This Month in Retail Banking
The Fed slowed its pace of rate increases in December, but banks are charging ahead with higher rates.
The latest issue of the Curinos CDA Consumer Executive Summary found that banks are increasingly trying to slow runoff from rate-seeking customers by raising rates of their own.
Posted rates are notably higher, with 19% of banks now posting a savings/MMDA rate above 2.00% compared with 3% in September. (See Figure 1.)
Distribution of Savings Acquisition Rates | Jan ‘22 – Jan ’23*
% of branch banks offering a savings/MMA product of at least the following rates
In addition, 46% of banks are offering a CD rate above 3.00% and 18% are offering more than 4.00%. (See Figure 2.)
Distribution of CD Acquisition Rates | Jan ‘22 – Jan ’23*
% of banks offering a <24 month CD of at least the following rates
Despite the higher rates, savings runoff is continuing. It appears, though, that the market is increasingly bifurcating between lower runoff (averaging 1-2%) and higher runoff (averaging 10-13%). Rate-based churn remains concentrated in higher-balance tiers, with switch to CDs disproportionately coming from balances in excess of $100,000.
Internet banks continue to lead the market, with the average of the top 10 savings rates peaking at 3.69% and one-year CDs reaching 4.38%.