Best Bank Account Interest Rates - Summary for January 29, 2011

The first scheduled FOMC meeting of 2011 took place this week, and the Fed decided to keep its monetary policy unchanged. They're still saying "exceptionally low levels for the federal funds rate for an extended period." Also, the Fed's purchasing of longer-term Treasury securities to drive down long-term interest rates (QE2) continues without change. The vote at the Fed was unanimous. It turns out the new voting members on the Fed aren't the inflation hawks that Thomas Hoenig was last year. Hoenig had voted against the zero-rate policies for all of last year's Fed meetings.

As a reader noted in the comments, the Fed may be able to keep short-term rates low, but it may not be able to keep long-term rates from rising. Worries about inflation and the nation's debt-ceiling debate could be factors that cause Treasury yields to rise this year. That could lead to higher long-term CD rates.

The chance that we'll see a Fed rate hike by December went down this week according to the Fed funds future. The futures are showing the implied probability of a higher Fed funds rate by next December at 38.8% which is down from last Saturday when it was 51.5%.

Savings Account Rates

On my short list of top nationally available savings accounts, only WTDirect reduced rates this week. I was worried that the news from the Fed this week would encourage banks to do another round of rate cuts on their internet savings accounts. That didn't happened, but with a new month starting next week, we are not out of the woods.

Looking back over the last year, one interesting thing to note is that savings accounts have been better deals than short-term CDs. Someone who kept his or her money in Ally's 6-month CDs for the last year would have earned around 1.22% APY (average of the 6-month yields on January and July 2010). If that person just kept his or her money in Ally's savings account, a rough estimate for the average yield for that year is 1.29%. There was a little benefit for the 1-year Ally CD, but it wasn't that much. The 1-year CD was paying 1.69% in January 2010. In summary, internet savings accounts continue to be good deals when compared to short-term CDs. Of course, they're not good deals when compared to previous years.

There are still banks that are offering savings account and regular checking account rates close to the 1-year CD rates. These savings and checking rates may go down this year, but as I showed above, you are probably not going to lose much interest.

Rate Hikes:

1. None

Rate Cuts:

1. WTDirect Savings - 1.11% (was 1.21%)

Certificate of Deposit Rates

There were just a few banks that made CD rate cuts this week. We may see more cuts next week especially at credit unions with the start of a new month.

If you want a yield of at least 2.00%, you now need a term of at least 3 years for nationally available CDs. If you want 3.00%, you will likely need a term of at least 7 years.

The long-term CDs may seem risky when inflation could force rates much higher, but CDs with mild early withdrawal penalties can help reduce this risk. As I and others have described, relying on early withdrawals does have some risk. This can be reduced by going with banks and credit unions with disclosures that are friendly to depositors. Three institutions that I would put in this category are Ally Bank, PenFed and Nationwide Bank. All three currently have competitive long-term CD rates and reasonable early withdrawal penalties. I reviewed these rates and the effective rates if these CDs were closed early in my comparison of the best long-term CD deals.

Reward Checking Accounts

If you don't want to lock your money into a long-term CD but you still want yields of at least 3.00%, the only bank account option these days is the high-interest reward checking account. This option does require some work, and there are risks that the rates will fall. The risk is greater this year due to the new regulation that will take effect in July. This regulation will reduce the interchange fees that banks receive from retailers when you use your debit card. It's too early to know how this will affect small banks, but it could have a significant effect. That was described in a letter sent by the president of Royal Banks of Missouri which described the likelihood of reward checking rate cuts.

Another problem with reward checking accounts is the balance cap. All reward checking accounts that have high rates limit the balance that qualifies for the high rate. If you have a lot of savings that you want to keep liquid, this can be an issue. One thing that can help is the Kasasa Saver account which is a savings account that links with the reward checking account, Kasasa Cash. I described some of the best checking/savings combos on Friday. These savings accounts don't have rates as high as the reward checking accounts, but they do have rates higher than internet savings accounts.

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

• Four Banks Closed by Regulators with No Buyer for a Colorado Bank
• Fed Stays the Course with Unanimous Vote

Savings/Checking Accounts - Nationwide

• Less-Than-Ideal Features of Ally Bank's Transfer Service
• Update on Alliant Credit Union's Savings and Checking Accounts

CD Deals - National

• Special 18-Month CD and IRA CD Rates at Velocity Credit Union in Texas - Easy Membership
• Top Jumbo Mid-Term CD Rates at USAA Bank - Available Nationwide
• Competitive CD Rates at CNBBankDirect - Available Nationwide
• Top CD Rates Continue at Digital Credit Union in MA - Easy Membership
• Special 39-Month/63-Month CD Package at SunTrust Bank - Available Nationwide

Checking/Savings Bonuses

• $100 Checking Account Bonus at Sound Credit Union - Washington State Only
• $100 Checking Account Bonus at AnchorBank in Wisconsin
• Amazon Kindle or $125 Bonus at MidFirst Bank in AZ & OK - Local Only

Reward Checking Accounts

• Finding the Best Reward Checking and Savings Account Pair
• Top Reward Checking and Savings Account at First State Bank - Illinois Only
• Updated Review of Standard Bank's Reward Checking Account - IL & IN Only
• Bank President Paints Grim Picture of Reward Checking's Future

CD and Money Market Deals - Local

• Top 20-Month CD Rate and Checking Account Rate at East River Bank in Philly - Local Only
• Competitive Long-Term CD Rates at First National Bank in Texas - Local Only
• Top 15-Month Special CD Rate at US Century Bank in South Florida - Local Only
• Special 35-Month CD Rate Continues at 1st MidAmerica Credit Union in Parts of IL & MO
• Money Market Account Special at Oritani Bank in New Jersey - Local Only
• Special 18-Month & 30-Month CDs at Jefferson Bank in Dallas-Fort Worth - Local Only

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 January 29, 2011

Checking/Savings/Money Market Accounts:

• Best Reward Checking Account Rates (Nationwide & by State)
• Best Savings Account Rates (Nationwide & by State)
• Best Money Market Rates (Nationwide & by State)
• Best Checking Account Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• EverBank - 2.01% ($5K min), 3-mo promo rate up to $50K (1.06% ongoing) account review
• AmericaNet/Evantage Bank - 1.75% (up to $35K, 1% over) account review
• The Morrill and James Bank - 1.51% Checking (min $1.5K) account review
• Flagstar Direct - 1.50% 4-mo promo (0.85% ongoing) $100 Bonus account review
• SFGI Direct - 1.41% (min $500 to open) account review
• SmartyPig - 1.35% (min $25, max $50K) withdrawal restrictions, account review
• Incredible Bank - 1.35% Checking ($1K min) account review
• Capital One/Costco - 1.30% InterestPlus Savings ($5K min) quarterly bonuses for $10K+, account review
• American Express Bank - 1.30%, account review
• Clear Sky Accounts - 1.30% account review
• Sallie Mae Bank - 1.30% (Upromise rewards) account review
• Capital One - 1.25% InterestPlus Savings ($1K min) quarterly bonuses for $10K+, account review
• Discover Bank - 1.25% Savings (min $500) account review
• CNB Bank Direct - 1.20% account review
• Alliant Credit Union - 1.15% (min $100) account review
• Zions Bank - 1.11% ($1K min)
• WTDirect - 1.11% ($10K min) account review
• Hudson City Savings Bank - 1.10% (min $2.5K)
• ING Direct - 1.10% Orange Savings
• Colorado Federal Savings Bank - 1.10% ($2.5K min) account review
• Ally Bank - 1.09% MMA account review

• Noteworthy Accounts - Local Only

• Mid America Bank & Trust Company - 1.44% (min $10K) in MO
• Affinity Bank (formerly Atlanta Business) - 1.40% MMA (min $100K) in GA
• Solera National Bank - 1.25% (min $100) in CO

3-Month Certificates of Deposit:

• Best 3-Month CD Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• Self-Help CU - 1.01% (min $500) account review
• Fort Knox FCU - 1.00% (min $500)
• TotalBank - 0.85% e-CD (min $1K)
• Virtual Bank - 0.75% (min $10K)
• Ally Bank - 0.64%

• Noteworthy Accounts - Local Only

• PlainsCapital Bank - 2.00% (min $1K, max $100K) in Fort Worth, TX
• Self Reliance New York FCU - 1.45% (min $500) in NYC
• Bank of Georgetown - 1.40% (4-mo w/relationship) (min $1K) in Washington DC metro

6-Month Certificates of Deposit:

• Best 6-Month CD Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• Connexus CU - 1.50% Active checking required, account review
• Colorado Federal Savings Bank - 1.10% ($5K min)
• Aurora Bank FSB - 1.09% (min $1K)
• Virtual Bank - 1.06% (min $10K)
• OneWest Bank - 1.05% (min $1K)
• Ally Bank - 1.04%

• Noteworthy Accounts - Local Only

• Massena Savings and Loan - 2.56% IRA-only (min $2.5K) in NY
• Self Reliance New York FCU - 1.65% (min $500) in NYC
• First Peoples Community Credit Union - 1.50% (min $5K) in MD, PA & WV
• Industrial Credit Union - 1.40% (min $1K) in MA
• F&A Federal Credit Union - 1.35% (min $50K) in CA
• Fayetteville Bank - 1.26% (min $500) (1.41% $100K+) in TX

9-Month Certificates of Deposit:

• Dime Savings Bank - 1.65% (10-mo) (min $500) req active chk account review
• TotalBank - 1.15% e-CD (min $1K)
• Virtual Bank - 1.11% (min $10K)
• OneWest Bank - 1.10% (min $1K)
• Discover Bank - 1.05% (min $2.5K)

• Noteworthy Accounts - Local Only

• Miami Postal Service CU - 1.76% (min $5K) in Miami, FL
• Self Reliance New York FCU - 1.70% (min $500) in NYC
• NavyArmy FCU - 1.20% (min $100K) in South TX

12-Month Certificates of Deposit:

• Best One-Year CD Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• Connexus CU - 1.75% Active checking required, account review
• RTN Federal Credit Union - 1.55% (min $50K)
• Melrose CU - 1.41% (min $5K) account review
• Bank of Internet - 1.36% (min $1K) account review
• Salem Five - 1.35% (14-mo) (min $10K)
• CNB Bank Direct - 1.35% (min $25K) account review
• Incredible Bank - 1.30% (min $10K)
• Discover Bank - 1.30% (min $2.5K) account review
• Alliant Credit Union - 1.30% (min $25K) account review
• Colorado Federal Savings Bank - 1.30% (min $5K)
• Ally Bank - 1.29% (min $0) account review
• Choice Financial - 1.25% (13 mo) (min $5K) add-on feature, account review
• Ally Bank - 1.20% (11-mo) (min $0) No-Penalty CD

• Noteworthy Accounts - Local Only

• Self Reliance New York FCU - 2.00% (min $500) in NYC
• University of Iowa Community CU - 1.80% (15-mo) (min $100K) in Iowa
• First Peoples Community Credit Union - 1.75% (min $5K) in MD, PA & WV
• Barksdale Federal Credit Union - 1.61% (min $1K) in Louisiana
• Industrial Credit Union - 1.60% (min $1K) in MA
• NavyArmy FCU - 1.60% (min $100K) in South TX
• Fayetteville Bank - 1.56% (min $100K) in TX
• Progressive Credit Union - 1.51% in NYC

18-Month Certificates of Deposit:

• Best 18-Month CD Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• Franklin Synergy Bank - 1.56% (min $1K)
• Alliant Credit Union - 1.55% (min $25K) account review
• Fort Knox FCU - 1.50% (min $500)
• CNB Bank Direct - 1.50% (min $25K) account review
• Velocity Credit Union - 1.46% (min $10K)
• Nationwide Bank - 1.40% (min $500)
• Aurora Bank FSB - 1.40% (min $1K)
• Colorado Federal Savings Bank - 1.40% ($5K min)
• Discover Bank - 1.35% (min $2.5K), account review
• USAA Bank - 1.35% (min $1K) (1.65% $175K min) account review
• Ally Bank - 1.35% (no min)
• First Savings Bank Northwest - 1.28% unlimited add-on (min $500) account review

• Noteworthy Accounts - Local Only

• Massena Savings and Loan - 2.82% IRA-only (min $200) in NY
• Self Reliance New York FCU - 2.10% (min $500) in NYC
• Truliant Credit Union - 1.50% (17-mo) (min $1K) in NC, SC & VA

24-Month Certificates of Deposit:

• Best Two-Year CD Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• Salem Five - 1.75% (min $10K)
• Fort Knox FCU - 1.75% (min $500)
• Alliant Credit Union - 1.70% (min $25K) account review
• Melrose CU - 1.66% (min $5K) account review
• CNB Bank Direct - 1.65% (min $25K) account review
• Bank of Internet - 1.60% (min $1K)
• OneWest Bank - 1.50% (min $1K)
• Ally Bank - 1.50% Raise Your Rate CD
• Colorado Federal Savings Bank - 1.50% ($5K min)

• Noteworthy Accounts - Local Only

• Self Reliance New York FCU - 2.35% (min $500) in NYC
• Barksdale Federal Credit Union - 2.12% (min $1K) in Louisiana
• University of Iowa Community CU - 2.10% (25-mo) (min $100K) in Iowa
• NavyArmy FCU - 2.00% (min $100K) in South TX

36-Month Certificate of Deposit:

• Best 3-Year CD Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• RTN Federal Credit Union - 2.25% (min $50K)
• Fort Knox FCU - 2.25% (min $500)
• Melrose CU - 2.17% (min $5K) account review
• America's Credit Union - 2.04% (min $25K)
• OneWest Bank - 2.00% (min $1K)
• Nationwide Bank - 1.95% (min $500)
• Bank of Internet - 1.91% (min $1K)
• Alliant Credit Union - 1.90% (min $25K) account review
• USAA Bank - 1.85% (min $1K) (2.10% $175K min) account review
• EverBank - 1.83% ($1.5K min) account review
• Andrews FCU - 1.80% (min $1K) account review
• Colorado Federal Savings Bank - 1.80% ($5K min)
• US Bank - 1.75% (37-mo) (min $1K)
• Sallie Mae Bank - 1.75% (no min) account review
• Pentagon Federal CU - 1.75% (min $1K), account review

• Noteworthy Accounts - Local Only

• Sea Comm Federal Credit Union - 2.63% (min $1K) in Northern NY
• Massena Savings and Loan - 2.56% (min $1K) in NY
• First Peoples Community Credit Union - 2.50% (39-mo) (min $5K) in MD, PA & WV
• Barksdale Federal Credit Union - 2.43% (min $1K) in Louisiana
• Security Service FCU - 2.35% (min $100K) in TX & CO
• Redding Bank in Commerce - 2.27% (min $100K) in Northern CA
• EBSB Direct - 2.25% (min $1K) in New England & NY
• Montauk Credit Union - 2.25% in NYC
• Fort Bragg Federal Credit Union - 2.23% (min $25K) in NC

48-Month Certificate of Deposit:

• Best 4-Year CD Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• Fort Knox FCU - 2.55% (min $500)
• Melrose CU - 2.42% (min $5K) account review
• SunTrust Bank - 2.40% (min $2K in 39mo & min $2K in 63mo) account review
• Alliant Credit Union - 2.30% (min $25K) account review
• Self-Help CU - 2.28% (min $500) account review
• EverBank - 2.25% ($1.5K min) account review
• OneWest Bank - 2.25% (min $1K)
• Hudson City Bank - 2.25% (min $5K) account review
• Pentagon Federal CU - 2.25% (min $1K), account review
• Bank of Internet - 2.16% (min $1K)

• Noteworthy Accounts - Local Only

• Barksdale Federal Credit Union - 2.89% (min $1K) in Louisiana
• Sea Comm Federal Credit Union - 2.75% (min $1K) in Northern NY
• LOMTO FCU - 2.60% in NYC
• The Napoleon State Bank - 2.58% (min $50K) in IN
• Police & Fire Credit Union - 2.50% (min $500) in PA
• First Community CU - 2.42% w/relationship (min $300) in MI

60-Month Certificate of Deposit:

• Best 5-Year CD Rates (Nationwide & by State)

• Noteworthy Accounts Available Nationwide:

• Connexus CU - 3.00% Active checking required, account review
• Melrose CU - 2.93% (min $5K) account review
• Digital Credit Union - 2.76% (min $25K) (3.00% w/relationship)
• Salem Five - 2.75% (min $10K)
• Kaiser Federal Bank - 2.75% (min $10K)
• Fort Knox FCU - 2.75% (min $500)
• Velocity Credit Union - 2.63% (min $1K) (2.73% IRA)
• EverBank - 2.61% ($1.5K min) account review
• Nationwide Bank - 2.55% (min $500)
• US Bank - 2.50% (59-mo) (min $1K)
• OneWest Bank - 2.50% (min $1K)
• Pentagon Federal CU - 2.50% (min $1K), account review
• Navy FCU - 2.40% ($20K min) (2.50% $100K+) restrictions to membership, account review
• First Internet Bank - 2.40% (min $1K)
• Ally Bank - 2.39% (min $0) account review
• Sallie Mae Bank - 2.35% (no min) account review
• Colorado Federal Savings Bank - 2.35% ($5K min)
• USAA Bank - 2.30% (min $1K) (2.45% $175K min) account review

• Noteworthy Accounts - Local Only

• PEF Federal Credit Union - 3.29% (min $500)
• Barksdale Federal Credit Union - 3.04% (min $1K) in Louisiana
• Security Service FCU - 3.00% (min $100K) in TX & CO
• Police & Fire Credit Union - 3.00% (min $500) in PA
• Sea Comm Federal Credit Union - 2.99% (min $1K) in Northern NY
• LOMTO FCU - 2.95% in NYC
• First Choice Bank - 2.90% (min $1K) in NJ
• First Peoples Community Credit Union - 2.80% (min $5K) in MD, PA & WV
• Hudson Valley Credit Union - 2.75% (min $500) in NY State
• F&A Federal Credit Union - 2.70% (min $50K) in CA

84-Month Certificate of Deposit:

• Best 6+-Year CD Rates (Nationwide & by State)

• Capital One - Costco - 3.05% 10yr (min $5K)
• Capital One Direct Banking - 3.00% 10-yr (min $5K)
• Pentagon Federal CU - 3.00% 7yr (min $1K), account review
• Navy FCU - 2.85% 7yr ($20K min) restrictions to membership, account review
• Discover Bank - 2.70% 7yr (min $2.5K) (3.00% 10yr) account review
• USAA Bank - 2.60% 7yr (min $1K) (2.69% $175K min) account review
• Apple FCU - 2.60% 7yr (min $500) (3.25% 10yr) account review

• Noteworthy Accounts - Local Only

• Security Service FCU - 3.50% 7yr (min $100K) in TX & CO
• Randolph-Brooks Credit Union - 3.45% 7yr (min $75K) in Central TX
• Anchor Mutual Savings Bank - 3.00% 8yr (min $500) in WA
• Montauk Credit Union - 3.00% 7yr in NYC
• Cardinal Bank - 2.91% 6yr (min $1K) in VA, DC & MD
• Access National Bank - 2.85% 7yr (min $10K) in VA, DC & MD

Various Deposit Account Deals

• Bank Deals Forum
• Checking/Savings Account Bonuses
• Best IRA CD rates, local and nationwide deals
• Latest CD and Savings Account Deals with No Major Deposit Limitiations

Bank Account Alternatives

• Ford Interest Advantage - 1.65% rate for $50k+, Ford Interest Advantage review
• GE Interest Plus - 1.45% rate for $50k+
• Paypal Money Market Fund - 0.14% 7-day yield
• Vanguard Tax-Exempt Money Market Fund - 0.14% 7-day yield
• Vanguard Prime Money Market Fund - 0.05% 7-day yield
• Fidelity Money Market Fund - 0.01% 7-day yield (reviews on Fatwallet)
• Fidelity Municipal Money Market Fund - 0.01% 7-day yield
• TIAA-CREF Money Market Fund - 0.00% 7-day yield
• FW Thread on Treasury Bills
• I & EE Savings Bonds for 2010, I Bond Article, I Bonds as CD Alternatives

Historical Rates from the Federal Reserve (Federal funds, Treasury bills, CD's)