Finance
US Banks Are Finally Being Forced to Raise Rates on Deposits
- Deposits declined last year for first time since 1948
- Rising funding costs for banks seen weighing on profit growth
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US banks are being forced to do something they haven’t done for 15 years: fight for deposits.
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 commercial bank deposits fell last year for the first time since 1948 as net withdrawals hit $278 billion, according to Federal Deposit Insurance Corp. data.