Best Bank Account Interest Rates - Summary for December 4, 2010

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Dec 4, 2010 - 5:30 PM by Ken Tumin

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The week started off with some positive economic news, and that helped to raise the 10-year Treasury yields to over 3% for the first time since July. However, the unemployment numbers released on Friday were worse than expected which increased the odds that the Fed will stick with QE2 to drive down interest rates. Some economists are predicting high unemployment will last for several years, and that could lead the Fed to continue its ultra low interest rate policy.

The Fed fund rate futures haven't changed much from last Saturday. Expectations for rate hikes next June inched up from 9.0% to 9.3%. For next September, it went down from 29.2% to 27.1%, and for next November, it went down from 35.9% to 34.0%

There were no bank or credit union failures this week. So far this year there have been 149 bank failures. The total for all of last year was 140. With two more non-holiday Fridays left in the year, I doubt we'll see more than 160 bank failures for 2010.

As I mentioned last week, we have updated all of the Texas Ratios and health scores for all banks and credit unions. These are based on September data that the FDIC and NCUA have recently released. You can view our list of Texas Ratios of banks and credit unions in our Bank Health Ratings page.

Savings Account Rates

What factors contribute to the very low interest rates? There's a good review of all of the factors in this NYT article, Why Savings Account Rates Are So Pathetic. It mentions the well-known reasons such as the Fed policy and the low loan demand. It also mentioned lazy customers as helping to keep rates down. This is especially the case for the megabanks which have millions of customers who let their money sit in deposit accounts that earn practically nothing.

We finally have a rate hike. SFGI Direct increased its savings account rate from 1.26% to 1.41% APY. SFGI Direct first offered its savings account in July 2009 with a competitive yield of 2.25%. They did a good job at attracting customers. In less than a month they stopped taking new applications. They reopened it for a while but for most of 2010 it remained closed for new customers. They finally reopened it again last October. The rates have remained very competitive. I have the rate history and more details about the account in my SFGI Direct savings account review.

Rate Hikes:

  1. SFGI Direct savings - 1.41% (was 1.26%)

Rate Cuts:

  1. EverBank MMA (ongoing yield) - 1.06% (was 1.11%)
  2. Discover Bank Premium Savings - 1.35% (was 1.50%)
  3. HSBC Advance Savings - 1.00% (was 1.10%)

Certificate of Deposit Rates

With the start of a new month, several banks and credit unions reduced their CD rates. Some of the rate leaders that cut their rates include PenFed, Melrose Credit Union, GiftsforBanking.com and Bank of Internet USA.

I reported on America's Credit Union this week and its high-yield promotional CDs. Many readers joined this credit union in 2009 when it was offering hot add-on CDs. The current promotional CDs don't have add-on features, but they have very competitive rates for terms of 6 months to 48 months.

Reward Checking Accounts

Several banks that have been offering popular reward checking accounts made or announced rate cuts this week. Bank of the Sierra slashed its top rate from 3.09% APY to 2.09% APY. This account had been one of the top nationwide reward checking accounts through 2009 and the first quarter of 2010. Last April the bank restricted new accounts to only CA and WV residents, and last July, it cut its yield from 4.09% to 3.09%.

First Arkansas Bank & Trust announced to its customers both a rate cut and a balance cap cut that take effect in January. The top yield is falling from 3.50% to 3.03% and the balance cap is falling from $35K to $25K. Like Bank of the Sierra, FAB&T used to be one of the top nationwide reward checking accounts until the bank restricted new accounts to residents in its state.

Should we expect reward checking accounts to continue to offer yields of at least 3 percent? With almost all CD rates now below 3%, it may be too much to expect. If you compare reward checking with internet savings accounts, they have done reasonably well this year. Many reward checking accounts have multiple years of history, so it would seem we shouldn't see major rate cuts. But every now and then we get some surprises like the rate cut at Bank of the Sierra.

I reported on two new reward checking accounts this week. One being offered by a bank in Tennessee is offering a very nice rate of 4.09% APY for balances up to $25K. The other one is closer to the norm with a 2.50% APY for balances up to $25K. That is being offered by a bank that's based in New York City. It has a unique debit card usage requirement: to qualify for the top rate, the customer needs 6 debit card purchases that total at least $100.

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

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 December 4, 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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