Best Bank Account Interest Rates - Summary for April 30, 2011

Comments (4)
Apr 30, 2011 - 8:46 PM by Ken Tumin

The Fed held its third FOMC meeting of 2011 this week, and there is still no signs of future rate hikes. After the meeting, Bernanke took questions from reporters for the first time in the Fed's history. The news conference highlighted the two important economic conditions that the Fed is focusing on: the unemployment rate and core inflation. It's unlikely we'll see a move toward rate hikes until the unemployment rate falls substantially or until core inflation (which excludes energy and food) rises substantially. The Fed acknowledged the increases in energy and commodity prices, but they consider "these effects to be transitory".

Based on recent history, large gas price hikes have been followed by big drops. This happened in 2005 when gas prices spiked due to Katrina and in 2008 when gas prices peaked during the summer and then plummeted during the financial crisis. Unless we're headed into another recession, I don't know how we'll see lower energy prices. The worry is that we'll see years of stagflation or biflation. Both of these conditions are especially tough on savers.

The markets don't seem to be too worried about inflation. The expectations for Fed rate hikes in the next year went down this week. Also, Treasury yields went down. Details can be seen in the following summary which is based on bond rate data and the CME Group FedWatch.

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

  • Dec 2011: 23.4% down from 31.3% last week
  • Jan 2012: 40.7% down from 48.3% last week
  • Mar 2012: 53.9% down from 60.0% last week

Treasury Yields:

  • 5--year: 1.97% down from 2.11% last week
  • 10-year: 3.29% down from 3.40% last week
  • 30-year: 4.40% down from 4.47% last week

Savings Account Rates

There weren't any rate cuts this week on my list of top liquid accounts, but the list did shrink. The Morrill and Janes Bank stopped offering its 1.51% checking account nationwide. It's now only available for residents in Kansas and Missouri.

The question now is how long will Morrill and Janes Bank be able to maintain the high rate. As I descried in my post, it's a small bank that may have trouble growing loans enough to pay for the cost of all the deposits it attracted. If rates are cut, how fast will they drop?

We may have a 21st Century version of the boiling frog anecdote which claims a frog won't jump out of the water if it's slowly heated. If banks slowly reduce rates, do fewer savers jump? I have a feeling many banks do "boil" savers that way.

Tennessee Commerce Bank is still offering a tiered-rate savings account with yields that range from 1.50% to 1.60%. Although this bank just started to offer this promotion, it does have a good history of maintaining competitive rates for past promotions.

If you want a guarantee that a rate won't drop, the best deal is currently at Salem Five Direct which is still offering 1.25% APY with the rate guaranteed until April 1, 2012. This is a good deal for everyone except those who already have this savings account. As I described in this post, a few readers found out the hard way that they don't qualify.

Rate Hikes:

  1. None

Rate Cuts:

  1. None

Certificate of Deposit Rates

We had another week of fairly steady CD rates. We may see more changes next week after a new month starts. Credit unions often change rates at the start of each month.

There was one nice rate hike this week. Salem Five increased the rate of its 2-year CD special from 1.50% to 1.75% APY.

I was going to take Velocity Credit Union's special 2-year and 3-year CDs off the list since they had been scheduled to end today, but the credit union once again extended these for another month. Both of these CDs are very competitive. One can qualify to be a Velocity member by joining an association (see review).

I made one change this week to my CD rate listings. I added Ally Bank's 5-year CD to the shorter-term CD lists. I calculated the effective yields based on an early withdrawal with the 60-day interest penalty. As we saw with Fort Knox FCU (see post), there is some risk that institutions will increase the penalty on existing CDs. Even though I've received assurances from an Ally Bank official that changes wouldn't impact existing CDs, I can't say it's without risk.

Best Local CD Rates

If you're lucky, you may be able to find local CD rates higher than the rates below which are nationally available. I did a new survey of the best local CD rates yesterday. Two notable additions were CD specials from Sovereign Bank in the Dallas/Fort Worth metro area and the 7-year CD from the BOK Financial banks that are located in several states including Arizona, Colorado and Texas.

Even if you can't find a local CD rate higher than what's available online, would a local CD still be preferable? I asked this question in the my poll Best Way to Open a CD: Branch or Online?. If the rates and terms are the same, 62% of the 61 people who took the poll said they would open the CD at the branch instead of online. The poll is still open, so feel free to vote if you haven't already.

Reward Checking Accounts

I didn't report on any new reward checking accounts this week, but I did review some of the best reward checking accounts that are available in Florida. Unlike some states, there aren't any hot deals in Florida. Currently, you can't get much better than the nationally available reward checking accounts at First National Bank and Danversbank. Both of these have yields of 3.01% APY for balances up to $25K.

Are you new to reward checking? If you are, my recent post, 10 Common Traits of High-Yield Reward Checking, may come in handy. I tried to include some lesser-known traits so hopefully it will also be informative to the experienced reward checking users.

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

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 30, 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
bmahendra

bmahendra - #1, Saturday, April 30, 2011 - 10:50 PM

Dear Ken,

I like your blog, but you should do the following for Capital One / Costco accounts...they should be broken up to correctly reflect the highest rate offered:

Capital One/Costco - 1.265% InterestPlus Savings ($10K min) with 10% quarterly bonuses for $10K ,

Capital One/Costco - 1.15% InterestPlus Savings ($5K min) quarterly bonuses for $10K ,

Capital One - 1.21% InterestPlus Savings ($10K min) with 10% quarterly bonuses for $10K ,

Capital One - 1.10% InterestPlus Savings ($1K min) quarterly bonuses for $10K ,

 

Also the rate for TN Commerce Bank is incorrect...some of your high networth readers could benefit from the following information:

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

Tennessee Commerce Bank - 1.60% ($250K min) or 1.55% (100k min) or (1.50% $250 min) req chk


6
KenBDG

KenBDG - #3, Sunday, May 1, 2011 - 8:14 AM

@bmahendra, those are good points. I'll incorporate them into next week's summary. Thanks.

@anonymous, thanks for your concerns. I consider bmahendra's comments as constructive criticism which is always welcomed. If you think something can be improved, feel free to comment.


6
Anonymous

Anonymous - #4, Sunday, May 1, 2011 - 4:39 PM

As I recall, Ally has been working on offering IRA accounts for some time now. Ken, or anyone, any word on when the Ally IRA accouns might happen? Thanks.


1
sgms

sgms (anonymous) - #5, Monday, May 2, 2011 - 9:23 PM

I opened a Capital One High Interest Free Checking this past Saturday ... 1.5% APY on balances up to 100K ... rate guaranteed for one year ... in case it's also of interest to others ... below is the link:

http://www.capitalone.com/banking/personal/?linkid=WWW_Z_Z_Z_Z_H1_03_T_BPCNS


1

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