CD Rates at Banks that are Subjected to the Federal Reserve’s Bank Stress Tests

Most of the 18 banks that have to be subjected to the Federal Reserve's stress test don't offer CD rates on the high end of rates available. Though that might change since the Federal Reserve has just completed their bank stress tests and the results might have some bearing on rates these banks offer.

While none of the 18 biggest bank holding companies failed the test, a majority of the banks might feel a need to increase their capital. Banks usually increase capital by increasing CD interest rates, savings rates, and other deposit rates to make it more attractive to deposit money into their bank.

When the stress test was applied, 10 of the 18 banks just barely have the minimum capital. If there is a recession worse than what the Federal Reserve uses in the stress test, these banks would have to raise capital in order to survive. Following is the list of 10 banks that just meet the minimum capital requirement after the tests are applied.

• Ally Bank
• U.S. Bancorp
• Suntrust
• Wells Fargo
• Regions Financial Corporation
• The PNC Financial Services Group Inc
• Keycorp
• Fifth Third Bancorp
• Capital One Financial Corporation
• BB&T Corporation

Right now none of these banks seem to be interested in attracting deposits since the rates they are offering on certificates of deposit are low. That is, except for Ally Bank, which has consistently been offering CD rates that are in the top 5 best available rates at any given time. The largest of these banks, Wells Fargo, is currently offering 1 year bank CD rates at a dismal 0.05 percent - you're better off stuffing your money in a mattress.

Of the 10 banks, Ally Bank has the highest 12 month certificate of deposit rate. Ally Bank CD rates on 1 year CD accounts are currently at 0.94 percent. You can see Ally's rate is much better than Wells Fargo's rate and much higher than the FDIC national average rate of 0.22 percent. The same is true for all of Ally Bank CD rates, higher than the averages and higher than the banks listed above.

The banks that would have the minimum capital requirement in the test might increase their deposit rates in the coming weeks and months. I don't expect these banks to start offering rates higher than Ally Bank's rate unless they are really serious about increasing their capital.