On December 15, 2020, the FDIC Board of Directors approved a Final Rule - PDF making certain revisions to the interest rate restrictions applicable to less than well capitalized institutions (as defined in Section 38 of the Federal Deposit Insurance Act), which are effective on April 1, 2021. The interest rate restrictions generally limit a less than well capitalized institution from soliciting deposits by offering rates that significantly exceed rates in its prevailing market.
The Final Rule redefined the “national rate” as the average of rates paid by all insured depository institutions and credit unions for which data is available, with rates weighted by each institution’s share of domestic deposits. The “national rate cap” is calculated as the higher of: (1) the national rate plus 75 basis points; or (2) 120 percent of the current yield on similar maturity U.S. Treasury obligations plus 75 basis points. The national rate cap for non-maturity deposits is the higher of the national rate plus 75 basis points or the federal funds rate plus 75 basis points.
A less than well capitalized institution may use the “local rate cap” in place of the national rate cap for deposits gathered from within the institution’s local market area. The Final Rule redefined the “local rate cap” for a particular deposit product as 90 percent of the highest rate offered on the deposit product by an institution or credit union accepting deposits at a physical location within the institution’s local market area.
In accordance with Section 337.7(d), an insured depository institution that seeks to pay a rate of interest up to its local market rate cap shall provide notice and evidence of the highest rate paid on a particular deposit product in the institution’s local market areas to the appropriate FDIC regional director. The institution shall update its evidence and calculations for existing and new accounts monthly unless otherwise instructed by the appropriate FDIC regional director, and retain such information available for at least the two most recent examination cycles and, upon the FDIC’s request, provide the documentation to the appropriate FDIC regional office and to examination staff during any subsequent examinations.
Monthly Rate Cap Information as of December 20, 2021
|Deposit Products 1||National Deposit Rates 2||National Deposit Rates
Rate Cap Adjusted
|Treasury Yield 3||Treasury Yield
Rate Cap Adjusted
|National Rate Cap|
|1 month CD||0.03||0.78||0.11||0.88||0.88|
|3 month CD||0.06||0.81||0.05||0.81||0.81|
|6 month CD||0.09||0.84||0.10||0.87||0.87|
|12 month CD||0.13||0.88||0.24||1.04||1.04|
|24 month CD||0.17||0.92||0.52||1.37||1.37|
|36 month CD||0.21||0.96||0.81||1.72||1.72|
|48 month CD||0.22||0.97||N/A||N/A||0.97|
|60 month CD||0.28||1.03||1.14||2.12||2.12|
The FDIC began posting the National Rate and Rate Cap on May 18, 2009. Data is not available prior to May 18, 2009. Data from May 2009 through March 31, 2021, reflects the calculation in effect at that time (averages weighted by branch, and not including credit unions), while data posted after March 31, 2021, reflects the calculation described above.
This historical data can be accessed at Previous Rates.
The monthly rate cap information will be published every 3rd Monday of each month. When the 3rd Monday falls on a Federal holiday, the rate cap information will be published on the next business day. All published rates and yields are based on information available on the last business day of the prior month end (note: rates and yields published on April 1, 2021, are based on information available as of February 26, 2021).
1If an institution seeks to offer a product with an off-tenor maturity that is not offered by another institution within its local market area, or for which the FDIC does not publish the national rate cap, the institution will be required to use the rate offered on the next lower on-tenor maturity for that deposit product when determining its applicable national or local rate cap, respectively. For example, an institution seeking to offer a 26-month certificate of deposit must use the rate offered for a 24-month CD to determine the applicable national or local rate cap.
2 Source: S&P Capital IQ Pro; SNL Financial Data. Calculations: FDIC. Savings and interest checking account rates are based on the $2,500 product tier, while money market and certificate of deposit rates represent an average of the $10,000 and $100,000 product tiers. Account types and maturities published in these tables are those most commonly offered by the banks and branches for which we have data (on-tenor maturities).
3 The treasury yields (treasury.gov) are those published by the U.S. Department of the Treasury with the same maturities as the listed CD tenors. For non-maturity deposits, where there is no comparable treasury yield, the yield used is the effective federal funds (newyorkfed.org) rate published by the Federal Reserve Bank of New York. Note: the US Treasury does not publish a 4-year Treasury rate.
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