"The deposit interest rate has dropped again. After going to several bank branches, it is difficult to find deposit products with interest rates above 2%. " Recently, Ms. Wang from Beijing sighed to reporters that several bank branches she often went to have lowered their deposit interest rates around May Day. "The longer the deposit time, the less cost-effective it is. The interest for 5 years is not as good as depositing for more than 3 years."

Since the beginning of this year, the trend of deposit interest rate reduction has continued. The Financial Times reporter noticed that since April, more than 20 commercial banks have lowered the interest rate on fixed deposits. After the adjustment, "high interest deposits" with interest rates above 3% are no longer found in the market, and bank deposit interest rates have fully moved towards the "1 era".

Deposit interest rates move towards the "1 era" in full swing

"Before May Day, our bank just lowered the deposit interest rate, and now it starts with one word." The account manager of a branch in Ping An Bank in Beijing told reporters that after the adjustment, the bank's 1-year, 2-year and 3-year fixed deposit interest rates were 1.6%, 1.7%, and 1.65%, respectively, and 5-year deposits were suspended.

The Financial Times reporter noticed that since the major state-owned banks once again lowered the interest rate of RMB deposits in October last year, a new round of deposit "interest rate cuts" are continuing to advance.

While national banks lowered deposit listing rates, rural banks and private banks, which were once regarded as the "highland" of deposit interest rates, have recently joined the queue of "interest rate cuts". Judging from the adjusted deposit interest rate level, the deposit interest rate advantages of the above two types of banks are gradually disappearing.

On April 27, Qingxu Rural Commercial Bank issued an announcement on the adjustment of RMB deposit execution interest rate. After the adjustment, the bank's actual execution interest rates for 1-year, 2-year, 3-year and 5-year deposit withdrawals were 1.6%, 1.7%, 1.9% and 1.9% respectively.

Starting from April 28, Shanghai Huarui Bank adjusted the deposit listing interest rates, and the three-year and five-year fixed deposit interest rates dropped to 2.5% and 2.4% respectively. It is worth noting that this is the third time that Shanghai Huarui Bank has adjusted its deposit listing interest rate this year, among which the 5-year deposit interest rate has dropped by 30 basis points from the beginning of the year.

"Private banks have relatively weak ability to absorb deposits. In the past, they generally used higher interest rates to attract customers, so there is relatively greater room for interest rates to lower." In the view of Dong Ximiao, chief researcher of China Merchants Union and deputy director of the Shanghai Financial and Development Laboratory, lowering deposit interest rates and reducing debt costs will help private banks maintain the basic stability of interest rate spreads and improve their stable development capabilities.

It’s better to save 3 years than to save 5 years?

It is worth noting that while banks are intensively cutting interest rates, the medium- and long-term deposit interest rates of many banks have shown obvious "inverted".

In addition, there are also banks where the interest rate of 5-year fixed deposits is lower than the interest rate of 1-year deposits. According to the China Merchants Bank App, the current one-year deposit interest rate of the bank's "Spiritual Deposit" product is 1.6%, while the interest rates for 3-year and 5-year deposit are only 1.50% and 1.55% respectively.

"At present, depositors have a strong desire to store long-term deposits. Many banks have lowered medium- and long-term deposit interest rates again. By reducing long-term deposit interest rates, banks avoid the risk of high-interest liabilities lock-in in future interest rate downward cycles." In the view of Ai Yawen, a researcher at Rong360 Digital Technology Research Institute, the compression of asset-side returns is also forcing banks to adjust the pricing of the liability side, optimize the liability structure, and deal with the rising cost problems caused by deposit regularization.

In fact, it is not just time deposits, but also the interest rates of large deposit products have similar "inverted" phenomena. According to data from Rong360 Digital Technology Research Institute, in March 2025, the average interest rate of 3-year large-denomination certificates of deposit issued by banks was 2.197%, and the average interest rate for 5-year is only 2.038%. Among them, the average interest rate of 5-year large-denomination certificates of deposit fell by 11.25BP compared with the previous month, while the average interest rate for other terms has risen.

The most intuitive impact of the continued decline in deposit interest rates on depositors is the decrease in savings returns. In the environment of interest rate cuts, how should depositors adjust their asset allocation strategies?

"In the future, market interest rates will still be on a downward trend, and deposit interest rates may continue to decline. Residents can make asset allocations suitable for individuals and families based on their own risk preferences, investment needs, investment capabilities, etc.." Dong Ximiao said in an interview that if you pursue stable returns, you can allocate some cash management financial products, money funds, treasury bonds and other products in addition to deposits; if you have strong risk tolerance, you can appropriately allocate stocks, equity-oriented funds, and gold products.