Savers could be big winners after SVB collapse

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Some financial institutions are raising yields on some of their deposit accounts after fears of a potential bank following the failures of Silicon Valley Bank and Signature Bank (SBNY).

In an unusual move on Saturday, Ally Bank (ALLY) raised the annual percentage yield on its 11-month no-penalty certificates of deposit, or CDs, to 4.75% from 4%, according to an industry analyst. On Monday, UFB Direct – the online division of Axos Bank (AX) – hiked rates on its money market and savings accounts from 4.55% to 5.02%.

And Synchrony Bank (SYF), Discover (DFS), and Charles Schwab (SCHW) all came out with higher rates on Monday on brokerage CD offerings, even as Treasury yields — which follow those rates — fell.

These moves provide an opportunity for savers to capitalize on bank shocks by securing higher rates of money for emergencies or other measures.

“It’s interesting,” Ken Tumin, senior industry analyst at LendingTree and founder of by LendingTree, said of the bank’s moves recently. “It seems to be a proactive way to offset any potential outflow of deposits.”

“We price our products to be competitive with others in order to attract customers,” a Synchrony spokesperson told Yahoo Finance. Discover declined to comment, while the remaining Yahoo Finance contacted for comment did not immediately respond.

San Diego, CA, USA – July 9, 2022: Exos Bank is headquartered in San Diego, CA, USA. Exos Bank is an American federally chartered savings and loan association and direct bank.

The rate hike on deposit accounts comes after regulators took over Silicon Valley Bank on Friday and Signature Bank over the weekend, marking the second and third largest bank failures in US history.

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SVB faced a liquidity crisis when its customers – fearful of uncertainty on the bank’s balance sheet – withdrew their money in large numbers. But the bank could not cover the deposits by selling its assets at a loss. Signature Bank, which served crypto customers, soon followed.

The collapse triggered a selloff in regional bank stocks this week, which put those institutions on high alert for subsequent bank raids. it’s a Wonderful Life,

Tumin said capping how much deposit accounts earn is one way can encourage customers to keep money in their accounts. Some media outlets reported that Big banks have seen huge inflows in recent timesPotentially from customers who have lost faith in other institutions.

Tumin also speculated that some of these are raising rates to attract new, small-dollar deposits that are below the FDIC insurance limit of $250,000.

that have multiple business accounts or uninsured accounts want to diversify their deposits and receive more small deposits,” he said.

“If their balance sheet includes a high percentage of uninsured deposits, it will be scrutinized by investors and perhaps even regulators. Therefore, they are incentivized to tactfully make smaller deposits.”

Whatever the reason, savers can be rewarded. It pays to shop around in the coming weeks, Tumin said, especially as more rethink their offerings and compete against each other.

One last piece of advice from Tumin when opening a deposit account: “Keep it under $250,000.”

Janna is the Personal Finance Editor for Yahoo Finance. follow him on twitter @JannaHerron,

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