SEATTLE — Despite a larger number of CD rates trending downward in July, 12-month certificates of deposit led in both rate growth and consumer appeal, according to CD Valet’s latest Ratewatcher report.
The 12-month CD posted the highest average APY among top offerings at 4.80% and experienced the largest average rate increase of 41 basis points during the month. The median increase was 20 basis points, the company reports.
CD Valet, which says it tracks more than 30,000 CD rates across 4,000 U.S. banks and credit unions, reported 584 rate increases in July—an average of 31 basis points per hike. At the same time, there were 1,019 CD rate reductions, averaging 24 basis points.
Approximately 36% of all CD rate changes in July were increases, down from 42% in June. Most of the increases, 57%, occurred in CDs with terms longer than one year, with the 24-month CD being the most frequently adjusted.
CD Valet noted the slowing pace of increases coincides with market expectations for a possible interest rate cut by the Federal Reserve later this year, despite no change to the federal funds rate at July’s Federal Open Market Committee meeting.
Key Findings
Other key findings, according to CD Valet:
- Credit unions were responsible for 65% of rate increases in July, compared to 35% from banks.
- The average APY for credit union CDs was about 16% higher than that of banks.
“With strong consumer interest and competitive momentum in the deposit space, financial institutions should consider optimizing their 12-month CD offerings — both in terms of rate and visibility,” Mary Grace Roske, head of marketing at CD Valet,” said in a statement. “The 12-month CD is well-positioned to attract rate-sensitive customers seeking short-term security.”