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Last Year’s High-Rate CDs Are Coming Home To Roost

We saw it coming and now it’s here. This year, CDs acquired above 400 bp will make up more than 80% of all maturities, and more than half of those will have been acquired above 500 bp. By July, only one in six renewing CDs will have been acquired below 400 bp (see chart).  

With the Fed Funds rate remaining high, financial institutions will need to sustain high CD rates to retain balances, especially because deposit betas are likely to lag any downward action by the Fed. Cut rates too soon and risk significant attrition. But lower market rates are anticipated, so the need to keep rates elevated should be less of an issue than it was last year. 

By the end of 2023, CD balances had doubled as a proportion of all deposits, to more than 24%. That’s why achieving sufficient CD retention at an acceptable cost will almost assuredly be the dominant deposit theme for the rest of 2024. 

% Of Maturing CD Balances By Maturity APY (As Of Dec ’23) ​ Branch Banks | Jan ‘24 – Jul ‘24​ ​

CDs with an APY of 500+ bp comprise ~38% of all projected maturing balances from January to July ’24.​ ​
Consumer Deposit Analyzer
Source: Consumer Deposit Analyzer | Note(s): Simple averages displayed | Consumer and branch balances displayed only | Maturity data accurate as of Dec ’23 | 1 Total maturing CD balance defined as the total maturing balance from Jan ‘24 – Jul ‘24​

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  • Author
    • Adam Stockton

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      Managing Director
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