Popular Direct is paying 4.50% annual percentage yield on its three-, four- and five-year certificates of deposit this week, and CFG Bank offers a flat 4.30% across every term from one year to five. The average saver, by contrast, earns just 0.38% in a standard savings account, a Federal Deposit Insurance Corp. benchmark that has barely moved in years. That 4.12-percentage-point gap has widened rather than closed in recent weeks, even as three sitting Federal Reserve governors just voted to raise interest rates rather than lower them, an unusual dissent that could push deposit yields higher still.
Popular Direct and CFG Bank Lead an August Rate Climb, Not a Retreat
The jump in top-tier yields reflects an active summer of increases rather than the pullback many banks made in the first half of 2026. Popular Direct is paying 4.50% APY on its three-, four- and five-year certificates, the highest rate in NerdWallet’s current survey of roughly 100 institutions. NASA Federal Credit Union raised its 49-month certificate to 4.40%, and Sallie Mae lifted nine of its certificate rates on August 26 alone, pushing its five-year offer from 4.35% to 4.40%. Marcus by Goldman Sachs raised six rates on August 19, moving its 18-month certificate from 3.80% to 4.30% in a single adjustment, and CFG Bank raised all four of its terms by 13 to 25 basis points on August 11.
The scale of the shift shows up in the tally, not just the headline numbers. About 35 institutions raised certificate rates in June and roughly 60 did so in July, nearly double the number that cut, reversing a trend that had pushed rates down at the start of 2026 after three Fed rate cuts in late 2025. Short-term certificates are still the most competitive: a three-month certificate at OMB Bank pays 4.05%, and a six-month certificate at Happen Bank pays 4.20%, both ahead of many one-year offers.
That short-term strength carries a tradeoff most savers overlook. A six-month certificate at 4.50% and a one-year certificate at 4.00% look like a clear win for the shorter term, but the shorter certificate only earns interest for half as long. A $10,000 deposit in the six-month certificate earns roughly $220 before it matures and has to be reinvested at whatever rate is available then, while the same $10,000 in the lower-rate one-year certificate earns closer to $400 by locking in a known return for the full year.
Credit unions extend the same pattern under a different name. Not-for-profit institutions such as NASA Federal Credit Union offer share certificates rather than certificates of deposit, but the mechanics and the current rate direction are identical: automatic rate increases through the summer, competitive multi-year terms, and federal deposit protection through the National Credit Union Administration rather than the FDIC.
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A 0.38% National Figure Is a Deposit-Weighted Average, Not a Ceiling
The FDIC calculates its national rate by weighting what every insured bank and credit union pays on a given product by that institution’s share of domestic deposits, which means the largest brick-and-mortar banks effectively anchor the number even when their own accounts pay far less than it. A large national bank’s standard savings account can pay as little as 0.01% APY, a rate that would need to be 38 times higher just to match the current 0.38% national average, let alone the 4.50% top-tier certificates now on the market.
The same skew runs through every deposit category the FDIC tracks. One-year certificates average 1.71% nationally, three-year certificates average 1.34%, five-year certificates average 1.36%, money market accounts average 0.63% and interest checking accounts average just 0.07%. Each of those averages sits at a fraction of what online banks and credit unions are currently advertising for the same term, because the mean blends thousands of legacy accounts that have not repriced against the trillions held in giant retail banks’ low-cost deposits.
The dollar difference compounds quickly even without much principal. Five thousand dollars parked at 0.01% APY earns about $1 in a year, leaving a balance of $5,001. The same $5,000 at a competitive 4% APY earns roughly $204, a gap of more than $200 on a single account with no additional risk, since both balances carry the same federal deposit insurance up to $250,000 per depositor.
A September Fed Meeting Now Carries the Opposite Risk From What Savers Expect
The Federal Open Market Committee voted 9-3 on July 29 to hold the federal funds rate at a target range of 3.50% to 3.75%, but the dissent ran in the direction few expected. Governors Beth Hammack, Neel Kashkari and Lorie Logan voted against the hold because they wanted to raise the rate by a quarter point at that meeting, not cut it, citing inflation still running above the Fed’s 2% goal amid supply shocks tied to energy prices and the conflict in the Middle East.
The committee’s next scheduled meeting falls on September 15 and 16, one of four meetings this year paired with a fresh set of economic projections. A quarter-point increase there would be the Fed’s first hike since it cut rates three times in 2024 and three times again in 2025, and banks that have already lifted certificate rates through June, July and August would have fresh cover to keep pushing offers past the current 4.50% ceiling.
The outcome of that debate stays unresolved until the vote is counted in September. If the three dissenting governors get the increase they wanted, banks with room to compete would likely stretch the gap between top certificates and the FDIC’s savings benchmark even further past four percentage points. If the committee holds again instead, the spread that already exists today does not depend on that decision at all: a certificate paying 4.50% versus a savings account paying 0.38% is a gap available for the taking on any day the two rates are published side by side.
This article was researched and drafted with the assistance of artificial intelligence.
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