Big banks are scrambling to meet a challenge from Internet-only institutions that offer much higher certificate of deposit rates.

"Banks are paying close attention to what is happening to CD rates online, and they are doing everything they can to adjust their rates and adjust their services in order to stay attractive," said Sherri Neasham, chief executive officer of The Tucson, Ariz., research firm this week released a survey of 35 lending institutions that underscores the gap between rates offered online by Internet-only banks and those at traditional banks.

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