Best Bank Account Interest Rates - Summary for October 30, 2010

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Oct 30, 2010 - 7:37 PM by Ken Tumin

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The next Fed meeting is almost here. On Wednesday we should know if the predictions about Quantitative Easing #2 (QE2) are correct. According to this Barrons article, the consensus is that the Fed will start purchasing $500 billion of long-term Treasury securities. The following excerpt puts this in perspective of interest rates:

JPMorgan economist Michael Feroli writes that the bank's expectation of $500 billion in purchases over the next six months would be roughly equivalent to a 50-basis-point (a half-percentage point) cut in the federal funds rate

The Fed funds futures continue to show little expectations for Fed funds rate hikes next year. The implied probability of a higher Fed funds rate by next June went down over the last week from 4.9% to 3.6%. For next September, it went down from 15.4% to 14.8%.

The FDIC took a break from its Friday closures. The total number of banks that have failed in 2010 remains at 139. The only failure on Friday was a small credit union in Washington State. According to the NCUA, this was the 17th credit union liquidation for 2010.

Savings Account Rates

Two popular internet banks cut their savings account rates this week. Discover Bank made the largest cut. Its Online Savings Account yield for new customers fell from 1.35% to 1.25% APY. Capital One reduced the yield on its InterestPlus Online Savings account from 1.35% to 1.30% APY. The Costco version had a similar cut. Its yield is now 1.35% APY.

There was a bit of good news this week. Hudson City Savings Bank made a big increase to its Money Market Savings Account rate. The yield increased from 1.00% to 1.35% APY for balances of at least $2,500. This increase actually occurred on the 22nd. I had missed it last Saturday. As I described in my Hudson City Savings review, Hudson City continues to lack a bank-to-bank ACH transfer service. If you're looking for a new savings account, better choices would be the internet banks that have comparable rates and also have an ACH transfer service. Examples include Sallie Mae Bank, Alliant Credit Union and any of the online savings accounts from the big credit card companies.

Rate Hikes:

  1. Hudson City Savings Bank - 1.35% (was 1.00%)

Rate Cuts:

  1. Capital One/Costco InterestPlus Savings - 1.35% (was 1.40%)
  2. Capital One InterestPlus Savings - 1.30% (was 1.35%)
  3. Discover Bank Online Savings - 1.25% (was 1.35%)

Certificate of Deposit Rates

iGObanking.com, the internet division of Flushing Bank in New York, continues to offer the best deal for mid-term CDs with a 2.25% APY for a 2-year and 3-year terms. For a 2-year term, that's 35 basis points above Alliant Credit Union's 2-year CD rate.

Flushing Bank's other internet bank, GiftsforBanking.com, also has a good deal. Its 2-year and 3-year CD rate is a little lower at 2.00% APY, but there's the extra benefit of a free gift that varies based on deposit size and the length of the term. I first reviewed GiftsforBanking.com in March. I took another look this week and reviewed the pros and cons of GiftsforBanking.com.

Based on the comments from readers who have applied for these CDs, both iGObanking.com and GiftsforBanking.com don't make it easy to open CDs. According to one reader's comment about iGObanking.com, "signing up is a real pain -- endless questions and unforgiving software." Another commenter described his experience with GiftsforBanking.com: "I opened a CD and it's an involved process."

With the new month starting on Monday, we may see more rate cuts especially at credit unions. It's getting hard to find 3.00% yields. For nationwide accounts, only Melrose Credit Union and Connexus Credit Union are offering 5-year CDs with yields around 3.00%. For 7-year CDs, only PenFed and Navy Federal are offering yields over 3.00%. I'm worried we may see fewer of these in November.

Reward Checking Accounts

Reward checking accounts have been helpful for us savers in the last couple of years. They have provided interest rates up to 3 percentage points higher than internet savings account rates. What can we expect as this awful interest rate environment continues? As I described this week, we should probably expect not only lower rates but also lower balance caps. Both of the new reward checking accounts that I reviewed this week have rates around 3.00% and a balance cap of $15K.

To find reward checking accounts available nationwide or to find those that are only available in your state, 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 October 30, 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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Nate

Nate (anonymous) - #1, Tuesday, November 2, 2010 - 1:26 PM

Don't forget that ING Direct has a $25 bonus - that's an instant 10% return!

I have a bunch of referrals left, so if you are interested in the $25 bonus for opening a new ING Orange Savings Account just E-Mail your first and last name to NSmith508@hotmail.com and Ill send you a fresh link so you can get your bonus! You have to open the account with a minimum of $250.


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