MERCER ISLAND, Wash. – Approximately 91% of CD rate changes made during September were decreases, reflecting the Federal Open Market Committee’s recent 0.25% reduction in interest rates, according to new data from CD Valet.
“While savers might have missed the high point in this interest rate cycle, there is still a window of opportunity,” said Mary Grace Roske, head of marketing and communications for CD Valet. “While the best time to lock in a rate was yesterday, the second-best time is today. As high-yield savings and money markets could fall substantially by year-end, now is a good time to lock in a fixed-rate CD.”
Only 9% of CD rate changes were increases during the month, continuing the downward trend from June, July and August, which saw the volume of rate hikes at 42%, 36% and 26% respectively, the company said.
In its monthly Ratewatcher report, CD Valet said it analyzes its digital marketplace, which includes all CDs offered by financial institutions that publish their CD rates online.
The analysis said its data is based on 38,000 retail CD rates, representing nearly 5,000 banks and credit unions.
The Findings
CD Valet reported:
• There were 5,662 CD APY decreases in September (four times as many as in August), and the average drop was 25 basis points. This compares to 574 CD APY increases reported during the month (up from 468 in August), averaging 45 basis points. “This shows that while the majority of institutions are decreasing CD rates, some are taking advantage of this opportunity to drive deposits by increasing their competitive position with compelling rates,” the company said.
• The company said banks and credit unions are pulling back on the “promo” CD offers, instead sticking more with standard terms. With rates declining, CD Valet said it expects to see fewer promo offers with terms shorter than 12 months.
• While the CD yield curve remains inverted, many expect it to flatten heading into late 2025 and early 2026, as the Fed’s anticipated rate cuts begin to take hold and short-term yields fall faster, allowing the curve to normalize. This shift would reflect growing confidence that inflation is cooling and signal a return to more typical reward-for-term dynamics in the savings landscape, the company said.
Additional Findings
• Of the institutions that increased CD rates, approximately 60% were credit unions while approximately 40% were banks, in line with trends from recent months.
• The average credit union CD APY was approximately 17% higher than average bank CD APY.
