Four major financial institutions, including Apple, Ally, Capital One, and Marcus by Goldman Sachs, have recently decreased their high-yield savings account rates, despite the Federal Reserve’s current stance on interest rates. This move has lowered the average savings rate to 3.4%.
Despite these cuts, Bread Financial and LendingClub remain standout options, offering a 4% APY on their high-yield savings accounts, providing a refuge for savers seeking higher returns in the current economic climate.
READ MORE FROM CNBC
In a surprising move, four prominent high-yield savings accounts have recently slashed their interest rates, even as the Federal Reserve shows no immediate signs of lowering its benchmark rate. Apple, Ally Financial, Capital One Financial, and Marcus by Goldman Sachs all reduced their savings account yields in the past week. This action has brought the median savings rate down by 5 basis points to 3.4%, according to data from BTIG. Typically, these rates closely follow the federal funds rate. When the central bank adjusts its rate, banks usually follow suit. However, the Federal Reserve has not cut rates since December, and recent economic indicators, including persistent inflation and a robust jobs report, have pushed back expectations for any rate cuts this year. Some market analysts are even anticipating potential rate hikes later in the year, as indicated by the CME FedWatch tool.
Vincent Caintic, a specialty finance analyst at BTIG, expressed bewilderment over these deposit rate cuts, especially given the market probabilities pointing towards a potential quarter-point Fed rate hike in December 2026. He speculated that a slowdown in loan growth might be driving this decision, leading to less demand for deposits. However, Caintic noted that recent financial conferences with competitors haven't indicated a widespread deceleration in loan growth.
Conversely, some online banks have informed Caintic that increased competition for deposits is likely as the current administration approves more bank applications. This trend would typically suggest a less aggressive stance on cutting deposit rates. Amidst these changes, two online banks, Bread Financial and LendingClub, continue to offer a competitive 4% annual percentage yield (APY) on their high-yield savings accounts. Bread Financial also provides a 4% APY on its 1-year certificates of deposit (CDs). Other 1-year CDs covered by BTIG's research are currently offering less than 4%. While CDs offer the security of locked-in rates, it's important to remember that early withdrawal of funds can incur penalties.
