A new bank has joined the 5% club, handing savings account depositors a hefty yield on their idle cash. Bread Financial is the latest bank to offer 5% annual percentage yield to its savings account clients, hiking its rate 10 basis points. A basis point is equal to one-hundredth of a percent. Bread’s move to boost its yield makes it the first online bank under Wells Fargo’s coverage to reach 5%, said analyst Michael Kaye. Marcus by Goldman Sachs also recently raised its online savings account rate 15 basis points, now offering a yield of 4.3% on savings accounts. Select banks have raised their yields since the Federal Reserve embarked on its rate-hiking campaign in March 2022. An array of otherwise boring instruments — Treasurys, certificates of deposit, money market funds and savings accounts — have since become much more interesting to investors who want to earn a few bucks from their cash holdings. Other banks that are offering upward of 5% APY on deposits include Popular Direct , now paying 5.15%, and CIT Bank , yielding 5.05%. Be aware that while CDs allow you to lock in higher yields for a specified period, banks can adjust the yield they pay for savings accounts at any time. The good times will keep rolling — for now, analysts say. “We still expect online bank rates will continue climbing even after the Fed stops raising its rates,” wrote Vincent Caintic, analyst at Stephens. “On 2Q23 earnings calls, online banks have called for accelerating deposit betas in 2H23 of approximately 10% points, taking down [net interest margin] guide as a result.” — CNBC’s Michael Bloom contributed to this story.
