Synchrony Financial and Others Raise CD Rates to 4% Amid Fed Rate Hold
Certificate of deposit (CD) rates have climbed, with Synchrony Financial recently increasing its annual percentage yield on a 12-month CD by 30 basis points to 4%. This follows similar moves from Bread Financial, Capital One, and Sallie Mae. As of June 26, over 639 banks offered one-year CDs above 3.5%, with 40 offering rates exceeding 4% — a doubling since the end of Q1. Despite these increases in CD yields, high-yield savings accounts have seen rate cuts this quarter, signaling lighter deposit competition for now. Analysts suggest that rising CD rates reflect expectations of higher Fed Funds Rates ahead and may pressure banks' net interest margins over the next 12 months as funding costs rise. S&P Global's Zain Tariq notes that while credit remains strong, tighter margins could lead to slower loan growth and more expensive borrowing for institutions.
Topics: banking_interest_rates certificates_of_deposit federal_reserve