Bread Financial, which previously offered a 5.25% yield on a 1-year CD, has been cutting rates. The financial institution recently cut its annual percentage rate on its 1-year CD to 5.15%. While the deal is still attractive to savers who want to lock up some spare cash and earn a nice return in the meantime, other banks are expected to cut their rates on these products—especially ahead of a rate cut by the Federal Reserve. “We think banks will continue to slowly cut rates, especially as the industry becomes more confident that the Fed will cut rates this year,” BTIG analyst Vincent Caintic wrote in a report earlier this week. “Our understanding from one participant is that depositors are relatively insensitive to cuts in 1-year CD rates as long as they remain around 5.00%, but a drop below 5.00% would result in significant deposit outflows,” he added. According to the CME FedWatch Tool, federal funds futures trading is showing a 100% chance that central bank policymakers will cut rates in September. The upshot for savers, however, is that CDs allow them to lock in higher interest rates for a period of time. Banks can cut the yield they pay on savings accounts at any time. See below for current APYs on some high-yield 1-year CDs. Some institutions still offer high-yield CDs. Popular Direct has a 1-year CD with an APY of 5.2%, while Goldman Sachs’ Marcus and Sallie Mae still offer an APY of 5.15% on their instruments. BMO Alto’s 1-year CD has an APY of 5.05%. Capital One and Citizens Access both have APYs of 5%.
