Bank Deals Weekly Summary for April 24, 2010

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Apr 24, 2010 - 5:07 PM by Ken Tumin

Quick Link for Rates, Recap of this week's posts

The Fed meets next week. The FOMC meeting is scheduled for Tuesday and Wednesday. No one is expecting a rate hike, but there's talk that a change in language is a possibility. The Fed has long maintained the language "exceptionally low levels of the federal funds rate for an extended period." One FOMC member, Thomas Hoenig, has voted against this for the last two meetings. Once the language is changed, the chance of a rate hike for future meetings will start to go up. Currently, the Fed Funds futures have the probability of a rate hike in September to be better than 50/50. You can see all these rate probabilities for future FOMC meetings using this FedWatch tool.

On Thursday, the government's unadjusted producer-price data for March showed a big jump in prices of basic materials. Some consider this to be a possible early warning sign of inflationary pressure. However, as this WSJ article describes:

But in economies still recovering from deep recession, costlier commodities will likely cause other strains before translating into big jumps at the cash register.

In this low-interest rate environment, banks are able to profit by buying Treasuries instead of making loans. This CNBC article provides some insights into this issue and suggests the possibility of a "type of tacit quid pro quo with the Federal Reserve to keep short-term rates low by helping the government finance its debt through Treasury auctions."

The FDIC was busy yesterday in Illinois. All 7 of yesterday's bank failures were in Illinois. The largest bank that failed was Amcore Bank which had $3.4 billion in deposits. The FDIC was able to find buyers for all 7 banks. These buyers assumed all deposits (except some brokered deposits) even those above the FDIC limit. Harris National Association assumed Amcore deposits and MB Financial assumed deposits of 2 other of the 7 banks (see review).

Savings Account Rates

SmartyPig announced that it will be raising the rate of its savings account from 2% to 2.15% APY effective May 19th. However, I don't know if this should really count as a rate hike since they will also be adding a balance cap for this rate. The 2.15% will only apply to the first $50K. The rate for the balances over this will only be 0.50%. SmartyPig profits from the small savers who make purchases through their partner retailers. So this could be the main reason for this change. There's also speculation that it could be in preparation for SmartyPig to be transitioned to a new bank (see post).

While updating the rates today, I came across a new promotion at Acacia Federal Savings Bank. It's guaranteeing 1.50% APY on its no-minimum Saver's Choice Account until July 4th. The bank is still offering 1.50% APY on its Top Choice Checking Account. However, this has a $5K minimum to avoid a $15/month fee. I first reported on this checking account in March.

It's now common to find checking accounts paying the same or higher interest rates than savings accounts, even for non-reward checking accounts. Incredible Bank is one example. It's still paying 1.74% APY on balances up to $250K. Alliant's checking account is now paying the same as its savings account (1.50% APY). Another example is the online checking account offered by FNBO Direct. It's called an Online BillPay Account since it doesn't offer paper checks. It's currently paying 1.25% APY on all balances which is the same as FNBO Direct savings account. There's also a $25 bonus for opening this account and using the debit card.

Rate Hikes:

  1. SmartyPig Savings - 2.15% up to $50K eff 5/19 (now 2% on all bal)
  2. Acacia Federal Savings Account - 1.50% guaranteed to 7/04 (promo)

Rate Cuts:

  1. CNB Bank Direct Savings - 1.25% (was 1.35%)

Certificate of Deposit Rates

With the possibility of inflation shooting up in the next year or two, short-term CDs can be much more appealing. However, their rates are very low, and they continue to trend down. It's now hard to find 3-month CDs with rates over 1.00% and 12-month CDs with rates over 2.00%. I'm a little worried that 3-month CD rates are so low. I don't know why someone would choose a 3-month CD that pays less than a savings account. Even if the savings account rates fall, the difference in interest earned will be very small.

I came across one hot nationwide CD deal last Sunday. North American Savings Bank is offering two CD specials: 2.05% APY 10-month CD and a 2.65% APY 17-month CD. The bank is based in the Kansas City metro area, and it allows people in any state to open the CDs online (see review).

More readers have reported success in joining Fort Knox Federal Credit Union. It continues to offer several competitive CD rates. They also have a bonus rate for Jumbo CDs (see my review). I provided some additional CD details in this Monday post.

Reward Checking Accounts

I reviewed two new reward checking accounts this week with rates of 3.51% APY to 3.80% APY. Both also offer a companion savings account that can be useful for those who have over $25K. The savings accounts rates are lower than the checking rates, but they're still better than most internet savings accounts. The only issue is that you have to meet the reward checking monthly requirements. If you don't, you'll only receive a low base rate for both the checking and savings accounts.

To see all of the high yield reward checking accounts available throughout the nation, please refer to the reward checking section of DepositAccounts.com.

Recap for the Week - Links to This Week's Posts

Banking News

Savings/Checking Accounts - Nationwide

CD Deals - National

Checking/Savings Bonuses

Reward Checking Accounts

CD and Money Market Deals - Local

The rates listed below are based on Annual Percentage Yield (APY). No minimum balances are required unless noted. MMA next to the rates indicate a money market account. Most MMAs have check writing and ATM cards. Online savings accounts usually lack both of these. The top lists include banks and credit unions with broad availability and with minimums under $100,000. Previous weekly summaries are available at this page. Quick Links: Refer to the following links for the savings accounts and CDs that interest you: Liquid Account Rates: Savings Accounts, Reward Checking, Bank alternatives CD Rates: 3 Mo CDs, 6 Mo CDs, 9 Mo CDs, 12 Mo CDs, 18 Mo CDs, 24 Mo CDs, 36 Mo CDs, 48 Mo CDs, 60 Mo CDs, 84 Mo CDs, CDs by state Comments: read and discuss

As of April 24, 2010

Checking/Savings/Money Market Accounts:

  • Noteworthy Accounts Available Nationwide:
  • Noteworthy Accounts - Local Only

3-Month Certificates of Deposit:

  • Noteworthy Accounts Available Nationwide:
  • Noteworthy Accounts - Local Only

6-Month Certificates of Deposit:

  • Noteworthy Accounts Available Nationwide:
  • Noteworthy Accounts - Local Only

9-Month Certificates of Deposit:

  • Noteworthy Accounts - Local Only

12-Month Certificates of Deposit:

  • Noteworthy Accounts Available Nationwide:
  • Noteworthy Accounts - Local Only

18-Month Certificates of Deposit:

  • Noteworthy Accounts Available Nationwide:
  • Noteworthy Accounts - Local Only



24-Month Certificates of Deposit:

  • Noteworthy Accounts Available Nationwide:
  • Noteworthy Accounts - Local Only

36-Month Certificate of Deposit:

  • Noteworthy Accounts Available Nationwide:
  • Noteworthy Accounts - Local Only

48-Month Certificate of Deposit:

  • Noteworthy Accounts Available Nationwide:
  • Noteworthy Accounts - Local Only

60-Month Certificate of Deposit:

  • Noteworthy Accounts Available Nationwide:
  • Noteworthy Accounts - Local Only

84-Month Certificate of Deposit:

  • Noteworthy Accounts - Local Only

Various Deposit Account Deals

High Yield Reward Checking Accounts - Open to All

Recent CD Specials at Local Credit Unions and Banks

Bank Account Alternatives

Historical Rates from the Federal Reserve (Federal funds, Treasury bills, CD's)

Edit 4/27/10: Corrected SmartyPig balance cap description


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