Best Bank Account Interest Rates - Summary for August 21, 2010

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Aug 21, 2010 - 6:53 PM by Ken Tumin

Best Bank Account Interest Rates - Summary for August 21, 2010

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Signs of a long low-rate environment continued this week as mostly downbeat economic news kept investors worried more about deflation than inflation. Treasury yields fell to near-record lows this week. The Fed funds futures show an implied probability of a higher Fed funds rate by December at 3.9% which is actually up from last Saturday when it was 2.3%. However, the probability of a higher Fed funds rate by next June has fallen to 35.0%. It had been 42.6% last Saturday. I think savers are going to have to be very patient in this environment.

After two slow Fridays at the FDIC, yesterday was one of the most active Fridays of the year in terms of bank closures. Eight banks failed which brings the yearly total to 118. The largest bank that failed was Chicago-based ShoreBank. This bank had offered an internet savings account that used to be a rate leader. Like the other 7 banks that failed yesterday, all deposits of ShoreBank were assumed by another bank. However, the bank that took over ShoreBank is a newly-chartered institution called Urban Partnership Bank. It'll be interesting to see if this new bank will continue ShoreBank's internet savings account. Perhaps with the new bank being well capitalized, they will be able to offer competitive rates again.

Keeping Track of Your Bank's Health

With so many banks failing these days, you might want to keep an eye on the financial health of your bank. If you keep under the FDIC deposit insurance limit, you don't have to worry about losing money, but there are other issues to worry about when your bank fails. At DepositAccounts.com we now provide the Texas Ratios and other financial health stats for every bank and credit union in the nation. In our recently updated website, you can search for your bank in our new bank reviews page. The search box in this page will take you to our hub page for your bank. Just click on the health tab on this hub page to review the financials. For ShoreBank we had an overall health score of 0 out of 5.

Savings Account Rates

Two rate leaders this week cut rates. Incredible Bank cut its internet checking account yield from 1.53% to 1.42% APY, and Ready Saver cut its yield from 1.50% to 1.35% APY. There are now only 3 institutions offering nationwide savings accounts without balance caps with yields of around 1.50%. Fort Knox FCU is one with its money market account that offers a 1.60% APY for balances of $50K and above. The second one is Palladian Private Bank which offers a savings account with a 1.50% APY on balances of at least $10K. The third institution is Alliant Credit Union. It offers the best deal with a 1.50% APY on balances of $100 and above. We should know next week if Alliant will be maintaining this yield through September.

If you just want a very simple and competitive online savings account, Sallie Mae Bank is a good choice. Its rate is close to Alliant's rate, and it has a few advantages such as no hard credit inquiry in the application process and no limit on ACH bank-to-bank transfers. The main downside is a short history. I've only been reporting on this bank since March of this year.

Rate Hikes:

  1. None

Rate Cuts:

  1. Incredible Bank Checking - 1.42% (was 1.53%)
  2. Ready Saver Savings - 1.35% (was 1.50%)

Certificate of Deposit Rates

CD rates have slowly trended down this week. One big disappointment was at Hudson City Savings which cut all of its CD rates by 25 basis points. Ally Bank continues to slowly cut its rates with a couple basis-point drops on a few CD terms. One bit of good news was a new 23-month special CD at North American Savings Bank. This special has a yield of 2.05% APY. Its 14-month CD special continues to be competitive at 1.75% APY.

With these short-term CD rates being so low, many are looking at long-term CDs. The long-term CD rates are also low when compared to rates a few years ago, and many are worried of locking into a long-term CD when there's a chance we'll see much higher rates in a couple of years. One thing that can reduce this risk is a mild early withdrawal penalty. Many of today's best long-term CDs when closed early with a penalty have better yields than shorter-term CDs. I described this in both my PenFed long-term CD review and in my Discover Bank long-term CD review.

5.00% Certificate of Deposit Exists!

PenFed will be offering 10-year CDs starting in January, and this should have even higher yields than its top 7-year CD. Select PenFed members have been offered a very interesting deal: a 5.00% APY 10-year CD. I reviewed this CD deal and others that PenFed is offering in this review. If you want a 5% yield from a bank account in today's environment, your only other choice is a reward checking account (for those in certain areas of the country). If you had the choice, which one would you choose? The 5% 10-year CD or the 5% reward checking account? You can give your opinion in this poll. Currently, 43 readers have voted, and the 5% 10-year CD is holding a big lead over the 5% reward checking account.

Reward Checking Accounts

Unfortunately, 5% reward checking accounts are rare these days. In our high yield checking database, we currently only list 12 institutions offering this and they are all local deals. There is actually still one institution that continues to pay 6.01% APY. It's the Golden Plains Credit Union in Kansas, and they have maintained this rate since I first reported on this account in April 2008.

Many institutions continue to cut their reward checking rates and balance caps. So if you are comparing a high-yield CD to a reward checking account, that's an important consideration. I remember back in 2007 when many banks were offering 6% on their reward checking accounts and PenFed was offering 6%+ long-term CD rates. I'm sure many people wished they put more into those PenFed CDs rather than in those reward checking accounts.

Many reward checking rates have fallen, but so have internet savings account rates. In my opinion, reward checking overall continues to be a better place for your liquid savings than internet savings accounts, at least for balances under $25K.

To find both reward checking accounts local to you and those available nationwide, please refer to the reward checking section of DepositAccounts.com.

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

Banking News/Resources

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. 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.

As of August 21, 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

Bank Account Alternatives

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


Post a CommentComments
In order of date posted. - Sort by votes
Anonymous

Anonymous - #2, Sunday, August 22, 2010 - 10:06 AM

Maybe that 5% 10 year CD at PenFed might look better yet , smirks


3
Anonymous

Anonymous - #3, Sunday, August 22, 2010 - 11:03 AM

I can't find Texas ratio for Mid-America Bank and Trust, Rolla/Dixon/St Roberts MO. Any help?


1
smirks

smirks (anonymous) - #4, Sunday, August 22, 2010 - 11:33 AM

rather deal with bonds


1
KenBDG

KenBDG - #5, Sunday, August 22, 2010 - 2:24 PM

@Anonymous #3, For some reason this bank wasn't being listed. I fixed that for now at least, and you should be able to find it if you use the search term "Mid America Bank & Trust". Here's the direct path to the Texas Ratios and other financial info: http://www.depositaccounts.com/banks/mid-america-bank-trust-co.html#health


3
Anonymous

Anonymous - #6, Monday, August 23, 2010 - 1:03 PM

I looked through that list of Banks which showed Texas Ratio and it was very informative.  However, I have since been unable to find again through your website.  I thought I had bookmarked it but alas it got away from me and I wondered if you would be kind enough to point me in the right direction.  I do appreciate all the information I receive from this site and thanks a million.


1
Anonymous

Anonymous - #7, Monday, August 23, 2010 - 1:31 PM

I found that Texas Ratio list in my current reading on this site.  Two of the Banks I utilize are on the list.  The one where I have two CD's has a Texas Ratio of 14 and the one where I have a Rewards Checking has a 7.  Should I be concerned?   I am not very apt at weighing the odds.  I did note that that a ratio of 100 was the mark of serious trouble but should a really good bank be on the list in the first place.


1
Anonymous

Anonymous - #8, Monday, August 23, 2010 - 2:04 PM

Thanks Ken BDG for indicating where the Texas Bank Ration list is.  After I posted regarding my losing it you responded and I thank you.   I have bookmarked it this time and would have printed it if it was so darned long.   Must be sixty or more pages -- scary situation.


1
Anonymous

Anonymous - #9, Monday, August 23, 2010 - 6:44 PM

Alliant is expected to drop savings rate down to 1.35% beginning in September (from a comment at FW).


1
Anonymous

Anonymous - #10, Tuesday, August 24, 2010 - 7:37 PM

Does anyone happen to know how often that Troubled Bank list is updated -- the one with the Texas Ratio ratings.   Thanks in anticipation.


1
Anonymous

Anonymous - #11, Wednesday, August 25, 2010 - 3:07 PM

Sallie Mae does have a limit on transfers and withdrawals (max of 6 combined). $10 penalty on each transfer or withdrawal over 6.


1

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