a 1.65% APY CD.

The average 3-year CD rate dropped the most, from 2.42% to 2.37% APY. The top spot continues to be occupied by USAA Federal Savings Bank, which offers a 2.65% APY CD with a minimum deposit of $175,000. The next highest rate is Acacia Federal Savings at 2.50% APY and a $500 minimum deposit.

The average 5-year CD rate dropped from 3.12% APY to 3.07% APY. At this rate, the average will go below 3% in the next 3-4 weeks.

USAA continues to have the top rate at 3.31% APY. The second highest rate has dropped from 3.26% APY to 3.25% APY offered by Acacia Federal Savings Bank.

The spread between savings and 3-year CD rates dropped significatly last week and is now at 1.05, down from a high of 1.24 in March. The ratio between 1-year CDs and 5-year CDs has remained steady over the past month and appears to have topped off. What does that mean? Longer term rates are no longer holding their own and are dropping at a faster rate than short-term rates. All rates are continuing to move towards 0. If the Fed doesn't raise the Fed Fund Rate soon (which it is unlikely to do) we can expect to see 5-year CD rates significantly below 3%,