Since the inception of the fed funds rate hike cycle beginning in March 2022, many banks were offering higher rates on CDs for deposits to retain and attract new customers in a period where consumers continue to benefit from prevailing interest rates on CDs for the first time in decades.

Growth in Consumer Demand for Certificates of Deposit

As the fed remained hawkish on taming inflation and the interest rate environment played a crucial role, consumers continued to seek out low-risk investments that drove fair returns and increasingly gravitated towards CDs which carry APYs as high as 5% compared to the national average savings account rate of 0.45% (according to the *FDIC). CD shopper visitation increased 258% since Q1 2022 to a multi-year high of 7.4M shoppers in Q1 2024. Comscore custom behavioral data solutions captured shopper visitation to product, promotion, and rate pages for CDs across 24 of the nation’s top national, regional, and digital banks’ websites.

Digital Banks Outpace National and Regional Banks for Certificates of Deposits

Online-only competitors are among the rate leaders that have been competing for the same CD dollars as national and regional banks – many of which topped the 5% APY threshold for CDs throughout 2023. Even though some of these digital players require higher minimum deposits than their traditional counterparts to qualify for the higher rates, digital banks continually offer variations on typical product features. Goldman Sach’s Marcus, for example, offers a no-penalty 7-month CD, which gives depositors the option to cash in early without penalty as well as a 20-month “Rate Bump CD” that allows consumers to benefit from any increases in rate during the CD term with no change fee or penalty. Other digital banks such as Ally, Synchrony, and CIT Bank also offer similar no-penalty CD and “rate bump” CD products. With these unique product features and a broad spectrum of available CD terms with high APYs, digital banks maintained top share for CD shopping visitation over the past two years, which outpaced both national and regional banks 3 to 1 by the end of Q1 2024.

Growth in Consumer Demand for U.S. Treasuries

While demand soared for CDs over the past two years, there was also an overall increase in consumer interest in U.S. Treasuries as the rise of Treasury yields impacted CD rates. Shopper visitation to the government’s U.S. Treasury site, TreasuryDirect.gov, increased 46% in Q1 2024 versus Q1 2023 and nearly four-fold compared to the two-year-ago period. Treasury products are good options for consumers as these investments are more liquid than CDs and offer a tax advantage since they are not taxed on the state level.

Key Takeaway:

In summary, consumers are increasingly likely to shop for CDs despite the product’s old-fashioned connotation in the not-so-distant past. Now, in a post-pandemic era, where banks are offering more flexibility for guaranteed returns, consumers of all ages have gained interest – not just consumers among the older age cohorts. An average of 19% of consumers that shopped for CDs from Q1 2023 through Q1 2024 were under the age of 35, while 32% were under the age of 45. Financial institutions could strategically consider CDs as a way to drive deposits and attract new customers while balancing risk and returns. By growing their market share for CDs at a time when several competitors are quietly decreasing rates on their high-yield savings options, banks can compete with the safety and liquidity features of U.S. Treasuries as consumer demand for higher deposit rates continues to trend at multi-year highs. This suggests that savings intentions have become stronger and consumers are even more focused on diversifying their portfolios to meet their savings goals no matter what stage in life they are in.

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