Best Bank Account Interest Rates - Summary for February 5, 2011

In a speech that Ben Bernanke gave this week, he described economic conditions that will likely be needed for us to see a change in the monetary policy. In Bernanke's words, "[u]ntil we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established." Also, "overall inflation" and not commodity inflation will have to rise. According to Bernanke:

On the inflation front, we have recently seen significant increases in some highly visible prices, notably for gasoline. Indeed, prices of many commodities have risen lately, largely as a result of the very strong demand from fast-growing emerging market economies, coupled, in some cases, with constraints on supply. Nevertheless, overall inflation remains quite low

On the surface, this week's unemployment data appears to be the early signs of the recovery that Bernanke mentioned. The unemployment rate fell from 9.4% to 9.0% in January. This follows December's decline of 9.8% to 9.4%. However, as described by this Kansas City Star article, the news is muddy:

The rate fell not because job growth mushroomed. It fell mostly because the Bureau of Labor Statistics revised numbers it had relied on last year, and partly because winter weather disrupted businesses and their data reporting.

In summary, a "sustained period of stronger job creation" is still a long way off, and consequently, we probably won't see a change at the Fed anytime soon.

Even though the unemployment news was muddy, the markets are seeing a recovery underway. Expectations for a Fed funds rate hike in December has gone up. The Fed funds future are showing the implied probability of a higher Fed funds rate by next December at 61.9% which is up from last Saturday when it was 38.8%.

Savings Account Rates

Discover Bank and Sallie Mae Bank cut their savings account rates by 5 basis points this week. I thought it would be interesting to see how these two accounts have held up over the last six months. Sallie Mae's rate has fallen from 1.40% to 1.25% APY. Discover Bank's advertised rate has fallen from 1.35% to 1.20% APY (some existing Discover customers have been receiving a higher premium rate). We've seen similar cuts at other major online banks like Ally Bank and Capital One.

It's interesting to note that two of the big internet banks have held their rates unchanged in the last six months. ING Direct's Orange Savings account rate has remained at 1.10% APY since March 2010. ING Direct's Electric Orange's rates have also remained unchanged since March 2010. For those with large balances, the top EO rate is now fairly competitive with a 1.25% APY for balances of at least $100K. ING Direct has never been a rate leader, but it also has never been a major disappointment.

The other big internet bank that has kept rates unchanged is American Express. Like ING, its online savings account rate has remained unchanged since March 2010. However, unlike ING, its rate has been much more competitive with a 1.30% APY.

I don't know if these banks are planning for cuts, but it's nice to see they have held their rates unchanged for almost a year. That's a good sign that we may have reached the bottom of the rate cuts.

Rate Hikes:

1. None

Rate Cuts:

1. Sallie Mae Bank Savings - 1.25% (was 1.30%)
2. Discover Bank Savings - 1.20% (was 1.25%)
3. Discover Bank Premium Savings - 1.30%

Certificate of Deposit Rates

Discover Bank not only cut its savings account rate, but it also cut most of its CD rates by 5 basis points. Bank of Internet USA also made similar cuts.

I was happy to see most of the rate leaders kept their CD rates unchanged for the start of February. I was especially worried for some of the credit unions like PenFed, Melrose, Connexus, Alliant and Fort Knox FCU. But all of these held their CD rates unchanged.

This week I updated the reviews of two of the credit union rate leaders. Connexus Credit Union is the only institution offering a nationally available 5-year CD with a 3.00% APY. However, as I described in my Connexus CD review, there are two major downsides: 1) an active checking account is required, and 2) the early withdrawal penalty is 365 days of interest. For those who prefer a short-term CD, Connexus also has top rates for 6-month and 1-year CDs.

At least for Melrose Credit Union, you don't have to worry about maintaining an active checking account. However, as I described in my Melrose CD review, the early withdrawal penalty is also harsh.

OneWest Bank has also offered some top CD rates in the last few months. Currently, they're offering the best bank CD rate for a 3-year term (2.00% APY). However, as I described in my OneWest CD review, it also has a harsh early withdrawal penalty for terms over 2 year. It used to be only a 6-month penalty, but in June, OneWest changed its CD disclosure for new CDs, and it added what it calls a "market adjustment". If you plan to close the CD early to take advantage of higher interest rates, this market adjustment penalty could eliminate any advantage.

Reward Checking Accounts

If you don't want to lock your money into a long-term CD and if you want higher yields than what online savings accounts provide, reward checking continues to be an option. Many reward checking accounts continue to pay rates higher than the best long-term CDs. One example is a reward checking account that's available for Kentucky residents that I reviewed this week. This reward checking account from Hancock Bank & Trust has a 4.00% APY for balances up to $40K. Not all states have such top reward checking accounts. California is one state that lacks great deals. We only have two California institutions offering yields over 3.00% APY for balances up to $25K. I reviewed one of these this week. The reward checking from Cooperative Center FCU has a 3.01% APY for balances up to $25K. Unlike the Kentucky deal, this isn't statewide.

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

• Regulators Close Three Banks and One Credit Union
• Convenience Banking: ATMs

Savings/Checking Accounts - Nationwide

• Capital One's Online Savings Accounts and Perks for Costco Members

CD Deals - National

• Review of OneWest Bank CD Rates and Terms - Available Nationwide
• Melrose Credit Union's Competitive CD and IRA CD Rates
• Top CD Rates Continue at Connexus Credit Union - Easy Membership

Reward Checking Accounts

• High-Yield Reward Checking at Cooperative Center Federal Credit Union in California - Local Only
• High-Yield Reward Checking Account at Hancock Bank & Trust in Kentucky

CD and Money Market Deals - Local

• Special IRA CD Rates at United Heritage Credit Union in Texas - Local Only
• Competitive CD Rates at E-Central Credit Union in Los Angeles - Easy Membership
• Top 5-Year CD and IRA CD Rates at Redstone Federal Credit Union in Alabama - Limited Membership
• Top CD and IRA CD Rates at University of Iowa Community Credit Union - Local Only
• Top 9-Month CD Rate Continues at Miami Postal Service Credit Union - Local Only
• Competitive 15-Month CD Rate at Greer State Bank in South Carolina - Local Only
• Competitive Money Market & CD Specials at InsBank in Nashville - Local Only
• CD Special and Top Reward Checking Rate at Foothills Federal Credit Union in California - Local Only
• Top 6-Year CD Rate at INOVA FCU in IN, CA & NC - Easy Membership
• Short-Term CD Specials at The First State Bank in Oklahoma - 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 February 5, 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
• Incredible Bank - 1.35% Checking ($1K min) account review
• SmartyPig - 1.35% (min $25, max $50K) withdrawal restrictions, account review
• Clear Sky Accounts - 1.30% account review
• American Express Bank - 1.30%, account review
• Capital One/Costco - 1.30% InterestPlus Savings ($5K min) quarterly bonuses for $10K+, account review
• Capital One - 1.25% InterestPlus Savings ($1K min) quarterly bonuses for $10K+, account review
• Sallie Mae Bank - 1.25% (Upromise rewards) account review
• CNB Bank Direct - 1.20% account review
• Discover Bank - 1.20% Savings (min $500) account review
• Alliant Credit Union - 1.15% (min $100) account review
• WTDirect - 1.11% ($10K min) account review
• Zions Bank - 1.11% ($1K min)
• Colorado Federal Savings Bank - 1.10% ($2.5K min) account review
• ING Direct - 1.10% Orange Savings
• Hudson City Savings Bank - 1.10% (min $2.5K)
• 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
• Aurora Bank FSB - 1.10% (min $1K)
• Colorado Federal Savings Bank - 1.10% ($5K min)
• 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 - 1.00% (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
• CNB Bank Direct - 1.35% (min $25K) account review
• Salem Five - 1.35% (14-mo) (min $10K)
• Bank of Internet - 1.31% (min $1K) account review
• Colorado Federal Savings Bank - 1.30% (min $5K)
• Alliant Credit Union - 1.30% (min $25K) account review
• Incredible Bank - 1.30% (min $10K)
• Ally Bank - 1.29% (min $0) account review
• Choice Financial - 1.25% (13 mo) (min $5K) add-on feature, account review
• Discover Bank - 1.25% (min $2.5K) 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 - 1.95% (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
• NavyArmy FCU - 1.60% (min $100K) in South TX
• Industrial Credit Union - 1.60% (min $1K) in MA
• 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
• CNB Bank Direct - 1.50% (min $25K) account review
• Fort Knox FCU - 1.50% (min $500)
• Velocity Credit Union - 1.46% (min $10K)
• Colorado Federal Savings Bank - 1.40% ($5K min)
• Aurora Bank FSB - 1.40% (min $1K)
• Nationwide Bank - 1.40% (min $500)
• Ally Bank - 1.35% (no min)
• USAA Bank - 1.35% (min $1K) (1.65% $175K min) account review
• Discover Bank - 1.30% (min $2.5K), account review
• 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:

• Fort Knox FCU - 1.75% (min $500)
• Salem Five - 1.75% (min $10K)
• 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 - 1.55% (min $1K)
• Colorado Federal Savings Bank - 1.50% ($5K min)
• Ally Bank - 1.50% Raise Your Rate CD
• OneWest Bank - 1.50% (min $1K)

• 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:

• Fort Knox FCU - 2.25% (min $500)
• RTN Federal Credit Union - 2.25% (min $50K)
• Melrose CU - 2.17% (min $5K) account review
• OneWest Bank - 2.00% (min $1K)
• Nationwide Bank - 1.95% (min $500)
• Alliant Credit Union - 1.90% (min $25K) account review
• America's Credit Union - 1.89% (min $25K)
• Bank of Internet - 1.86% (min $1K)
• USAA Bank - 1.85% (min $1K) (2.10% $175K min) account review
• Colorado Federal Savings Bank - 1.80% ($5K min)
• Andrews FCU - 1.80% (min $1K) account review
• Pentagon Federal CU - 1.75% (min $1K), account review
• Sallie Mae Bank - 1.75% (no min) account review
• US Bank - 1.75% (37-mo) (min $1K)
• EverBank - 1.72% ($1.5K min) 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
• Redding Bank in Commerce - 2.27% (min $100K) in Northern CA
• Montauk Credit Union - 2.25% in NYC
• EBSB Direct - 2.25% (min $1K) in New England & NY
• Fort Bragg Federal Credit Union - 2.23% (min $25K) in NC
• Security Service FCU - 2.20% (min $100K) in TX & CO

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
• Pentagon Federal CU - 2.25% (min $1K), account review
• Hudson City Bank - 2.25% (min $5K) account review
• OneWest Bank - 2.25% (min $1K)
• EverBank - 2.19% ($1.5K min) account review
• Bank of Internet - 2.11% (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)
• Fort Knox FCU - 2.75% (min $500)
• Kaiser Federal Bank - 2.75% (min $10K)
• Salem Five - 2.75% (min $10K)
• Velocity Credit Union - 2.63% (min $1K) (2.73% IRA)
• EverBank - 2.61% ($1.5K min) account review
• Nationwide Bank - 2.55% (min $500)
• Pentagon Federal CU - 2.50% (min $1K), account review
• OneWest Bank - 2.50% (min $1K)
• US Bank - 2.50% (59-mo) (min $1K)
• First Internet Bank - 2.40% (min $1K)
• Navy FCU - 2.40% ($20K min) (2.50% $100K+) restrictions to membership, account review
• Ally Bank - 2.39% (min $0) account review
• Colorado Federal Savings Bank - 2.35% ($5K min)
• Sallie Mae Bank - 2.35% (no min) account review
• 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
• Police & Fire Credit Union - 3.00% (min $500) in PA
• Security Service FCU - 3.00% (min $100K) in TX & CO
• 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
• Randolph-Brooks Credit Union - 2.89% (min $75K) in Central TX
• 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)
• Pentagon Federal CU - 3.00% 7yr (min $1K), account review
• Capital One Direct Banking - 3.00% 10-yr (min $5K)
• Navy FCU - 2.85% 7yr ($20K min) restrictions to membership, account review
• Apple FCU - 2.60% 7yr (min $500) (3.25% 10yr) account review
• USAA Bank - 2.60% 7yr (min $1K) (2.69% $175K min) account review
• Discover Bank - 2.60% 7yr (min $2.5K) (3.00% 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
• Montauk Credit Union - 3.00% 7yr in NYC
• Anchor Mutual Savings Bank - 3.00% 8yr (min $500) in WA
• 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+
• Vanguard Tax-Exempt Money Market Fund - 0.15% 7-day yield
• Paypal Money Market Fund - 0.13% 7-day yield
• Vanguard Prime Money Market Fund - 0.06% 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)