Bank, PNC Bank and Truist, regional powers all. The story is similar for the next three biggest banks: U.S. If a bank wants to make a splash, then, they need to offer higher rates. When the typical person thinks about opening a bank account, their mind tends to drift towards at least one of the big four. The big banks enjoy the benefits of generations of customers and high name identification. The four largest financial institutions in the nation, which together own nearly $10 trillion in assets, don’t offer a competitive CD. No Chase Bank, no Bank of America, no Citi® and no Wells Fargo. Stare at our rankings for a while and something obvious becomes apparent: a dearth of big banks. While non-APY factors are important, we believe that your potential earnings should reign supreme. To rank customer service, we documented how the financial institutions were ranked by the Better Business Bureau and JD Power.Īdditionally, we valued accounts with lower minimum deposits, daily compound interest schedules (rather than monthly) and those that are available to everyone, regardless of where they live. In each category we looked at a variety of factors.įor instance, to determine APY, we documented the interest rate offered on 17 different terms. We looked at the terms of 144 CDs offered by 84 banks and credit unions to reach our rankings. We took this historical lesson to heart when crafting our ratings, as you can see below: After all, a one-year CD that pays less than 1% is hardly worth it when prices are rising at twice as high a rate. The upshot, though, is the same: Americans are more likely to consider CDs if they pay more in interest, especially compared to inflation. CD yields jumped in 2022 after the Fed raised rates by 4.25 percentage points in nine months.

That’s what has made the current moment so interesting. The aftermath of the Great Recession, in which the Fed kept interest rates near zero for almost a decade as inflation continually ran under its desired level, is just the most recent trend. The story behind drooping CD rates is complicated, and it involves: falling inflation (until recently), an aging population, technological innovations and the Federal Reserve lowering interest rates. At the beginning of 1989, for instance, a one-year CD offered an 8.30% APY. The reason? CDs used to be a much better deal. In 2019, however, only 7.7% of households had a CD. They were still in vogue nearly two decades later, as more than 16% used them in 2007.

Roughly a fifth of households owned a CD in 1989, according to the Fed. CDs used to play an important, albeit complimentary, role in the finances of everyday Americans.

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