Best Bank Account Interest Rates - Summary for September 25, 2010

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Sep 25, 2010 - 5:48 PM by Ken Tumin

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The Fed held another FOMC meeting on Tuesday, and as expected they continue to say "exceptionally low levels for the federal funds rate for an extended period". With the continued weakness in the economy, it appears the Fed is paving the way for further stimulus. This could take the form of purchasing of US government securities, and that will put downward pressure on long-term interest rates. In short, there's not much hope for higher rates any time soon. The Fed funds futures are showing an implied probability of 19.8% for a higher Fed funds rate by next June. This is down from 26.9% last Saturday.

It's not helping much, but Thomas Hoenig continues to be the lone dissenter at the Fed. You can see what's behind Hoenig's economic thinking in this BusinessWeek article which is the best review of Hoenig that I've seen.

Two small banks failed yesterday: one in Florida and one in Washington State. More action was actually at the NCUA which announced three more corporate credit unions were placed into conservatorship. These are credit unions that serve other credit unions instead of consumers. Last year the NCUA placed two into conservatorship. One impact of corporate credit union problems was a special assessment charged to all credit unions to help keep the insurance fund healthy. This extra cost to credit unions was another thing that put downward pressure on deposit rates.

Savings Account Rates

Two banks on my list of top nationwide accounts cut rates this week. One was DollarSavingsDirect which cut the savings account yield from 1.20% to 1.10% APY. The other one was 1st Constitution Direct which ended its special 1.25% for new customers. There's only one rate of 1.10% APY for balances of at least $10K. Both of these banks used to be rate leaders. Now they are well under the rate leaders.

The best non-promo rates continue to be AmericaNet Bank and its sister bank Evantage Bank which continue to offer 2.00% APY on balances up to $35K. The next best one is SmartyPig which offers 1.75% APY on balances up to $50K. This New York Times Bucks Blog post has an interesting review of SmartyPig with quotes from BBVA Compass Senior VP and the SmartyPig CEO. It was clear in the article that the interest rate decisions are being driven by BBVA Compass. That's a little worrisome since they don't have a history of competitive deposit rates. Hopefully, the business model of SmartyPig will allow them to keep rates as competitive as they have been over the last few years.

Rate Hikes:

  1. None

Rate Cuts:

  1. Dollar Savings Direct Savings - 1.10% (was 1.20%)
  2. 1st Constitution Direct Savings - 1.10% (was 1.15% - 1.25% for new accts)

Certificate of Deposit Rates

Two rate leaders for long-term CD rates made cuts this week. USAA Bank reduced its 5-year and 7-year CD rates by 25 basis points. The highest CD rate is now 3.05% APY for the Jumbo 7-year CD. Discover Bank also cut CD rates on most of its terms. The biggest hit was on the 10-year CD rate which fell from 3.25% to 3.00% APY.

One bit of good news was at Fort Knox Federal Credit Union which raised its 5-year CD yield from 2.75% to 3.00% APY. They used to have top CD rates for many terms, but rates were slashed in early September.

The only institutions to offer nationwide 5-year CDs with yields of at least 3.00% are credit unions. I now have four on my list. The best 5-year CD yield at a bank is 2.90% APY at Sallie Mae Bank. However, you may want to sacrifice a little on the yield and choose Ally Bank's 5-year CD which has smaller early withdrawal penalty. I compared these two CDs in this post. The rates have fallen a bit since the post, but it's still a pretty good comparison.

Reward Checking Accounts

I didn't report on any new reward checking accounts this week. It's getting harder to find new reward checking accounts. I wonder if these reward checking accounts are losing favor in this interest rate environment and with new regulations that are taking effect.

There are still several reward checking accounts that are paying over 4.00% on balances of $25K. We will be losing one popular one in October at Danversbank. It has been reported that they will be reducing the yield from 4.01% to 3.01% APY in October. At least the balance cap will remain at $25K. The easy-to-join Consumers Credit Union sent emails informing members that it will be lowering the balance cap of its reward checking account from $25K to $10K effective November 1st.

The $10K cap can make it very difficult for many who want to use reward checking accounts as an alternative to internet savings accounts. It can be hard with even a $25K cap. You can open multiple reward checking accounts, but it can be difficult to meet the debit card requirements. Also, banks want their customers to use these as their primary checking accounts. Many are using ChexSystem to make sure you're not opening multiple accounts at other banks. Even with these difficulties, many readers are maintaining multiple reward checking accounts. In a poll this week, 80% of the 85 readers who voted in the poll reported to have at least 2 active reward checking accounts, and 7% reported to have over 10.

For those who don't want the hassles of reward checking or who are worried about continued rate and balance cap cuts, you may want to consider an alternative with Ally Bank's 5-year CDs and money market account. You can get close to the reward checking rates with Ally's 5-year CDs, and the low early withdrawal penalty may provide enough liquidity compared to multiple reward checking accounts.

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.

Rates as of September 25, 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)

Edit 9/26/2010: Added NAPUS FCU's special CD in local 24mo CD list


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

Anonymous - #1, Sunday, September 26, 2010 - 3:23 PM

Didn't see the promotional rate from NAPUS FCU.  It is a fantastic 22mo. 3.82% rate if you can meet the qualifications of 25,000 minimum and membership.  Just surprised no mention of this rate.


1
Anonymous

Anonymous - #2, Sunday, September 26, 2010 - 3:38 PM

I didn't see the 22 mo. deal.


1
KenBDG

KenBDG - #3, Sunday, September 26, 2010 - 5:52 PM

I just added NAPUS FCU to the 24mo local list. I see the special 3.82% 22-mo CD appears to be still available. However, the credit union's field of membership appears very narrow. Any way to join if you're not connected to the postal service?


2
Anonymous

Anonymous - #4, Sunday, September 26, 2010 - 7:56 PM

patriot bank in fla(patriotbankfl.com)just sent me a snail mail that effective 10/12, the cap on the revolutionary checking will drop from 35k to 25k and 12 debit card purchases instaed of 10!! But they are keeping the rate at 3.01%


1
Pardeep Topgun

Pardeep Topgun (anonymous) - #5, Monday, October 4, 2010 - 6:11 AM

Good Post for Interset rates but Can you tell me about High Interest Bank Accounts. From where i can get more info about it.



 


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