Best Bank Account Interest Rates - Summary for March 26, 2011

Leave a comment
Mar 26, 2011 - 6:17 PM by Ken Tumin

In the last two years it seems like everything has gone against savers. In addition to the Fed's zero-interest rate policy, the FDIC has capped deposit rates for weak banks and new regulations have put pressure on the banks to lower deposit rates. The latest regulation that may add to this pressure is the interchange regulation which will cap interchange fees from debit cards. This regulation is the result of the Durbin Amendment that was part of last year's Dodd-Frank financial reform. It requires the Federal Reserve to implement a cap on debit card interchange fees. April 21 is the day the Federal Reserve is scheduled to approve the final rules, and the rules are to take effect on July 21.

The interchange regulation was designed to only impact large banks with assets of at least $10 billion. However, there are several ways that this regulation could hit small institutions, and this would likely give banks another reason to lower deposit rates especially on reward checking accounts.

The only thing that can prevent the new regulation from taking effect is the passage of new legislation that was recently introduced in the House and Senate that calls for a delay of the interchange regulation from taking effect by up to two years. This delay is intended to allow for a new study to examine the effects of this interchange regulation.

For it to pass, the bill will need at least 60 votes in the Senate. According to this Credit Union Times article, it's an "uphill fight".

On a positive note, there have been fewer bank failures. There was only one failure yesterday, and the total for March was only 3 compared to 19 for March of 2010.

On another positive note, yields rose this week due to reduced concern that the problems in Japan and Libya will impact the global economy. The 10-year Treasury yields rose from 3.27% to 3.44% and the 30-year Treasury yields rose from 4.41% to 4.50%.

Higher yields were also predicted by the Fed funds futures. The implied probability of a higher Fed funds rate by next December is now 46.5% which is way up from last Saturday when it was 29.5%.

Savings Account Rates

The rates of two more savings accounts dropped to one percent this week. Ally Bank cut its savings and money market rates from 1.05% to 1.00%. WTDirect cut its savings account rate from 1.11% to 1.01% APY for balances of $10K+. After three years of rate cuts, you have to wonder when will it end.

The Morrill and Janes Bank with its 1.51% checking account continues to have a big lead for the top liquid account rate that's not a promo and that doesn't have a balance cap. Second place goes to SFGI Direct's savings account which has a 1.31% APY. Both of these are relatively small banks so you have to wonder how long they'll be able to remain rate leaders. If they do reach their deposit limits, it's possible that they could stop accepting new applications rather than reducing rates. Temporarily suspending new account applications has been common at SFGI Direct in the last two years.

Rate Hikes:

  1. None

Rate Cuts:

  1. WTDirect Savings - 1.01% $10K+ (was 1.11%)
  2. Ally Savings/MMA - 1.00% (was 1.05%)

Certificate of Deposit Rates

One of the two banks that had been offering a special 3.00% 5-year CD in February cut its special rate again this week. Kaiser Federal Bank reduced its special 5-year CD rate from 2.75% to 2.50% APY. That other one, Sovereign Bank, continues to offer 2.80% APY which is the highest nationally available 5-year CD rate for a bank. Melrose Credit Union continues to offer 2.93% APY which is the highest nationally available 5-year CD rate for a credit union that doesn't require a checking account.

If you think inflation and interest rates will soon be shooting up and if you don't want to rely on early withdrawals on CDs, a short-term CD would be something to consider. However, short-term CD rates currently provide very little benefit over savings account rates. For terms under 1-year, the best short-term CD deal continues to be at Ally Bank which offers a 1.15% APY 11-month no-penalty CD. The yield is comparable to internet savings accounts, but at least you don't have to worry about this rate dropping for 11 months after you open this CD. You would have to rely on the early withdrawal if rates do shoot up within 11 months, but since the no-penalty is in the name of this CD, that shouldn't be a concern.

If you want higher bank rates without a reward checking account, you'll have to rely on long-term CDs. You can reduce the risk of being stuck in a low-interest-rate CD by using CD ladders and by choosing CDs with mild early withdrawal penalties. I provided another look at this in my recent post The Best CD Rates and the Smallest Early Withdrawal Penalties. As I mentioned in November, relying on early withdrawals on your CDs has some risks.

Reward Checking Accounts

We lost one of the two remaining 5 percent reward checking accounts this week. Erie GE Federal Credit Union in Pennsylvania reduced the yield on its reward checking account from 5.12% to 4.07% APY for balances up to $25K. The last remaining institution in the 5% club is Southern Bank which still offers 5.01% APY on balances up to $25K. You can still apply online for this account if you live in Missouri or Arkansas. Thanks to reader 51hh who mentioned this news in the discussion forum.

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

CD and Money Market Deals - Local

Posts from Previous Weeks

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.

Rates as of March 26, 2011

Checking/Savings/Money Market Accounts:

  • Noteworthy Accounts Available Nationwide:

3-Month Certificates of Deposit:

  • Noteworthy Accounts Available Nationwide:

6-Month Certificates of Deposit:

  • Noteworthy Accounts Available Nationwide:

9-Month Certificates of Deposit:

12-Month Certificates of Deposit:

  • Noteworthy Accounts Available Nationwide:

18-Month Certificates of Deposit:

  • Noteworthy Accounts Available Nationwide:

24-Month Certificates of Deposit:

  • Noteworthy Accounts Available Nationwide:

36-Month Certificate of Deposit:

  • Noteworthy Accounts Available Nationwide:

48-Month Certificate of Deposit:

  • Noteworthy Accounts Available Nationwide:

60-Month Certificate of Deposit:

  • Noteworthy Accounts Available Nationwide:

84-Month Certificate of Deposit:

Various Deposit Account Deals


Bank Account Alternatives

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


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

Be the First to Comment


Post a Comment

Featured Accounts
Related Posts
Best Bank Account Interest Rates - Summary for Week Ending May 26, 2012Best Bank Account Interest Rates - Summary for Week Ending May 26, 2012
Best Bank Account Interest Rates - Summary for Week Ending May 19, 2012Best Bank Account Interest Rates - Summary for Week Ending May 19, 2012
Survey of the Best CD Rates for May 18, 2012Survey of the Best CD Rates for May 18, 2012
Best Bank Account Interest Rates - Summary for Week Ending May 12, 2012Best Bank Account Interest Rates - Summary for Week Ending May 12, 2012
Best Bank Account Interest Rates - Summary for Week Ending May 5, 2012Best Bank Account Interest Rates - Summary for Week Ending May 5, 2012
Best Bank Account Interest Rates - Summary for Week Ending April 28, 2012Best Bank Account Interest Rates - Summary for Week Ending April 28, 2012
Best Bank Account Interest Rates - Summary for Week Ending April 21, 2012Best Bank Account Interest Rates - Summary for Week Ending April 21, 2012
Best Bank Account Interest Rates - Summary for Week Ending April 15, 2012Best Bank Account Interest Rates - Summary for Week Ending April 15, 2012
Useful Resources
Nationwide Savings Accounts