Sallie Mae hikes yield on 1-year CDs as Fed stays in rate policy holding pattern

As the market awaits expected interest rate cuts from the Federal Reserve this year, at least one consumer finance company has gone in the opposite direction — raising rates on its one-year certificates of deposit. Last week, Sallie Mae boosted the annual percentage yield for its 12-month CD by 10 basis points, or 0.10% week over week, to 5.15%. That brings it in line with LendingClub and below Bread Financial 's 5.25% APY.

"Broadly we still expect online bank deposit rates to decline," BTIG's Caintic said. "Management commentary on public webcasts this week continue to cite expectations for decelerating spending and lending, implying less deposit demand and therefore less need to pay up for deposits." While CDs offer attractive income, experts have cautioned about hoarding too much cash because of those expected declines.

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