Your Evening Briefing: Banks Are Finally Fighting for Your Money
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US banks are being forced to do something they haven’t done for 15 years: fight for your money. After years of earning next to nothing, depositors are discovering a trove of higher-yielding options like Treasury bills and money market funds as the Federal Reserve ratchets up benchmark interest rates. The shift has been so pronounced that deposits at commercial banks fell last year for the first time since 1948, with net withdrawals hitting $278 billion. So in a bid to stem those outflows to better paying options, banks are grudgingly lifting their rates from rock-bottom levels, particularly when it comes to certificates of deposit. More than a dozen US lenders including Capital One are now offering an annual percentage yield of 5% on one-year CDs, a rate that would have been unspeakably high two years ago. Even the big banks are feeling the heat: At Wells Fargo, 11-month CDs now pay 4%.
Cash is indeed king in 2023. That’s the verdict of the 404 professional and retail investors who took part in the latest MLIV Pulse survey. Two-thirds of respondents said the cash in their portfolios would bolster rather than drag down their performance in the year ahead.