Why Chase CD Rates still lag behind online banks

While Chase cds remains almost unchanged in June from May, it does contrast significantly with online providers like Ally Bank which has its at 5 year at 3% and Chase at 1.55%, a difference of 1.45%.

While this may look a case of online banks being significantly more competitive with deposit products one has to consider the other products as well. Chase wishes to be competitive with mortgages with its fixed 30yr APR at 3.940%* (.78 pts) and 15 year fixed rate at 3.517% (.975 pts), while Ally Bank rates are 3.842% (0.61 pts) and 3.295% (.65 pts).

Its a case of interest margins with Chase require their products to be priced less competitive that some online banks, however their cds and mortgage products are competitive with other branch based banks.

A recent Retuers article recently highlighted that deposit growth at Chase, which is the largest U.S. bank by assets, has its deposit rate of growth slowing as their customers withdraw some of their money and put it into competing banks that pay higher yields.

While it may be a case of being slow to increase deposits can increase profitability, but its likely that while Fed rates are increasing, mortgage rates have becoming very competitive, capital requirements, increasing environment of compliance (CRS) costs of millions of customers as well as maintaining a large branch network across the US remaing some of the key drivers of the bank.

*Rates from Chase.com* as at 05/31/19 09:30 AM ET