MRI Study Shows Teeter Totter Effect of CD Deposits

Dr. Dan Geller
Market Rates Insight

Tom Woolf
Market Rates Insight
(415) 259-5638

A new analysis from Market Rates Insight (MRI,, a leading research firm that tracks rates for deposits, loans, and fees for financial institutions, reveals how depositors shift their deposit balances from short-term CDs (three-months or less) to long-term CDs (over one year) based on the premium paid on the three-month CD. 

The premium of three-month CDs has a very strong and significant negative relationship to the balance of CDs over one year.  When this premium goes down the balance of CDs over one year goes up, and vice versa.  In all other cases, when premiums go down, balances go down as well. Moreover, since the balances of CDs in general are going down, we know that the fluctuation of the balances of long-term CDs is not “new money” but rather dollars shifted from shorter-term CDs.

“Short-term CD depositors are willing to trade liquidity for longer terms when the premium paid on a three-month CD is shrinking and vice versa.” said Dan Geller, Ph.D. Executive Vice President at Market Rates Insight. “This means that institutions can control the balance level of their longer-term CDs by increasing or decreasing the premium paid on their three-month CD.”

Over the past six years premiums of three-month CDs have fluctuated from a low of 49 basis points (bps) in July 2004 to a high of 199 bps in October 2007, and back down to 57 bps in March 2010.  At the same time, balances of CDs with terms over one year fluctuated from $245 billion in March 2004 down to $175 billion in February 2007 and back up again to $369 billion in March of 2010.

The complete analysis can be viewed at:


About Market Rates Insight

For more than two decades, Market Rates Insight (MRI) has been helping subscribers price with precision by providing banks, thrifts, credit unions, and other financial institutions with accurate market intelligence on deposits, loans, and fees. MRI uses deposit surveys, mortgage and consumer loan surveys, fee and feature studies, scanned ads, new product alerts, and market share and money fund reports to give subscribers the intelligence they need to profitably react to emerging trends. MRI’s products include customized, web-enabled market research tools that report on rates, as well as online searchable databases, gauges, alerts, and dashboards that aggregate key client data to provide real-time views on how they stack up against market competitors.

Market Rates Insight is located in San Anselmo, California. For more information, see

More News