Philly.com Says Deposit Rates Rising
The Philadelphia Enquirer writes "Bank deposit rates going up." It says, "A handful of large and small banks are paying U.S. savers the most for their money in 10 years as the Federal Reserve continues to raise interest rate targets. On Monday, Chester County's DNB First Bank, based in Downingtown, posted new rates including 3 percent for FDIC-guaranteed, five-year, $1,000 certificates of deposit (up from 2.15 percent), and 2.35 percent for one-year CDs (up from 1.15 percent). Three-month CDs, for which the bank had been paying an annualized interest yield of just 0.05 percent -- just a nickel for every $100 — have been boosted to a full 1 percent — or a dollar for every $100. DNB First is one of a handful of U.S. community banks paying the nation's highest deposit rates, including Souderton-based `Univest (3 percent for four-year-and-11 month CDs, minimum $500), with big national companies including Capital One and Goldman Sachs' Marcus financial services also yielding 3 percent on similar deposits, according to data posted at Bankrate.com, NerdWallet and other sites that track bank rates." The piece adds, "Deposit yields have risen in the past two years, following a string of increases in the Federal Reserve Open Market Committee's targeted federal funds rate -- what the central bank charges commercial banks to borrow money -- to 2 percent this month, up from 0.25 percent in 2016. Banks don't automatically raise deposit yields when the Fed boosts its rates. Banks that hope to make more loans, tend to pay more for deposits. Banks use customer deposits as a source of cheap funding, lending the money at higher rates to homebuilders and mortgage borrowers and other loan customers, or investing in securities or fee-generating services. Deposit rates tend to go up when loan rates are also rising."
