Consumers Warned Not to Be "Asleep at the Wallet" As Nearly $1 Trillion Tsunami of Certificates of Deposit (CDs) Is About to Mature

Leading CD Marketplace CD Valet Shares Savings Tips for Consumers Before
Expected Interest Rate Reductions in Mid-September

SEATTLE, Sept. 12, 2024 /PRNewswire/ -- In the midst of a nearly trillion-dollar wave of Certificates of Deposit (CD) maturing this fall, savers are navigating how to maximize earnings on their savings while knowing that the Federal Reserve is expected to lower interest rates in mid-September.

The banking publication The Financial Brand reported that between July and October 2024, about $950 billion in CDs -- a type of savings account that pays a fixed interest rate on money held for an agreed-upon period – that savers opened over the last year will mature.

Millions of consumers from millennials to baby boomers have taken advantage of the resurgence in the popularity of CDs, according to the RateWatcher Report published in August by CD Valet. Savers opened these time deposits in 2023 or early 2024 when rates were higher and now face the possibility of reduced returns as their CDs come up for renewal. Now, they will need to determine how to keep their earnings strong following the Federal Reserve Board's Open Market Committee meeting on September 17-18, where it is forecast they will reduce the federal funds rate (the benchmark rate) by either one-quarter or one-half a percentage point.

Based on CD Valet data, savers are beginning to look longer-term, in hopes that they can ride out this interest rate downturn in anticipation of higher rates when their next renewal arrives. In August, the number of savers shopping for 2-year CDs on CD Valet increased by 110 percent, while those looking out to 4- and 5-year terms rose by nearly 100 percent. Given the rate forecast, locking in a 2-year CD at rates as high as 4.50% could be a prudent move. While shorter-term promotional rates might be attractive now, longer-term CDs can provide better overall returns as interest rates drop.

"Savers shouldn't be 'asleep at the wallet' if they have CDs coming due," said John Blizzard, Founder of CD Valet, an online marketplace connecting consumers with financial institutions to compare and open CDs with the most competitive rates and terms nationwide. "Assuming the Federal Reserve does lower interest rates, savers can still maximize earnings if they make timely decisions about their savings." 

Key Considerations for Savers:

1. Act Quickly on Maturing CDs
   Banks and credit unions typically provide a 7-to-14-day window following a CD's maturity for consumers to renew, cash out, or transfer funds. Savers are urged to monitor their maturity dates closely and avoid automatic rollovers, which may lock in lower, less favorable rates. Shopping around for the best available rates before renewal is essential in the current climate.
   
   
2. Shop Beyond the "Big Four"
   Despite their size, the nation's four largest financial institutions often offer significantly below-market rates on CDs. With these institutions holding about 25% of the nation's CDs, savers with accounts at large banks likely will find better returns elsewhere. Exploring options at smaller banks and credit unions could result in significantly higher yields.
   
   
3. Use Objective Platforms for Rate Comparisons
   Many websites that list "best CD rates" are supported purely by advertisers, show limited offerings, and do not present a comprehensive view of the market. Objective platforms like CD Valet, which includes over 31,000 CD rates from 4,100 financial institutions, offer a more complete picture. This helps consumers find the best rates and provides them opportunities to support community financial institutions.
   
   
4. Watch for Hidden Pitfalls in Short-Term CDs
   Short-term CDs with unusual terms like 2, 7, or 9 months often come with promotional rates that roll over into less competitive offers. Savers should carefully review the terms and conditions to avoid surprises and ensure they are getting the best possible deal.
   
   
5. Evaluate Alternatives to Money Market Funds
   For over a year, some money market funds have offered variable-rate yields of more than 5.00%. But with short-term interest rates set to fall, savers should consider shifting their funds into time deposits like CDs – cash flow needs permitting - to lock in fixed-rate yields.
   
   
6. Negotiate for Better CD Rates
   Consumers renewing CDs at their current institution might have room to negotiate for a higher rate, particularly if they have significant deposits or a strong banking relationship. While not all institutions will negotiate, it is worth asking, especially if the deposit is substantial. It is best to do your research.
   
   

Blizzard also notes "As interest rates shift, savers must stay informed and proactive. By understanding their options and making strategic decisions, they can continue to secure favorable returns despite the changing interest rate environment."

About CD Valet
CD Valet is an online marketplace connecting consumers with financial institutions to compare and open Certificates of Deposits (CD) with the most competitive rates and terms nationwide. Unlike other rate comparison sites, CD Valet shows the most competitive rates from financial institutions across the nation, from the smallest credit unions and community banks to the largest nationwide and internet banks. With daily rate updates and earnings calculators, CD Valet gives consumers comprehensive data and free tools to help them find the right CD to meet their savings goals. CD Valet is owned and operated by Seattle Bank, a wholly owned subsidiary of Seattle Bancshares, Inc. Visit: CDValet.com

SOURCE CD Valet