Best Bank Account Interest Rates - Summary for Week Ending May 28, 2011

Comments (3)
May 28, 2011 - 10:42 AM by Ken Tumin

This was another week with no signs of future rate hikes. Treasury yields continued to fall as concerns grew over a European debt crisis and soft economic data in the U.S. The one bit of good news is gas prices which are now down about 16 cents from the recent peak. That should give a little boost to the economy.

For those who were worrying about runaway inflation which forces interest rates to shoot up, don't forget the other possible scenario: what Japan has experienced since 1990. In that case, the economy remained weak, inflation stayed low and interest rates remained at rock bottom levels. No one can predict what will happen here in the U.S. for the next 5 years, but don't forget Japan's history. If that occurs here, those who went long with CDs will do better than those staying in savings accounts and short-term CDs. You might not want to place all your bets on any one possibility.

Falling Treasury yields and reduced expectations for future Fed rate hikes can be seen in the charts. The 5-, 10- and 30-year Treasury yields all dropped from last week. While the implied probability of a December Fed funds rate hike stayed about the same since last week, the implied probabilities for rate hikes early next year went down significantly. 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: 12.9% up from 12.7% last week
  • Jan 2012: 21.1% down from 25.1% last week
  • Mar 2012: 28.2% down from 35.1% last week
  • Apr 2012: 40.3% down from 51.8% last week

Treasury Yields:

  • 5--year: 1.72% down from 1.79% last week
  • 10-year: 3.07% down from 3.14% last week
  • 30-year: 4.24% down from 4.30% last week

The Friday before the Memorial Day weekend was quiet with just one bank failure (First Heritage Bank in Washington State). That puts the year's bank failure total at 44.

Savings Account Rates

Tennessee Commerce Bank is no longer listing its savings account special. This had yields of 1.50% to 1.60% APY. Hopefully, TCB will keep these top rates for several months for those were able to sign up. Based on its past promotions, TCB does have a good record.

Salem Five Direct's savings account promotion is nearing an end. It's schedule to expire on June 1st. The promotion guarantees 1.25% APY for up to $1 million until April 1, 2012. I'm glad they were able to keep it going to its scheduled end date. A deal this good has often been pulled early at other banks.

Rate Hikes:

  1. None

Rate Cuts:

  1. Tennessee Commerce Bank savings account promo ends for new customers
  2. Hudson City Internet Money Market Savings - 1.05% (was 1.15%)

Certificate of Deposit Rates

In addition to removing its savings account special, Tennessee Commerce Bank cut the rates of its three special CDs. The old rates were near the top of my lists for 3-, 4- and 5-year terms. The new rates are now near the bottom.

Another disappointment was at Nationwide Bank. It has been slowly cutting its CD rates almost every week for the last month. This last week, rates fell again by 5 to 10 basis points.

About a month ago, Salem Five pleasantly surprised me by raising its 2-year CD special rate from 1.50% to 1.75% APY. That ended this week. The rate is now back down to 1.50% APY.

Another major bank that cut its special CD rates was SunTrust. It's no longer showing the special 39-month/63-month CD which had a 2.40% APY or the special 2.70% APY 66-month CD. The only decent special long-term CD that it's listing now is a 2.25% APY 59-month CD. I wasn't going to list this, but since this matches PenFed's 5-year CD rate, I went ahead and put it on the list.

With these bank rate cuts, credit union rates are rising on my lists. We may see some changes next week with the new month. Credit unions often change rates at the start of each month. Velocity Credit Union's 24-month and 36-month CD specials are scheduled to end on May 31st. They have extended these specials a few times, but I'm not optimistic they will be extended again.

As a reminder for those who may buy or renew CDs at PenFed, an important change to its early withdrawal penalty was made earlier this year. As a reader noted in the discussion forum, the 5-year CD now has an early withdrawal penalty of up to 1-year of interest. It used to be only 6 months of interest. With a yield of only 2.25%, not many readers may open this 5-year CD. But if rates go up next month (fingers crossed), PenFed members need to know about this change before jumping on this 5-year CD.

PenFed's change on its early withdrawal penalty makes Ally Bank's 5-year CD more appealing. Its yield of 2.39% is just a little higher than PenFed's 5-year CD, but the 60-day early withdrawal penalty is now one-sixth the penalty of PenFed's CD (see my Ally Bank CD review).

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. There's a new rate leader for terms around 7 years. It's a small bank in southeast Mississippi that's offering 3.75% APY on a 8-year CD ($100K minimum). Unfortunately, not many will qualify for this deal since the bank only accepts local deposits.

Reward Checking Accounts

It's appearing more likely that legislation that will delay the implementation of the debit card interchange fee regulation will pass Congress. According to this Seeking Alpha article, the Senate may soon vote on this bill, and its passage appears likely. That will be good news for reward checking accounts which depend on the debit card interchange fees to fund the high interest rates.

As I discussed on Monday, reward checking accounts don't need any more headwinds. If the interchange fee regulation is delayed, that will hopefully help reduce the number of reward checking rate and balance cap cuts that we have been seeing.

If you're new to reward checking, my recent post, 10 Common Traits of High-Yield Reward Checking, should come in handy.

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. Be sure to use the "Filter Accounts" button above the table to compare accounts in your state.

Recap for the Week - Links to This Week's Posts

Banking News/Resources

Savings/Checking Accounts - Nationwide

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 May 28, 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, May 28, 2011 - 2:45 PM

I opened a 7 year $20K (3.40%) CD today at Navy Federal Credit Union and the service rep told me I was lucky I did because the interest rate is scheduled to drop to 3.15% next week. In fact, the new interest rate sheet she had indicated the rates for all terms of share certicates will be decreasing. Very depressing...


11
Bozo

Bozo - #2, Sunday, May 29, 2011 - 5:29 PM

With the ten-year bond hovering just above 3%, it's a wonder banks and credit unions aren't charging us to keep our money. Before you giggle at that, I read something recently about banks in China doing just that. It's a thouight.


5
S_S

S_S (anonymous) - #5, Thursday, June 2, 2011 - 12:57 AM

Bad news, today, got a email notice from Coulee Bank that the rewards checking account interest rate is dropping to 2.55% APY starting June 1st, 2011.


1

Add Your 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