Of the $1.5 trillion in CDs at branch banks, 90% will mature in the next 12 months – 10% of them this month alone and that monthly percentages will climb even higher later this summer (see chart).
Curinos’ Deposit Analyzer estimates that interest rates on maturing CDs will be 4%+ on average for most of 2024 before sloping down to 3% in the first quarter of next year. This downward rate trend creates significant attrition risk, especially among first-time renewers. Those shopping around will find plenty of offers above 5%.
Banking institutions haven’t dealt with a meaningful volume of renewals in more than 15 years, so institutional memory on how to compete on levers other than rate may be in short supply. Insights derived from data can help bridge that knowledge gap, be it by identifying desirable CD term offers at the right moment in time to keep rate-sensitive customers in the fold or by finding opportunities to lower auto-renewal rates while minimizing the risk of attrition.
Even more importantly, analytics may keep an FI from overpaying for these deposits. In a falling rate environment, they may prefer to shift the emphasis from renewal at all costs to moving CD balances to liquid savings that can be down-priced faster.
% Of CD Balances Maturing In The Next 12M By Renewal Profile
First vs. Multi-renewal* | Branch Banks | May ‘24 – Apr ‘25
Regardless of the Fed’s actions this year, CDs are here to stay.
