Synchrony Bank Hikes Rates on Savings Account and CDs

Synchrony Bank increased rates on several of its deposit products today. Most noteworthy was a 25-bp rate hike on its High Yield Savings account which increased the rate to 0.85% APY. It’s the first major online bank to make such a large rate increase on its savings account in this current rate hiking cycle. Synchrony Bank, like other online banks, had been focusing on CD rate hikes. It’s nice to finally see a significant rate hike to an online savings account. Hopefully, it’ll spur similar rate hikes at the other online banks.

Synchrony Bank also increased rates of several of its CDs including its new No-Penalty CD. Most noteworthy is a rate increase of the 16-month CD Special to 2.00% APY. This is the highest rate for a CD with a term this short at a major online bank. Most of the CDs that had rate increases are shown below. The new APYs are shown in bold and are effective as of 5/19/2022. The previous APYs are noted inside parentheses.

The minimum deposit for Synchrony CDs and IRA CDs used to be $2,000, but it’s now $0. Synchrony’s CDs are also available as an IRA (Traditional and Roth) earning the same APYs, with the same funding requirements. The following table provides the current yields of the above CDs that had rate increases. Click on the “details” arrow to display the CD rate history and other details. For the full list of Synchrony Bank deposit rates, please refer to the rates section of our Synchrony Bank page.

Thanks to DA reader, tbc3, who posted news of these rate increases in the DA Forum.

Synchrony Savings and Money Market Accounts

The 25-bp rate increase of Synchrony Bank’s High Yield Savings account is a promising sign that online banks are prepared to keep their savings account rates inline with the federal funds rate. That was the case during the last rate hiking cycle.

This is the High Yield Savings account second rate hike this year. The first occurred on March 8th when the High Yield Savings account yield increased from 0.50% to 0.60%. The yield reached a bottom of 0.40% about a year ago. That lasted less than two months. The yield increased to 0.50% in May 2021 and remained at that level until last March.

Synchrony Bank also increased the rate of its Money Market account, but the rate increase was smaller (0.40% → 0.55% APY). Since 2013, the High Yield Savings account has maintained higher rates than the Money Market. The difference was the largest in 2019 when the High Yield Savings yield peaked at 2.25% while the Money Market yield peaked at only 1.20%.

The High Yield Savings account has no minimum balance requirement or monthly service fees. An optional ATM card is available and can be used at ATMs and for making purchases with a PIN. Synchrony Bank offers an ACH bank-to-bank transfer service that allows customers to link up to five accounts at other banks (per FAQ - It used to be ten.) Once the link is established, the customer can initiate electronic deposits and withdrawals to and from those external bank accounts.

Besides the interest rate, the difference between the two accounts is that the Money Market has check writing abilities, while the High Yield Savings account does not. When you open the Money Market account, you can choose to receive checks, which should be received in ten business days.

Synchrony Bank’s New CDs

On May 11th, Synchrony Bank launched two new CDs: the 24-month Bump-Up CD and the 11-month No-Penalty CD. Out of these two, only the No-Penalty CD had a rate increase today, rising 20 bps to 0.90%. The Bump-Up CD rate remains the same (1.40% APY).

The 11-month No-Penalty CD has the same features as Ally Bank’s 11-month No Penalty CD. Only a full withdrawal can be done. Partial withdrawals are not allowed. Also you’re allowed a penalty-free early withdrawal anytime after the first six days. The one difference between Ally and Synchrony is that Synchrony is currently only providing one way for requesting a closure (calling a CSR). Ally allows closures to be done via their online account management software.

Synchrony Bank added three new FAQs covering this No-Penalty CD. This FAQ provides the most information:

What's a No-Penalty CD?

A No-Penalty CD is a type of certificate of deposit account that gives you the opportunity to withdrawal your full account balance before the end of the CD term without an early withdrawal penalty. You can make an early withdrawal by calling our Bankers at 1-866-226-5638. Note: due to federal regulations, you can’t withdraw funds during the first six days of your account.

The 24-month Bump-Up CD has the same features as Ally Bank’s 24-month Raise Your Rate CD. You’re allowed only one chance to bump up the rate of the CD to the currently advertised rate on the Bump-Up CD. Once you request the rate bump, the new rate takes effect the same day and will continue until the remainder of the term.

Synchrony Bank added five new FAQs on this new Bump Up CD. This FAQ provides the most information:

What's a Bump-Up CD?

A Bump-Up CD is a certificate of deposit account that offers the opportunity to request a one-time annual percentage yield and interest rate increase or "bump up" during the term of the CD, effective the day you request the increase through the remainder of the term. When you request a "bump up" on your CD rate, you’ll receive the currently advertised rate on the Bump-Up CD term you currently have. You can request a rate increase by calling us at 1-866-226-5638 or by going to your account online, or in the Synchrony Bank app, selecting "Bump Up My CD."

I find it interesting that Synchrony provides an online and mobile option to request a rate bump-up on the Bump-Up CD, but it doesn’t provide an online or mobile option to request an early closure of the No-Penalty CD. Also, I’m surprised Synchrony only added one Bump-Up term. Ally Bank has always offered both a 2-year and 4-year term of its Raise Your Rate CDs. The 4-year term has two options to bump up the rate.

The fact that the 24-month Bump-Up CD yield is now 50 bps below the standard 24-month CD yield shows that the Bump-Up CD may not result in more interest earnings. If Synchrony Bank doesn’t keep this Bump-Up CD rate competitive, the bump-up feature may not be enough to offset the lower rates. Also, it’s not easy to decide when to request a bump up. If you decide too soon, you may miss out on much higher rates. On the other hand, if you wait too long, you have less time to earn the higher rate.

Synchrony CDs Features

Synchrony’s FAQs describe several important features of the CDs. Below are a few FAQs on CDs that I thought would be worth mentioning.

One downside with Synchrony Bank’s 16-month CD as compared with its 12-month CD (besides the longer term) is an early withdrawal penalty (EWP) that is double in size (180 days rather than 90 days of interest). The full details of the EWPs are described in Synchrony’s FAQs:

Q: Is there an early withdrawal penalty for CDs?

An early withdrawal penalty may be assessed if you make a withdrawal prior to the CD maturity date, which is the last day of the CD term. The penalty is applied to the amount of principal withdrawn (no penalty on interest). The bank does not charge an early withdrawal penalty on a CD for the death of an account owner with proper verification.

Penalty Amounts:

• Terms of 12 months or less: 90 days of simple interest at the current rate.
• Terms of more than 12 months but less than 48 months: 180 days of simple interest at the current rate.
• Terms of 48 months or more: 365 days of simple interest at the current rate.

The EWP only impacts early withdrawals of principal. As described in the following FAQ, interest can be withdrawn at any time without penalty:

Q: Can I withdraw my interest from a CD?

You can withdraw interest paid during your CD’s current term anytime without penalty. You can transfer the interest to a Synchrony Bank High Yield Savings or Money Market Account or a non-Synchrony Bank account. For help withdrawing your interest, call us at 1-866-226-5638.

There’s one FAQ on the 15-day rate guarantee period that changed in 2018. This FAQ now reads as follows:

Q: Are there rate guarantees for CDs?

The Bank will give you the CD interest rate in effect on the day the CD was opened as long as we receive and process your opening deposit on or before 15 calendar days from the opening date. We will not go by the postmark date of a deposit. If we receive your deposit within the 15-day period and the current rate for your CD term is higher on the date we receive and process your deposit, the Bank will give you the higher rate. Your interest rate is locked for the term of your CD once we receive and process your deposit.

For IRA CDs, the bank will give you the interest rate in effect on the day the CD was opened as long as we receive and process your opening deposit on or before 60 calendar days from the opening date and you are actively participating in the account opening process. This means all appropriate paperwork must be completed and that funding or appropriate account funding documents must be provided.

The rate guarantee is important for those who may have opened one of the above CDs in the past week or two. According to this current FAQ, “[y]our interest rate is locked for the term of your CD once we receive and process your deposit.” So if you opened one of the above CDs last Tuesday (May 10th), and Synchrony received and processed your deposit last week, you will not qualify for the new higher rate. However, if Synchrony received and processed your deposit today, you should receive the higher rate. Previously, the FAQ stated that “if the bank rates go up during the rate lock period, the Bank will give you the higher rate.”

Availability

Headquartered in Draper, Utah, Synchrony Bank is an internet bank that offers its services and product line to U.S. citizens and “U.S. lawful permanent residents” who are 18 years or older, have a permanent U.S. residential address, and possess a valid Social Security number.

Application

Synchrony Bank accounts can be opened online, but IRA and Trust accounts require paper forms. Funding an account can be done with an electronic funds transfer. This is done by providing Synchrony with the account number and routing/transit number of an external bank account. If Synchrony can’t automatically verify your external account, it’ll use a trial deposit system. Once the online application completes, Synchrony Bank will mail a welcome kit within 7 to 10 days. The welcome kit includes a signature card that must be signed and mailed back. In addition, the welcome kit includes a deposit slip. If you decide to fund the account with a check instead of an online transfer, a check must be mailed with the deposit slip.

The online application can accommodate up to four beneficiaries per account. Unlike some other financial institutions, Synchrony Bank does not require Social Security numbers for person beneficiaries: only name, address, and date of birth are necessary to add a beneficiary. Non-person beneficiaries can also be designated. Only equal allocations are allowed for the beneficiaries. Percentages cannot be specified. After your account is opened, beneficiaries can be managed online.

According to the CSR, there’s no hard credit inquiry that can ding your credit score. The CSR stated that they “only do soft inquiry to verify your identity."

Bank Overview

Synchrony Bank has an overall health grade of “B+" at DepositAccounts.com, with a Texas Ratio of 4.47% (excellent), based on December 31, 2021 data. In the past year, Synchrony Bank’s non-brokered deposits declined by $2.21 billion, which is below average for deposit growth, and is the main reason Synchrony’s overall health grade is below an “A”. Please refer to our financial overview of Synchrony Bank (FDIC Certificate # 27314) for more details.

Synchrony Bank can trace its origins to a brick-and-mortar institution, the Monogram Bank, USA, which was established in Ohio in 1988. From 1989 to 2014, the Bank moved its headquarters four times and re-branded five times, with the current name change occurring in June 2014. Prior to the name Synchrony Bank, the Bank was known as GE Capital Retail Bank, reflecting its tie to GE Capital, its parent company. In January 2013, GE Capital Retail Bank acquired the deposit base and online deposits business of MetLife Bank, N.A.

Currently, Synchrony Bank is the 40th largest bank in the country with assets in excess of $86 billion.

How the High Yield Savings Account Compares

When compared to nationally available Money Market Accounts and Savings Accounts tracked by DepositAccounts.com, that do not require large balances or direct deposit and do not have small balance caps, Synchrony Bank High Yield Savings rate currently ranks 12th.

How the 16-Month CD Special Compares

When compared to similar length-of-term CDs tracked by DepositAccounts.com which are available nationally and have minimum deposit requirements of $10k or less, only one bank has a higher rate than currently offered on the Synchrony Bank 16-month CD Special. The following table compares the 16-month CD to the two highest-rate CDs from credit unions and to the other two highest-rate CDs from banks.

How the 11-Month No-Penalty CD Compares

When compared to nationally available no-penalty CDs tracked by DepositAccounts.com, Synchrony Bank 11-month No-Penalty CD ranks fifth. Note, all terms are included for comparison. For no-penalty CDs, a longer term is more beneficial.

The above information and rates are accurate as of 5/19/2022.

To look for the best rates on liquid bank accounts, both nationwide and state specific, please refer to our Money Market Accounts Table and Savings Accounts Table. To look for the best CD rates, both nationwide and state specific, please refer to our CD Rates Table page.