Looking For Interest In Smaller Places

Interest rates on certificates of deposit at small banks, internet banks and credit unions are now a full 1 to 1.5 percentage points higher than at big banks. While all financial institutions have raised the lending rates they charge their borrowers in response to Federal Reserve rate hikes, only the smalls have been raising deposit rates.

Previously, most financial institutions were reluctant to raise deposit rates because their profit margins had been so squeezed by the ultralow rates that prevailed before the Fed finally started hiking at the end of 2016. But now, competitive pressures to attract deposits are forcing small banks, internet banks and credit unions to raise their full range of CD deposit rates in line with the increase in Treasury bill rates (though offerings on lowly savings accounts are still paltry).

Share on FacebookTweet about this on TwitterShare on LinkedInShare on Google+

(Continues ...)

Log in to see the rest of this article and the discussion

Kiplinger Alerts is a subscription-based e-mail and online alert service that helps you make more profitable decisions for your business and investments. You get reliable intelligence and forecasts on more than a dozen factors that affect the economy and are critical to your business and financial success.

Already a subscriber?

Login now

Not yet a subscriber?

Enjoy it free for 30 days