Certificate of Deposit Market By Term Length (Short Term CDs, Medium Term CDs, Long Term CDs), Interest Rate Type (Fixed-Rate CDs, Variable-Rate CDs), Issuing Institution (Commercial Banks, Credit Unions, Online Banks), Region for 2024-2031

Published Date: August - 2024 | Publisher: MIR | No of Pages: 320 | Industry: latest updates trending Report | Format: Report available in PDF / Excel Format

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Certificate of Deposit Market By Term Length (Short Term CDs, Medium Term CDs, Long Term CDs), Interest Rate Type (Fixed-Rate CDs, Variable-Rate CDs), Issuing Institution (Commercial Banks, Credit Unions, Online Banks), Region for 2024-2031

Certificate of Deposit Market Valuation – 2024-2031

Saving up for those near-future dreams – like a car, vacation, or sprucing up the house – is a bigger deal than ever these days. But your regular savings account might not cut it if you want to reach those goals fast. That's where shorter-term Certificates of Deposit (CDs) can come in handy! They usually offer a better interest rate than savings accounts, so you can grow your money quicker and make those short-term goals a reality. This increased focus on short-term savings is really boosting the market, pushing it from USD 7.2 Billion in 2024 all the way to a USD 10.80 Billion by 2031.

Lately, you might notice banks are really trying to get CDs in front of specific groups of people. For instance, they might offer killer CD rates to retirees, who are often looking for a reliable income stream. Or, a bank might create a CD specifically for younger folks, maybe letting them put in small amounts regularly to reach a savings goal. This kind of targeted marketing helps different groups see CDs as a good option for saving, which brings new customers into the deposit market and helps it grow. As a result of this CD push, the market is expected to grow at a CAGR of 5% from 2024 to 2031.

Certificate of Deposit MarketDefinition/ Overview

Banks and credit unions provide Certificates of Deposit (CDs), which are a secure way to save money while earning a guaranteed interest rate. When you open a CD, you agree to deposit a specified amount of money for a set length of time, which might be anywhere from a few months to several years. In exchange for promising to keep your assets untouched for the stated period, the financial institution provides you with a fixed interest rate that is typically higher than what you would earn in a standard savings account.

Think of a CD as a promiseyou agree to lock away your money for a set term. If you need to take it out early, before the maturity date, expect a penalty – you might lose some or even all of the interest you've earned. The upside? CDs offer a guaranteed interest rate, so you know exactly what you'll get. This predictability is great for planning and budgeting because you can count on a specific return. Just remember, most CDs have a minimum deposit to open the account, and the amount can vary depending on the bank, the CD's length, and the offered interest rate. This deposit makes sure you're putting a specific amount into the CD.

CDs are generally considered a secure investment option because they are usually covered by government entities banks are insured by the Federal Deposit Insurance Corporation (FDIC), while credit unions are insured by the National Credit Union Administration (NCUA). This insurance protects depositors’ funds up to a specified sum in the event of a bank or credit union failure, giving investors peace of mind and security. Overall, CDs provide a secure way to store and grow your money while earning a guaranteed return on investment.

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How the High Interest Rate and Growing Economic Variables are Surging the Growth of Certificate of Deposit Market?

The high interest rates set by central banks or monetary authorities are surging the growth of certificate of deposit market. Higher interest rates typically lead to higher CD rates, as banks rely on deposits to sustain their lending operations. Economic variables such as GDP growth, inflation, unemployment, and consumer confidence all have an impact on CD demand. During difficult economic times or recessions, investors frequently flock to CDs for security and stability, which may increase demand and cut CD rates.

Okay, so how do CD rates actually get decided? Well, a lot goes into it! Think about the Federal Reserve making changes to interest rates or doing things like quantitative easing – that directly affects the interest rate landscape, and CD rates feel the impact. Plus, new regulations, like higher reserve requirements or changes to deposit insurance, can squeeze banks and affect what CD rates they can offer. Don't forget about us, the investors! Many are seeking those nice, secure, low-risk options, and that pushes CD demand. Of course, things like age, investment goals, and how much risk you can stomach all play a role in deciding if a CD is right for you. Finally, banks and credit unions are always battling it out for your deposits, so they sometimes offer special deals or promotional pricing to attract you, and that also influences those CD rates.

Market liquidity is another element that affects CD rates. Banks may hike CD rates during times of low liquidity to attract deposits and meet financial needs. Furthermore, Federal Reserve policies and pronouncements, particularly those concerning interest rate expectations and monetary policy, can influence investor sentiment and CD rates.

How are the Low Liquidity and Interest Rate Risk Impeding the Growth of the Certificate of Deposit Market?

The lack of liquidity that investors perceive as a restraint for the certificate of deposit market.  This lack of flexibility causes problems if investors need to access their cash before the CD matures. Furthermore, while committing to a CD, investors suffer interest rate risk, which means they may miss out on potentially higher market returns if interest rates rise after they purchase the CD. Banks apply early withdrawal penalties, which can reduce profits and discourage investors from withdrawing funds before maturity.

Furthermore, CDs may not offer significant protection against inflation risk, particularly during periods of severe inflation. CD returns may not match the rate Inflation causes a progressive depreciation of purchasing power for investors. Another factor is opportunity costby devoting funds to CDs, investors miss out on the potential for higher returns given by alternative investment vehicles, especially during periods of strong economic growth or rising interest rates.

Competition from alternative fixed-income vehicles, such as bonds, Treasury securities, and money market accounts, complicates the CD market. CDs’ relative attractiveness compared to other assets may change based on investor preferences and market conditions. Additionally, regulatory requirements such as reserve ratios and capital adequacy rules may limit banks’ capacity to provide competitive CD rates. Changes in the legislative landscape might affect the availability and terms of CDs, influencing investor decisions and market dynamics.

Category-Wise Acumens

How Specific Saving Goals are Surging the Growth of Short-term CDs Segment in the Certificate of Deposit Market?

Right now, short-term CDs are totally winning the certificate of deposit game, and experts think that's going to keep happening. You know, these short-term Certificates of Deposit (CDs)? They're perfect for folks who have goals, like saving up for that sweet new car, a dream vacation, or just building a solid emergency fund. They're a hit with people who don't like taking big risks because they offer a guaranteed return pretty quickly, offering some serious protection and making you feel secure. Plus, short-term CDs are an easy way to stash cash between bigger investments, giving you a steady, predictable return on money you might not need instantly.

Sure, short-term CDs might not pay as much interest as their longer-term cousins, but they still offer a better return than your average savings account. That makes them pretty attractive if you're trying to get the most out of your savings while still needing access to your cash. Think of them as a sweet spotyou can get to your money (though maybe with a small penalty if you withdraw early) and still see a guaranteed return on your investment. Plus, they're super popular because they're perfect for those short-term savings goals, and some folks just like knowing they can grab their money when they need it. Now, if you're thinking a bit further ahead, medium-term CDs could be your jam. They strike a great balance between potential earnings and how long your money's tied up, which is awesome if you've got some mid-term financial goals in mind.

How the Predictability and Variable-Rate are Fostering the Growth of Fixed-rate CDs Segment in the Certificate of Deposit Market?

Fixed-rate CDs segment dominates the certificate of deposit market owing to the offer predictability and is preferred by risk-averse investors who value capital preservation and consistent returns. However, variable-rate CDs represent a niche area, which may be appealing at periods of projected interest rate increases. Variable-rate CDs have interest rates that fluctuate according to market conditions, allowing investors to possibly profit from larger returns as interest rates rise. While variable-rate CDs provide more flexibility, they are less popular due to the uncertainty associated with changing interest rates and many investors’ preferences for stability.

During times of economic uncertainty or when interest rates are expected to remain stable or fall, Certificates of Deposit (CDs) become a popular alternative for investors seeking safety and predictability in their returns. Fixed-rate CDs provide peace of mind by assuring the exact return at maturity. This feature makes them ideal for investors who have specific savings goals that necessitate a steady level of profits, such as saving for a large purchase or creating an emergency fund.

Gain Access to Certificate of Deposit Market Report Methodology

Country/Region-wise Acumens

How the Strong Economy and Healthy Banking Sector is Surging the Growth of the North American Certificate of Deposit Market?

The certificate of deposit (CD) market in North America is experiencing a strong boom, driven by current low interest rates, which are bolstered by a strong economy and a healthy banking sector. These low interest rates have encouraged investors to seek refuge in CDs, seeing them as a safe and stable investment option in the face of economic turmoil. As a result of the increased demand for CDs, their prices have risen, reflecting investors’ need for portfolio stability.

Also, the strength of the economy has played an important part in the CD market’s growth. With more people having access to discretionary income, there’s an increasing trend toward investing in CDs as a sensible low-risk option. Furthermore, the banking system’s stability is inspiring confidence in investors, allowing banks to provide competitive rates and terms, and accelerating the CD market’s growth pace.

Furthermore, the strength of the economy has played a pivotal role in fostering the CD market’s expansion. With more individuals having access to disposable income, there’s an increased inclination towards investing in CDs as a prudent and low-risk option. Moreover, the stability of the banking system has instilled confidence among investors, facilitating banks to offer competitive rates and terms, thus further fueling the growth momentum of the CD market.

How Low Interest Rates and a Strong Economic Outlook are Enabling the Growth of the Europe Certificate of Deposit Market During the Forecast Period?

The certificate of deposit (CD) industry in Europe is expected to be the fastest growing region in the certificate of deposit market during the forecast period owing to the presence of low interest rates, along with rising consumer confidence and a strong economic outlook, bolsters the appeal of CDs as an investment vehicle. The ECB’s monetary policy stance has played an important role in promoting this economic trajectory. By implementing and sustaining a low-interest rate environment, the ECB has encouraged banks to provide competitive CD rates, resulting in increased investor interest and demand.

Furthermore, the ongoing economic recovery in the European Union (EU) has greatly boosted the CD market. Consumer confidence is on the rise as the EU’s economic picture continues to improve and grow, resulting in a greater demand for safe investment products such as CDs. Concurrently, the growing popularity of Internet banking has emerged as another impetus for the CD market’s expansion. The convenience and accessibility provided by internet banking platforms has made it easier for customers to investigate and invest in CDs, hence increasing demand.

However, fluctuations in interest rates remain a crucial factor influencing the relative attractiveness of CDs vis-à-vis alternative investments. Moreover, potential regulatory shifts or harmonization within the European Union could significantly impact the CD market dynamics across the region. On the technological front, the pervasive digital transformation, marked by the rising adoption of online and mobile banking, is poised to render CDs more accessible and convenient for investors, potentially broadening their participation in the market.

Competitive Landscape

The certificate of deposit market is a competitive landscape where traditional players and emerging forces vie for customer deposits. By offering competitive rates, diverse product options, a strong brand image, and convenient digital platforms, financial institutions can effectively compete and attract savers seeking a safe and secure way to grow their money.

The organizations are focusing on innovating their product line to serve the vast population in diverse regions. Some of the prominent players operating in the certificate of deposit market include

  • Bank of America
  • Wells Fargo
  • JPMorgan Chase
  • Citibank
  • Goldman Sachs
  • Capital One
  • S. Bank
  • TD Bank
  • Ally Bank
  • Discover Bank

Latest Developments

  • In July 2020, Goldman Sachs announced a partnership with Folio Financial Inc. that combines Goldman Sachs’ decades of experience providing execution, clearing, and custody services to institutional and ultra-high net worth clients with Folio’s cutting-edge technology offerings in the RIA market.
  • In August 2020, JPMorgan Chase & Co. announced the acquisition of InstaReM this will increase the bank’s payment offerings for healthcare customers, providers, and payers. InstaMed’s secure, centralized platform addresses several difficulties in the healthcare payments business, with a special emphasis on eliminating paper, improving the consumer financial experience, and lowering collection costs.

Report Scope

REPORT ATTRIBUTESDETAILS
Study Period

2021-2031

Growth Rate

CAGR of ~5% from 2024 to 2031

Base Year for Valuation

2024

Historical Period

2021-2023

Forecast Period

2024-2031

Quantitative Units

Value in USD Billion

Report Coverage

Historical and Forecast Revenue Forecast, Historical and Forecast Volume, Growth Factors, Trends, Competitive Landscape, Key Players, Segmentation Analysis

Segments Covered
  • Term Length
  • Interest Rate Type
  • Issuing Institution
Regions Covered
  • North America
  • Europe
  • Asia Pacific
  • Latin America
  • Middle East & Africa
Key Players

Bank of America, Wells Fargo, JPMorgan Chase, Citibank, Goldman Sachs, Capital One, S. Bank, TD Bank, Ally Bank, Discover Bank

Customization

Report customization along with purchase available upon request

Certificate of Deposit Market, By Category

Term Length

  • Short Term CDs
  • Medium Term CDs
  • Long Term CDs

Interest Rate Type

  • Fixed-Rate CDs
  • Variable-Rate CDs

Issuing Institution

  • Commercial Banks
  • Credit Unions
  • Online Banks

Region

  • North America
  • Europe
  • Asia-Pacific
  • South America
  • Middle East & Africa

Research Methodology of Market Research

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Reasons to Purchase this Report

We take a look at the market using both numbers and deeper insights, breaking it down into segments considering things beyond just the economy. You'll get the market value (in USD Billion) for each of these segments and smaller sub-segments. We'll point out which region and segment we think will grow the fastest and be the biggest overall. Our analysis will show you how the product/service is being used in different regions and what's impacting the market there. We'll also map out the competitive landscape, showing you where major players rank, along with their new service/product launches, partnerships, expansions, and acquisitions over the last five years. You'll get detailed profiles of these companies, including an overview, insights, product comparisons, and a SWOT analysis. Expect a look at the industry's present and future, considering recent happenings like growth opportunities, driving forces, challenges, and restraints in both new and established areas. We dig deep with Porter's five forces analysis and give you a good understanding of the Value Chain. Finally, we'll cover market dynamics and future growth opportunities, plus offer 6 months of analyst support after the sale to answer your questions.

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Pivotal Questions Answered in the Study

Some of the key players leading in the market include Bank of America, Wells Fargo, JPMorgan Chase, Citibank, Goldman Sachs, Capital One, S. Bank, TD Bank, Ally Bank, and Discover Bank, among others.

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