Less than a month after hiking its 1-year certificate of deposit yield to 5.5%, SLM – or Sallie Mae – has cut its sweetened rate back down. The annual percentage yield on the bank’s 1-year CD is now 5.1%, a 40-basis point trim. A basis point is equal to one one-hundredth of a percent.

At the time, the 5.5% rate made Sallie Mae’s 1-year CD the most generous offered by the banks under Wells Fargo’s coverage. That title now belongs to Bread Financial, which now pays a 5.5% yield on the instrument – and a 5.55% yield for customers who want to renew their 1-year CDs.

Select banks have boosted deposit rates as the Federal Reserve has tightened its monetary policy since March 2022. Over the last two weeks of August, the average highest rate paid on CDs grew by another 8 basis points, according to Morgan Stanley analyst Betsy Graseck. She also anticipates that deposit betas – a measure of how much savers are pocketing due to the Fed’s policy changes – will continue to rise until after the central bank cuts rates.

“Applying the forward curve where the Fed does not cut until early 2024, deposit costs likely won’t start declining until the middle of next year,” Graseck wrote in a research note. In turn, banks will face pressure on deposit costs as they contend with increased competition from Treasurys and money market funds, as well as other institutions rolling over maturing CDs at yields exceeding 5%, she added.