It was a quit week for CD rates, as indicated by the BankingMyWay weekly CD tracker.

For the week, rates were down, ever-so-lightly. On the short-end, three-month and six-month CD rates were down from 0.75% to 0.71%, and from 1.05% to 1.04%, respectively. Up the ladder, one-year CDs were down from 1.38% last week to 1.36% this week. At the higher end, five-year CD rates barely moved , sliding from 2.27% to 2.26% for the week.

Why the tightening range on CD rates last week? Call it the “mirror effect” from other interest-bearing securities, like U.S. Treasuries. Two-year Treasuries saw barely a ripple last week, moving up one basis point. Even 10-year Treasuries, which are heading into a busy auction week leading up to Memorial Day weekend, barely moved, up just four ticks for the week.

Another trend this week in CD rates is the widening disparity of rates between national and local lenders. The better deals, it seems by far, are at the state and local levels. Big banks aren’t trying very hard to match the CD rates of their smaller rivals, but maybe they just can’t afford to right now. With many big banks under the gun by federal regulators to get their fiscal ships in order, the priority is in reform and survival and not hiking CD rates.

In addition, new FDIC stipulations should cause many banks to see a big increase in their FDIC insurance payments. North Dakota-based CountryBank USA says its FDIC payments will go from $8,000 in 2008 to $150,000 in 2009. Adding to the burden is a bank market environment where there is an over-abundance of depositors but a lack of qualified borrowers to loan money to, presumably at higher rates than they pay out on savings accounts.

That’s just not the way banks and credit unions like to do business.

As long as investors continue to be content getting anything resembling a decent deposit rate, financial institutions will be just as content to keep deposit rates low, thus keeping CD rates low in the process.

It’s a simple formula. Lack of demand for higher rates and a punishing bank reform atmosphere equals a dank climate for bank CDs. Of course though, there are always diamonds in the rough, if you know where to look.

To find your best, personalized CD rate, visit BankingMyWay.com.

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