Some banks raised CD yields last month. Where you can still snag 4%
A handful of banks recently rewarded savers parking cash in a certificate of deposit with a little more yield, according to Morgan Stanley. Select banks under the firm’s coverage lifted the highest rates they were willing to offer on CDs, meaning that savers have another opportunity to lock in sweet yields in the event the Federal Reserve resumes its rate cuts. Of the 35 banks that Morgan Stanley covers, six raised their top CD rate in February, analyst Betsy Graseck found in a Thursday report. Last month, the average highest rate was up 4 basis points to 3.68%. One basis point is equal to one one-hundredth of a percentage point. Graseck pointed to two factors behind the increase: First, less certainty around the Fed’s future path for rate cuts. The fed funds target rate currently sits at 3.5% to 3.75% following a trio of cuts in late 2025. Policymakers in January said that while the unemployment rate has shown signs of stabilizing, inflation remains “somewhat elevated.” Second, banks are also seeing improving loan growth, Graseck said. When borrowing activity picks up, banks become more profitable and they generate more net interest income – that is, the difference between the income they earn from loans and what they pay for customers’ deposits. See below for a list of banks still offering rates of 4% or greater on CDs as of Thursday afternoon. Maturities will vary. Bread Financial , which once offered an annual percentage yield exceeding 5% on its 12-month CD, is offering a 4.15% yield on a nine-month CD. Bread’s 12-month CD currently pays a rate of 3.75%. For investors with a 12-month time horizon, Marcus by Goldman Sachs is offering a 4% yield, while Synchrony Financial has a 14-month CD with a 4.1% yield. Be aware that while CDs allow investors to lock in rates for a set period, they will have to prepare for the likelihood that fewer rich options will be available at maturity. Renewal rates on CDs may also be much lower than the yield originally offered. In the near term, Graseck sees rates on CDs keeping steady as the Fed remains in a holding pattern on interest rates. But there’s the possibility that banks could jockey for deposits, which may work out well for the consumer. “There is modest upside risk if competition for deposits intensifies, particularly as new entrants begin to compete on price as they enter new markets,” the analyst wrote. “Many large banks are highlighting increasing aspirations to build out their branch footprints and enter in new markets.” —CNBC’s Michael Bloom contributed reporting.
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