Best Bank Account Interest Rates - Summary for August 7, 2010

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Aug 7, 2010 - 7:01 PM by Ken Tumin

Best Bank Account Interest Rates - Summary for August 7, 2010

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We had some more economic data that's pointing to a long low-interest rate environment. The Labor Department released its July employment report on Friday, and the job numbers were a disappointment. Many analysts are warning that there's a growing chance that the unemployment rate will go back over 10%. In addition, there's more talk about the risk of deflation. The Fed's next scheduled FOMC meeting is on Tuesday, and it's safe to say we won't be seeing any signs of future rate hikes. In fact, we may see additional monetary stimulus. The Fed funds futures are now showing the implied probability of a higher Fed funds target rate by December at 2.9% which is down from last Saturday when it was 3.2%. The implied probability for a higher rate by June 2011 is 39.7% which is way down from last Saturday when it was 52.3%.

It was a quiet Friday yesterday for the FDIC with only one bank failure. This was one of the rare weeks in which we had more credit union failures than bank failures. Two credit unions were liquidated early in the week which brings the total number of credit union failures this year to 13. The number of bank failures is now up to 109.

Savings Account Rates

We lost another 1.50% savings account this week. Acacia Federal cut the rate of its Saver's Choice Savings Account from 1.50% to 1.25% APY. The same rate cut also occurred on its Top Choice Checking. We now only have five banks and credit unions offering non-promo nationwide savings or money market accounts without balance caps with yields of at least 1.50%.

We have three institutions that continue to offer savings account yields around 2%. However, they all have balance caps. I gave them another review this week. SmartyPig is paying 2.15% APY for balances up to $50K (see review). Evantage Bank and AmericaNet Bank's Mega Money Market account has a 2.00% APY on balances up to $35K (see review). These two banks are sister banks to Redneck Bank. All three are owned by the same family.

Rate Hikes:

  1. None

Rate Cuts:

  1. Acacia Federal Savings Bank Saver's Choice - 1.25% (was 1.50%)
  2. Acacia Federal Savings Bank Top Choice Checking - 1.25% (was 1.50%)

Certificate of Deposit Rates

There were several banks and credit unions that cut their CD rates this first week of August. These include Ally Bank, Hudson City, OneWest, Bank of Internet and Delta Community Credit Union.

In the last several months we've been seeing awful short-term CD rates. Most internet banks now offer 3-month CD rates under 1.00%, but there was one exception this week at iGObanking.com which raised its 3-month CD yield to 1.35% APY. Even with this rate, I'm not sure why someone would choose this over an internet savings account. Let's say you chose a iGObanking's savings account which is currently at 1.21% APY. If that yield dropped to 1.00% in 3 months, your average yield for those 3 months would be close to 1.11%. For a $10K deposit, the difference between this savings account and the 3-month CD would only be about $6. One downside with iGObanking is that their CD rates can fall drastically. For example, earlier this year they were offering a competitive 5-year CD rate. Now it's only 1.00%. In 3 months I wouldn't be surprised if iGObanking's 3-month CD yield falls way under 1.00%. I'm sure iGObanking is hoping their 3-month CD customers let their CDs automatically renew.

On the other end of the CD spectrum, there were also some rate hikes. Pentagon Federal Credit Union and USAA Bank both raised rates on their 7-year CDs. PenFed's 7-year CD yield increased from 3.51% to 3.75% APY. USAA Bank's Super Jumbo 7-year CD yield almost reached 4% with a 3.96% APY.

It may seem unwise to lock money into a 7-year CD when rates are so low. However, with short-term CD rates so low, these long-term CDs can have higher yields than short-term CDs even if you close the CD early with an early withdrawal penalty. I compared the yields that you would receive if you closed PenFed's 7-year and 5-year CDs early. I also compared this to Ally Bank's 5-year CD which only has a 60-day early withdrawal penalty. For early closures after 1, 2 and 3 years, Ally Bank's 5-year CD is the best deal. However, once you reach 4 years, PenFed's 7-year CD is the best deal.

Reward Checking Accounts

Reward checking can look very appealing when you can get higher rates than you can get with a 7-year CD. That explains the demand for the 4.75% APY reward checking account that Randolph Bank & Trust Company was offering nationwide. Like most reward checking accounts, the rate applies to balances up to $25K if typical monthly reward checking qualifications are met. I first reported on this account being available nationwide in mid July. When August started, the bank released an online application for this account. Apparently, they weren't prepared for the demand. Randolph changed its nationwide policy early this week, and it's now restricting new accounts to North Carolina residents.

The best nationwide reward checking account is now at Danversbank which is still offering 4.01% APY for balances up to $25K for its reward checking account. It has a long history with this rate, but it recently slashed its online savings account rate to 0.75%. If you are worried that Danversbank may not be able maintain the 4.01%, there are many reward checking accounts that pay at least 3.00% which could have a better chance of maintaining these rates. However, downward rate pressures will be experienced by all banks and credit unions due to the new regulations that will be taking effect this year. That is something to keep in mind if you're planning how much to put into reward checking accounts and CDs.

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 Comments: read and discuss

As of August 7, 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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