Three credit rating agencies dominate the global market for bank credit assessments:
For bank holding companies and their bank subsidiaries, each agency publishes:
Bank credit ratings consider:
The composite assessment translates into a rating that, in theory, predicts the probability of default over various time horizons.
FDIC insurance covers your CD deposits up to $250K per bank per ownership category, regardless of the bank's credit rating. If the bank fails, the FDIC pays. The rating's relevance to an insured deposit is essentially zero from a recovery perspective.
The rating's relevance to an insured deposit from a convenience perspective is also small. Failures of A-rated banks (Silicon Valley Bank in 2023 carried investment-grade ratings up to the week before its collapse) and B-rated community banks both result in resolution within days. The depositor experience is similar.
The honest take: if you're a small CD depositor within FDIC limits, picking a higher-rated bank over a lower-rated bank does not improve your protection. Pick on rate, customer service, and convenience.
If you have more than $250K at one bank in one ownership category, the excess is uninsured. In a bank failure resolved as a deposit payoff (no acquirer), uninsured depositors recover what the receivership can extract from the bank's asset sales, typically 80-95% over multi-year timelines. Higher-rated banks have lower probability of failure, so the credit rating is meaningful for that uninsured slice.
For uninsured corporate or institutional balances, watching the credit rating quarterly is part of cash management. Downgrades from one rating notch to another are early warnings; downgrades to non-investment-grade are loud warnings.
If you're buying a bank's senior unsecured debt, subordinated debt, preferred stock, or trust-preferred securities, the credit rating is central. Recovery in default for these instruments is much lower than for insured deposits. The 2008-2009 failures wiped out equity and most subordinated debt of failed banks. Bondholders in Washington Mutual's holding company recovered ~30 cents on the dollar over years of bankruptcy proceedings.
Bank debt is a different asset class from bank deposits. Don't confuse the two when evaluating credit ratings.
For most retail CD buyers within FDIC limits, none of this is necessary. Look at the rate and the institution's reputation; the FDIC handles the rest.
| Bank | Moody's LT Issuer | S&P LT Issuer | Fitch LT Issuer |
|---|---|---|---|
| JPMorgan Chase & Co. | A1 | A- | AA- |
| Bank of America Corp. | A1 | A- | AA- |
| Wells Fargo & Co. | A1 | BBB+ | A+ |
| Citigroup Inc. | A3 | BBB+ | A |
| Goldman Sachs Group | A2 | BBB+ | A |
| Morgan Stanley | A1 | A- | A+ |
| U.S. Bancorp | A2 | A | A+ |
| PNC Financial | A2 | A- | A |
These are bank holding company ratings; the underlying bank subsidiary ratings (e.g., JPMorgan Chase Bank, N.A.) are typically one notch higher due to structural seniority. Ratings change; verify current values before relying on these.
For MYGAs, the equivalent of a bank credit rating is the insurance carrier financial strength rating from A.M. Best, S&P, Moody's, and Fitch. A.M. Best is the gold standard for insurance ratings, with A++ (Superior) at the top through D (Poor) at the bottom. Most MYGA-writing carriers carry A.M. Best ratings of A- or higher, and the better established carriers (MassMutual, Symetra, Corebridge) carry A+ or A++. Just as with bank ratings, the carrier rating matters more for the uninsured-by-state-guaranty-fund portion of the contract than for the protected portion.
This article reflects publicly available information and approximate rates as of the date stated above. CD rates, brokered CD inventories, FDIC and NCUA rules, and carrier MYGA rates change frequently, often daily. Always verify current values against the issuing institution's official disclosure documents before committing funds. This is general education, not a personal recommendation or an offer of any product. Hans Goldstein is an independent licensed insurance producer (NPN 20602398) appointed with multiple A-rated carriers across the annuity market; this article is not an endorsement of any specific bank, brokerage, credit union, or carrier. No compensation has been received from any reviewed institution in connection with the publication of this article. FDIC and NCUA insurance limits, ownership category rules, and the operations of CDARS, ICS, and other IntraFi programs are governed by federal regulation and the program documents; always confirm coverage with the institution and refer to FDIC.gov, NCUA.gov, or IntraFi.com for the official rules. MYGA carrier financial strength ratings, state guaranty fund limits, and tax treatment are subject to change. Always read the actual contract and consult a licensed advisor before purchasing any annuity, CD, or insurance product.
Hans Goldstein is an Enrolled Agent, admitted to practice before the Internal Revenue Service. Not affiliated with or endorsed by the IRS. General education, not tax or legal advice for your situation.