Best Bank Account Interest Rates - Summary for April 2, 2011

Comments (16)
Apr 2, 2011 - 7:34 PM by Ken Tumin

Two economic trends that will lead the Fed to end their ultra-low interest rate policy will be lower unemployment rates and higher inflation. We saw both this week as reported by this CNBC article. The jobs report on Friday was stronger than expected. For inflation, the CEO of Walmart warned this week that inflation "is going to be serious".

The question that's hard to answer is how much job growth and how much inflation will it take for the Fed to tighten its monetary policy and raise rates. As the CNBC article describes, some of the hawkish Fed members were speaking out this week about the need for the Fed to start thinking about changing course. However, one of the dovish Fed members said in a speech that we're "still very far away from achieving our dual mandate of maximum sustainable employment and price stability."

As I mentioned before, it's probably going to be a long path before the rate hikes begin. The Calculated Risk blog's timeline estimates that we will see the first rate hike by early 2012 if economic conditions continue to improve. The first test of this timeline will be in the next few months as the Fed makes its decisions about ending QE2.

Instead of describing the changes in yields and future rate expectations, I'm trying something new. Below is a quick summary of these changes since last week based on bond rate data and the CME Group FedWatch. As you can see, there wasn't much change this week.

Fed funds futures' implied probability for a higher rate by:

  • Dec 2011: 45.7% down from 46.5% last week
  • Jan 2012: 66.8%
  • Mar 2012: 79.6%

Treasury Yields:

  • 5--year: 2.24% up from 2.16% last week
  • 10-year: 3.44% same as last week
  • 30-year: 4.48% down from 4.50% last week

One trend that's becoming clear this year is that fewer banks are failing. There were only 3 bank failures in March, and there were no failures for the first Friday of April. The total number of bank failures for 2011 remains at 26. Last year at this time, there had been 41 bank closures.

Savings Account Rates

Another one of the rate leaders made a cut this week. SFGI Direct reduced its savings account yield from 1.31% to 1.21% APY.

On a positive note, we have a new rate leader. Tennessee Commerce Bank (TCB) is offering 1.55% APY for balances of $100K to $250K and 1.50% APY for balances of $250 to $100K. For new customers, this will require a checking account to qualify for these rates. I have more details about this bank in my Tuesday account review. I haven't been following TCB much since 2009 when they stopped offering the TCB savings account that had been paying 2.30% APY. For those who were able to get in back then, they have been rewarded as one commenter described:

I opened the TCB Savings account back in September 2009 and shortly after that they stopped accepting new accounts. They held the interest rate at 2.29% from September 2009 until March 1, 2011. Compared to other savings accounts I felt I was fortunate to get in under the wire on that rate! They recently changed the rate to 1.49% as you listed in your post.

Not all banks have this reputation. AmTrustDirect is one. I added to my list AmTrustDirect's Premium e-Money Market which has a competitive rate of 1.25% APY for balances of $10K to $150K. In the past, AmTrustDirect made it a practice to create new savings accounts with teaser rates while the rates on the old accounts went way down. I don't know if this has continued since New York Community Bank took over (AmTrust Bank failed in December 2009).

Additions:

  1. Tennessee Commerce Bank Savings w/chk - 1.55% $100K-$250K, 1.50% $250-$100K
  2. AmTrustDirect Premium eMMA - 1.25% $10K-$150K

Rate Hikes:

  1. None

Rate Cuts:

  1. SFGI Direct Savings - 1.21% (was 1.31%)
  2. Savings Square Savings - 0.75% (was 1.00%)

Certificate of Deposit Rates

We lost a few rate leaders this week. CNB Bank Direct was one of the bank leaders for terms of 12 to 24 months. It reduced rates by 15 basis points this week. RTN Federal Credit Union had top 12-month and 36-month rates for a $50K minimum. Those rates went down by 25 basis points this week.

On the plus side, Doral Bank Direct started offering a 1-year CD with a 1.40% APY. This is the highest 1-year CD rate from a bank and is close to the Melrose Credit Union's 1-year CD rate which is the best rate from a credit union that doesn't require an active checking account. Two things to note about Doral are that the CD isn't available in several states and a few readers have reported customer service issues.

Navy Federal Credit Union made some substantial rate hikes on its long-term CDs this week. Its 7-year CD now has the top rate of 3.40% APY for a $20K minimum (3.30% for a $1K minimum). One thing to note about Navy Federal is that membership is limited to those who have a military connection.

In addition to Navy Federal, I reported on a few other banks and credit unions this week which have recently raised their long-term CD rates. These are mostly local deals, but they do add to what seems to be the start of a trend of higher long-term CD rates. I'm not going to say it's a definite trend until we start to see more 3.00%+ 5-year CDs.

The problem for CD investors is deciding on the term of the CD when there's the possibility of much higher rates in the future. We've long discussed the strategy of going long on CDs with mild early withdrawal penalties. The risks of this strategy was shown this week when we learned that Fort Knox Federal Credit Union increased the EWP from 90 days to 180 days of interest on existing CDs (see post).

If you don't want the risk of being locked into a long-term CD, you will likely be disappointed with the current yields on short-term CDs especially those with maturities under one year. If you are considering this type of CD, don't forget Ally Bank's 11-month No-Penalty CD. Its yield is better than almost all other CDs with maturities of 3, 6 and 9 months. The No-Penalty feature allows you to make this CD a 3-month CD, a 6-month CD or virtually any maturity of up to 11 months.

There is only one reason that I can think of which someone would choose Ally's 3-month, 6-month or 9-month CD instead of its No-Penalty 11-month CD. If you hope that you'll be offered a 0.25% bonus rate for a CD renewal, an Ally short-term CD may make sense. Some have reported being offered a 0.25% rate bonus for renewing their Ally CDs. In addition, some have reported being allowed to change terms and add to their CDs. This can make a small 3-month CD worthwhile. However, there's no guarantee that you'll be offered the rate bonus when your CD matures. If you had success with this, please leave a comment on your experience.

Reward Checking Accounts

We lost one of the two nationwide rate leaders this week. Coulee Bank started to restrict its reward checking account to residents of Wisconsin, Minnesota and Iowa. The account still has a 3.03% APY on balances up to $25K. That leaves Danversbank as the only nationwide reward checking account with a 3% APY on balances up to $25K. Unfortunately, the future of Danversbank's reward checking is in doubt due to Danversbank pending acquisition by People's United.

Even though it's not possible to find nationally available reward checking accounts with rates over 3.00% (for balances up to $25K), there are still many local deals available. I reviewed a couple of these this week. The best one is Home Federal Bank in Louisiana which has a reward checking account paying 4.00% APY on balances up to $25K. The 4-percent club has been shrinking, but there are still many banks in this club.

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

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 April 2, 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
Anonymous

Anonymous - #1, Saturday, April 2, 2011 - 7:59 PM

Seems like everything is costing more but our government keeps putting out reports that inflation is in check. Who do you believe?


5
Anonymous

Anonymous - #2, Saturday, April 2, 2011 - 10:17 PM

A #1 You probably don't understand how quantitative easing works.

This short video will help you:

http://www.youtube.com/watch?v=PTUY16CkS-k


2
Mike

Mike - #3, Saturday, April 2, 2011 - 10:33 PM

Ken, if CD rates and mortgage rates are related to treasury rates...   if the federal reserve is actually able to control them...   how could they ever rise...  without crushing the USA?

I see the potential/actual inflation.  But I see the USA 1.5 Trillion dollar Annual Deficit.  If we were the Fed, charged with the safe guard of the USA...  wouldn't we be voting to keep rates low, so we could pay the interest on the money we borrow as the USA?

We do not take in enough money to pay our current national "mortgage" payment.  And we chose an adjustable rate mortgage.  We borrow money, to pay the money we owe.  Right?  Or am I looking at this in a wrong way?

If rates stay low...  I lose as an individual.  If rates rise...  I may lose bigger as a citizen of the USA.

I'm not making a point.  I'm a student, asking questions.


2
KenBDG

KenBDG - #4, Sunday, April 3, 2011 - 8:17 AM

One thing to keep in mind is that as we start moving toward a more normal monetary policy at the Fed, it's likely that we'll see a flatter yield curve. So it's possible that as the Fed funds rate and short-term interest rates rise, long-term interest rates may not rise as much.


3
Rita

Rita (anonymous) - #5, Sunday, April 3, 2011 - 8:56 AM

Nationwide rate leaders for Reward checking account is offered by  North Star Bank of Texas . The 4.01% APY* rate is paid on amounts up to and including $30,000 and 0.50% APY* for amounts over $30,000

 Qualification:

  • Ten (10) StarCard Debit Card point of sale transactions posted to your account.
  • Have at least one (1) Direct Deposit or one (1) ACH auto debit posted to your account.
  • Log onto StarNet Online Banking at least once per qualification cycle*
  • Enroll and receive electronic statements


    • 1
    Anonymous

    Anonymous - #6, Sunday, April 3, 2011 - 10:12 AM

    @Rita #5:  North Star Bank's application states "All account owners will be required to visit the branch in person to complete the account opening and funding process."  Not exactly nationwide. 


    3
    Anonymous

    Anonymous - #7, Sunday, April 3, 2011 - 11:38 AM

    Mike #3

    In a sense your analysis is true.  That is, if you only look at the externals.  You compared the national deficit to a mortgage and suggested that as a nation it would be foolish to voluntarily pay a higher interest rate.  Unfortunately, I think the Fed sees it the same way.  Let’s keep your example of a mortgage.  If you are paying a monthly mortgage note of $2,000 and your bank offered to lower it to $1,200 would you accept it?  I don’t think you would be able to sign the papers quick enough!  It is the same with our government.  We have the ability to lower and even eliminate our deficits by spending far less money and increasing our revenue.  This would require some very hard and painful decisions by our lawmakers which would guarantee that they would not be re-elected.  That is where our problem lies.  The government isn’t serious in fixing the problem, they inject more money into creating it.  It is like giving a junkie another fix of heroin rather than sending him to rehab to cure him.  Our elected officials are giving our nation one quick “fix” after the other, without addressing the cancerous economic problems that will eventually do in this nation if they are not addressed.

    As another poster stated everything costs much more today.  However, the government doesn’t take certain items into consideration when they determine the inflation numbers.  Take food for example, it costs more but it is not included in the inflation numbers.  I suppose if one stops eating they would save much, but then again they would die.  So the inflation numbers the government uses are really not true indicators of how our country is really doing.

    In short, if any politician wants to be elected or re-elected, they will tell us how much they can give to us.  But one must remember that the money they are giving to us is our own tax dollars, this is what leads us into these great deficit problems.  Holding a political office has become a career, rather than a servant of the people.  Sad, but true.


    5
    Anonymous

    Anonymous - #8, Sunday, April 3, 2011 - 1:17 PM

    University of IOWA credit union had special 16-mon 2.5% CD, which is higher than 18month CD. Reward checking acct is still in 4%. However, I don't know if it is national.


    2
    51hh

    51hh - #9, Sunday, April 3, 2011 - 7:26 PM

    UICCU (University of Iowa Community Credit Union) Membership Qualification:

      -- live or work in one of the following counties in Iowa: Benton, Black Hawk, Buchanan, Cedar, Clinton, Delaware, Des Moines, Dubuque, Grundy, Hamilton, Hardin, Henry, Iowa, Jackson, Jasper, Jefferson, Johnson, Jones, Keokuk, Lee, Linn, Louisa, Lucas, Mahaska, Marion, Marshall, Monroe, Muscatine, Polk, Poweshiek, Scott, Story, Tama, Wapello, Warren, or Washington.

      -- Alumni of Univeristy of Iowa.

    Good luck.:-)


    3
    Anonymous

    Anonymous - #10, Monday, April 4, 2011 - 5:05 PM

    Anonymous # 7

    You raise many good points.  Our current budget problems appear to have originated at the beginning of the 21st century.  Many of the programs, policies, and bureaucratic inventions that came into being over the past decade will have to be disassembled in order to change course.


    4
    Anonymous

    Anonymous - #11, Monday, April 4, 2011 - 5:09 PM

    On Tennessee Commerce Bank's website, the highest rate shown is 1.6 (balances over $250K).

     

    https://www.tncommercebank.com/currentrates.html


    1
    billy

    billy - #12, Monday, April 4, 2011 - 7:54 PM

    Ken,

    In a normal growing economy we SHOULDN'T have a flat yield curve. A growing economy should have a sloped yield curve, because there should be a better return for tying up money for a long time than for a short time.

    A flat yield curve indicates investors have no idea what is going to happen next. It will eventually normalize back to either a normal slope or inversion with the latter indicating a recession.


    2
    Anonymous

    Anonymous - #13, Tuesday, April 5, 2011 - 6:35 AM

    If a flat yield curve indicates investors have no idea what is going to happen next, perhaps Ken has it right.  I don't believe anyone has a clue where we are heading.


    1
    billy

    billy - #14, Tuesday, April 5, 2011 - 9:49 AM

    I agree that nobody knows what is coming next, but we don't have a flat yield curve NOW. So either the bond market thinks things are generally OK now, or else short-term rates are artificially low and we should have a flat yield curve.

    Personally I think the curve is only going to get steeper, especially as it becomes more apparent that inflation is picking up, Investors are going to demand better yields on longer term debt.


    1
    Anonymous

    Anonymous - #15, Wednesday, April 6, 2011 - 4:16 PM

    ABC Bank of Chicago is offering a 24 month special CD at 1.75%. A branch visit is required to open.  This special is not listed on their website, but has been advertised in the Chicago Tribune.  We can confirm that it was available as of today's date.   http://www.abcbank.net/


    1
    Mike

    Mike - #16, Friday, April 8, 2011 - 3:38 PM

    Ken:  Do you think that short term CDs and savings accounts will rise, but that 10 year CDs will barely creep up?  If so, that would indicate to me that I would want to continue laddering with 10 year CDs at present, if they are not likely to rise much over the next few years.  Right?



    Anonymous #7:   The key is not what you and I think, but what "they" think, and how to plan around (profit from/inspite of)  "them."  Your own words show what you think "they" think.  You  wrote,  "You compared the national deficit to a mortgage and suggested that as a nation it would be foolish to voluntarily pay a higher interest rate.  Unfortunately, I think the Fed sees it the same way."

    If your analysis is correct, that is... that the fed sees it the same way, then that is an indication that interest rates will remain Low.


    1

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