Best Bank Account Interest Rates - Summary for August 28, 2010

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Aug 28, 2010 - 7:11 PM by Ken Tumin

Best Bank Account Interest Rates - Summary for August 28, 2010

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Friday's GDP news wasn't great, but it was a little better than economists had expected. Also, Bernanke in a speech on Friday downplayed the possibility that the Fed will increase debt buying and suggested we'll see economic growth next year. This news helped push Treasury yields higher, which is a nice change after seeing Treasury yields drop to lows not seen since the 2008 financial crisis. However, there continues to be concerns about a double-dip recession. If that should happen, be prepared for a very long low-rate environment.

The Fed funds futures now show an implied probability of a higher Fed funds rate by December at zero percent which is down from 3.9% from last Saturday. However, the probability of a higher Fed funds rate by next June has gone up from last Saturday. It's now 36.6% which is up from 35.0%.

One surprising development yesterday was the lack of bank failures. A Friday free of bank failures has been rare this year, and I didn't expect it after the previous Friday in which there were 8 failures. Instead of my usual bank failure summary post, I reviewed the number of failures by state so far this year. Nationwide there have been 118 bank failures. Florida has the most failures of any state with 22. Other top states include Illinois with 15, Georgia with 11 and California with 10. As a comparison to last year, there were a total of 140 bank closures in 2009 with Georgia having the most with 25.

Savings Account Rates

Readers learned from Alliant Credit Union this week that they will be reducing the yield on its savings account and High Rate Checking from 1.50% to 1.35% APY in September. That leaves just two institutions with nationwide savings accounts that pay 1.50% APY or above with no balance cap. As of 8/28/10, Fort Knox Federal Credit Union continues to pay 1.60% APY on balances of at least $50K on its Money Market Share Account, and Palladian PrivateBank is paying 1.50% APY for balances of at least $10K on its savings account. Credit unions often change rates at the start of the month so we'll have to wait and see what happens at Fort Knox FCU.

The other nationwide savings accounts with rates around 2.00% are either promo rates or rates that have balance caps. Out of these, I think SmartyPig is the best deal with a 2.15% APY on balances up to $50K.

In the poll for this week, I asked the question if it's worth chasing rates. Is it worth opening a new account for only $50 extra a year? Or $200 extra a year? This year we have seen many rate leaders slash rates. So what may first appear to be $200 extra over the next year may end up being much less.

In the poll with 50 votes counted, readers have been pretty equally distributed across the 5 choices that I gave: extra $50, $100, $200, $500 per year or tired of rate chasing.

Rate Hikes:

  1. None

Rate Cuts:

  1. Alliant Credit Union Savings & Chk - 1.35% (effective 9/1) (currently 1.50%)

Certificate of Deposit Rates

Four rate leaders cut their CD rates this week. Alliant Credit Union doesn't wait to the start of each month to change CD rates, and they decided to change them this week. Most of the rates went down by 15 basis points. However, the 4- and 5-year rate fell by 25 basis points to 2.75% APY ($25K min). Alliant Credit Union CD rates continued to be good deals compared to others and were still near the top of my lists for several terms.

Another nationwide credit union that cut rates was Melrose Credit Union. It cut all of its CD rates by 25 basis points. Even after this rate cut, its 5-year CD yield remains the best nationwide CD with a 3.03% APY. However, it should be noted they have a harsh and convoluted early withdrawal penalty (see review). There are several banks and credit unions that continue to offer 3.00% APY 5-year CDs that have much more mild penalties. If you have $175K to invest, USAA Bank continues to be the best 5-year CD deal with a 3.31% APY.

Ally Bank used to be near the top of my the 5-year CD list, but I'm afraid its now on the bottom. For the last few weeks, Ally has made small cuts to the 5-year CD, and it did it again this week bringing the yield down to 2.74%. It may be in response to more people taking advantage of the very low early withdrawal penalty of only 60 days of interest. Ally Bank also made slight rate cuts on other CD terms. However, I just noticed today of a CD rate hike at Ally Bank. Its 11-month no-penalty CD yield increased from 1.30% to 1.32% APY. It's not much, but with all of the rate cuts, it's nice to report on a rate hike.

Discover Bank reduced rates on most of its CDs this week. The new 10-year yield is 3.25%. This had been 3.50% APY which was a good long-term CD deal thanks to a mild early withdrawal penalty of 9-months of interest (most banks have a penalty of at least 1-year for CD terms over 5 years)

PenFed continues to offer 3.75% APY on its 7-year CD which has a 1-year early withdrawal penalty. PenFed typically changes rates at the start of each month, so there's a chance that this rate could fall next Wednesday on September 1st. As I showed in this PenFed CD review, this can be good deal even if you break the CD at year 3, 4 or 5.

Select PenFed members were offered a great deal for their maturing October CDs: 5.00% APY 10-year CDs in January. This 10-year CD is new to PenFed, and starting January, all members should have access to it (although the yield is unlikely to be 5%). Note, some readers who were not offered this CD have reported being able to reserve it online. Your miles may vary on this. Please refer to the comments in my 5% Pentagon Federal Credit Union CD review.

Reward Checking Accounts

Danversbank continues to offer the best nationwide reward checking yield of 4.01% APY for balances up to $25K. If you're looking for additional 4% reward checking accounts for balances of at least $25K, you'll have to look for accounts available in your city or in your state. I reported on a few banks this week that offer statewide reward checking accounts. Two have yields of 3.51% APY for balances of up to $25K. One is available to Illinois residents and the other to Florida residents. Two other banks were offering 4.00% APY to anyone in Texas. ViewPoint Bank was one of these two, and it has a $50K balance cap. Until recently, this account had been available nationwide.

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 28, 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)


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Anonymous

Anonymous - #2, Tuesday, August 31, 2010 - 2:32 PM

Ally down to 1.25%


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