CD Money in Motion Continues to Decline

CDs contributed strongly to deposit growth in 2023 and 2024, but now both their total acquisition and new-to-bank money volumes have begun to slide. That’s because the industry is following the Fed’s lead on lowering rates and passing through 80-90% betas on their flagship CD products.  

According to Curinos Retail Deposit Analyzer, CDs hit a peak of 40-50% in new-to-bank balances in 2023 (with the remaining existing balances moving to CDs from within the bank) as customers rushed to lock in high CD rates. And while that percentage normalized in 2024 as the Fed paused interest rate hikes, most banks still saw strong total CD acquisition volumes for the first half of the year. Then, with the first Fed rate decrease in September and ensuing CD rate reductions, CD new money volumes decreased almost immediately and across both top and bottom performers (see chart). 

Now, with CDs in the market as much as 100 bp lower than at their previous peak, many customers have hit the pause button, leaving much of the available consumer wallet locked into existing CDs of various durations across their preferred banking institution. That’s likely to make new CD acquisition more difficult in 2025 as deposit managers face the twin headwinds of lowering rates and the need to find pockets of growth in the portfolio. 

But the opportunity is there: top CD performing banks are capturing about four times more new money than bottom performers. That’s why, moving forward, precision pricing strategies driven by the right analytics will be all the more critical to improving new money yield.