Metro Areas Where Residents Love Certificates of Deposit

Certificates of deposit (CDs) have long been a great place to stash your savings, especially for conservative investors who want a guaranteed yield. But who are these conservative savers, and where do they live?

In this study, DepositAccounts looked at the percentage of households owning CDs in the 100 largest metros in the U.S. to gauge where this investing product is most — and least — popular.

Until only a few months ago, 1-year CD yields were reaching as high as 3.00%. But CDs as a whole are coming off their recent highs. The federal funds rate hasn’t had a boost since December 2018, and we’re even starting to see the best CD rates decline.

This doesn’t mean that CDs have suddenly become a poor investment. In fact, we found that the households with the most money tend to favor CDs even more. Read on to see where your city ranks.

Key findings

• Among the 100 largest U.S. metros, San Francisco came out on top, with 25.4% of households owning certificates of deposit.

• That’s more a little more than twice as many households, on a percentage basis, than Greensboro, N.C., our bottom-ranked city, where only 12.5% of households own CDs.

• Typically, households in large cities are more likely to sock money away in CDs. Chicago, Los Angeles, New York and Washington, D.C. — among the 10 largest metros in the U.S. — all make our list of top 10 cities where people own CDs.
• There are some exceptions, of course. Odgen, Utah ranks No. 4 in the nation for CD saving: 21.9% of Ogden households have CDs. Note that Ogden is the smallest city on the list of the 100 largest U.S. metro areas.
• Variability in local CD rates may explain some of the difference, as the highest rates available by state can vary by as much as one percentage point. In fact, in Jan. 2019, Utah had the highest average local 1-year CD yield in the country.

Big cities love CDs

This heat map illustrates the differences in CD ownership among the top metro areas in the U.S. The larger cities along the coasts, like Los Angeles and New York City, fall on the higher end of the spectrum, while smaller metro areas in the South and Midwest have fewer CD-owning households.

“My guess is that it's correlated with savings,” says Ken Tumin, founder of DepositAccounts.com. “The richest households will be the ones who invest most in CDs.” Taking this analysis into account, the data suggests that the richest households are in the big cities along the West and East coasts, with an occasional smattering of households in between.

As for why CDs would be so appealing, CDs provide a more conservative and secure place to stash savings compared to, say, mutual funds. This would allow households who have a lot of money to set aside to keep some of their principal safe.

Methodology:

DepositAccounts looked at the 100 largest U.S. metros to find the cities with the highest percentage of households that own certificates of deposit, according to S&P Global in 2019.