Best Bank Account Interest Rates - Summary for Week Ending July 16, 2011

If you're thinking that the debt ceiling deadlock was going to lead to higher rates, you might be in for a surprise. As described in this Calculated Risk blog post, it's very likely we'll see a last minute deal to raise the debt ceiling. Investors appear to be thinking the same thing. Treasury yields actually went down this week even with warnings that the credit rating of the US could fall if Congress doesn't raise the debt ceiling soon. There continues to be more concern over European debt issues. As mentioned in this WSJ article:

In the U.S., the risk of default is mainly political in nature; the money is there to pay the debt. In Europe, however, there is "credit risk," or the possibility that countries can't scrape up the money

That WSJ article also described a rare event this week: "Treasury yields have dipped below zero when adjusted for inflation." This is when conservative investors are hit especially hard as their returns don't keep up with inflation, and that's the inflation reported by the government.

Rising inflation, at least as measured by the CPI-U, is showing signs of slowing. The Labor Department released June inflation data on Friday, and it showed that the seasonally adjusted CPI-U decreased 0.2% in June. For the last 12 months, it's up 3.6%. With inflation slowing and with more weak economic data, I'm afraid higher rates are unlikely anytime soon.

You can see the lower expectations for future rate hikes in the Fed Funds futures. The implied probabilities for Fed rate hikes over the next year were down from last week. Note, the rate hike probabilities for several future FOMC meetings were missing in the CME Group FedWatch webpage so I left off the ones that were missing. Hopefully, this will be corrected next week. The following summary is based on bond rate data and the CME Group FedWatch.

Treasury Yields:

• 5--year: 1.44% down from 1.57% last week
• 10-year: 2.91% down from 3.02% last week
• 30-year: 4.24% down from 4.28% last week

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

• Apr 2012: 26.2% down from 27.5% last week
• Jun 2012: 28.7% down from 46.2% last week
• Dec 2012: 63.4%

Even with the CPI-U falling slightly in June, it's still up over the last 3 months. In 3 more months, we'll have the CPI-U numbers to know the next inflation component of the Series I Savings Bonds. This could make I Bond purchases in late October very attractive as a short-term deal.

On the subject of I Bonds, there was big news this week from the Treasury. It announced that we will no longer be able to purchase paper savings bonds from banks and credit unions after this year. They want people to switch over to TreasuryDirect. As I described in my end of paper savings bonds post, this will effectively cut the amount of I Bonds that we can purchase per year from $10K to $5K unless you buy them with your tax refund.

The FDIC and the NCUA were active this week again with failing financial institutions. Four small banks and one credit union were closed by regulators. That brings the total number of bank failures for 2011 to 55 and the total number of credit union liquidations to 12. The four bank failures were typical. However, there were some interesting circumstances regarding the credit union liquidation.

Savings Account Rates

The higher savings and money market rate at Ally Bank didn't last long. The 1.09% APY only lasted about a week. It's now back down to 1.04% APY.

Hopefully, Ally's savings account rate will stay about one percent. Two of Ally's internet competitors joined the sub-1% group. Both Flagstar Direct and WTDirect made large cuts which lowered their money market and savings account rates to under 1% APY.

I added one new internet bank to the list. MainStreet Bank's new airbanking.com is offering an internet savings account that's paying 1.10% APY. That may sound low, but 1.10% is near the middle on my savings account list.

A little more attractive addition is from Dime Savings Bank. I just learned today that they're offering a promotional 1.75% APY on their money market account with the rate guaranteed for 6 months. However, it requires an active checking account which has potential monthly fees. I have a review in this Dime Savings Bank money market promotion post.

Rate Hikes:

1. Dime Savings Bank MMA promo - 1.75% for 6mo w/chk (new)
2. airbanking.com savings - 1.10% (new to the list)

Rate Cuts:

1. Ally Bank Savings/MMA - 1.04% (was 1.09%)
2. Flagstar Direct MMA - 0.90% (was 1.11%)
3. WTDirect Savings - 0.76% (was 1.01%)

Certificate of Deposit Rates

My recap of CD rate changes and the list of CD deals will now be in my Friday surveys of the best CD rates. My Saturday recaps will now focus on banking news of the week and liquid accounts.

Reward Checking Accounts

With the CD rates being moved to my Friday post, I thought this would be a good time to expand my listing of reward checking accounts. I'll just highlight a few of the top reward checking accounts that are nationally available. You can refer to our reward checking table to see all of the nationwide and local rates.

In addition to being nationally available, the institutions on the list have to offer at least 2.00% APY for balances of at least $10K. I decided not to make this $25K since there are some with a $10K cap that are still good deals for balances of up to $25K. As I monitor these accounts, I'll include rate change summaries like I've done with the savings accounts.

In addition to rate and balance cap changes, we may also see some that become local-only deals. Credit unions may eliminate an easy method of membership or they may restrict reward checking accounts to members within their market area. It has been rare for credit unions to limit accounts to their market area, but it has been common for banks. So please keep that in mind if you try to apply for an account at one of these institutions. If you do get rejected for being out-of-state, please leave a comment.

There were two noteworthy reward checking accounts that I reviewed this week. First is the reward checking account at ABCO Federal Credit Union in New Jersey. This is another credit union which provides an easy way for anyone to qualify for membership. Also, the reward checking rate is very competitive for nationally available accounts: 2.52% APY for balances up to $25K.

The second one isn't noteworthy for a top rate, but it's noteworthy in that a major internet bank is offering a reward checking account. It's Bank of Internet. The main downside is a top rate that's low for reward checking: 1.25% APY. With Incredible Bank paying 1.21% APY with no monthly requirements, it's hard to justify the extra work. However, it does have a few nice features such as the lack of a balance cap.

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

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

Banking News/Resources

• Does Christian Lopez Have to Pay Taxes from Returning Derek Jeeter's 3000th Hit?
• Regulators Close Four Banks & One Questionable Credit Union
• Credit Unions Don't Always Have Fewer Fees Than Banks
• Paper Savings Bonds Will No Longer Be Sold by Banks
• What Happens if the U.S. Defaults on Its Debt?

Savings/Checking Accounts - Nationwide

• Money Market Account Special at Dime Savings Bank in New York
• FNBO Direct's Special Offer for Existing Customers and Keeping Accounts Open

CD Deals - National

• Survey of the Best CD Rates for July 15, 2011
• Issues and Tips on Closing CDs at Dime Savings Bank & Other Banks
• New Internet Savings Accounts and CDs at airbanking
• Top 2-Year CD Rate at Northrop Grumman Federal Credit Union - Easy Membership
• The Lure of the Long-Term CD Rates - iGObanking vs Ally Bank

Checking/Savings/CC Bonuses

• iPod touch KeyBank Checking Account Promotion - Certain States Only

Reward Checking Accounts

• The New Free Rewards Checking Account at Bank of Internet
• High-Yield Reward Checking at ABCO Federal Credit Union in NJ - Easy Membership

CD and Money Market Deals - Local

• Survey of the Best CD Rates for July 15, 2011
• Top Southern California 18-Month CD Rate at Borrego Springs Bank - Local Only
• Top Long-Term CD & IRA CD Rates at EECU in Fort Worth Texas - Local Only
• Top CD Rates Continue at Chasewood Bank in Houston - Local Only
• Competitive Long-Term CD Rate at Third Federal in Florida & Ohio
• Competitive Rates on Add-On CDs in Phoenix at Bank 1440 - Local Only
• Top 4-Year CD Rates at FCN Bank in Parts of IN & OH - Local Only

Posts from Previous Weeks

• Archive of 2011 Posts

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.

Rates as of July 16, 2011

Checking/Savings/Money Market Accounts:

• Best Savings Account Rates (Nationwide & by State)
• Best Money Market Rates (Nationwide & by State)
• Best Checking Account Rates (Nationwide & by State)

• How to View Rates for Your State

• Noteworthy Accounts Available Nationwide:

• Dime Savings Bank - 1.75% MMA 6-month promo w/chk, promo & acct review
• Capital One/Costco - 1.26% InterestPlus Savings ($10K min, includes 10% quarterly bonus) 1.15% (w/o bonus) account review
• MyBankingDirect - 1.25% (min $5K) promo rate
• AmTrustDirect - 1.25% (min $10K, max $150K) promo rate
• Incredible Bank - 1.25% MMA ($100K min) 1.15% (under $100K) account review
• Incredible Bank - 1.21% Checking ($1K min) account review
• Capital One - 1.20% InterestPlus Savings ($10K min, includes 10% quarterly bonus) 1.10% (w/o bonus) account review
• SFGI Direct - 1.16% (min $500 to open) account review
• ING Direct - 1.15% ($100K) 1.10% ($50K) Electric Orange Checking
• CNB Bank Direct - 1.15% account review
• Alliant Credit Union - 1.15% (min $100) account review
• Discover Bank - 1.15% Savings (min $500) account review
• airbanking.com - 1.10% Savings
• Clear Sky Accounts - 1.10% (max $250K) account review
• SmartyPig - 1.10% (min $25, max $50K) withdrawal restrictions, account review
• Sallie Mae Bank - 1.10% (Upromise rewards) account review
• Colorado Federal Savings Bank - 1.10% ($2.5K min) account review
• Hudson City Savings Bank - 1.05% (min $2.5K)
• Ally Bank - 1.04% MMA account review
• EverBank - 1.01% MMA ($5K min)
• American Express Bank - 1.00%, account review
• ING Direct - 1.00% Orange Savings
• Zions Bank - 0.95% ($1K min)
• Flagstar Direct - 0.90% MMA
• WTDirect - 0.76% ($10K min) account review

Reward Checking Accounts:

• Best Reward Checking Account Rates for a $10,000 Balance - Nationally Available
• Best Reward Checking Account Rates for a $25,000 Balance - Nationally Available

• How to View Rates for Your State

• Noteworthy Accounts Available Nationwide:

• Consumers Credit Union - 4.09% (up to $10K) 1.59% ($10K-$25K) 0.76% ($25K+)
• Lake Michigan Credit Union - 4.00% (up to $15K) 0.00% ($15K+)
• Atlantic Coast Bank - 3.01% (up to $15K) 0.50% ($15K+)
• ABCO Federal Credit Union - 2.52% (up to $25K) 0.00% ($25K+)
• Community Bank of Pleasant Hil - 2.51% (up to $25K) 0.50% ($25K+)
• Community Bank of Raymore - 2.51% (up to $25K) 0.50% ($25K+)
• Avidia Bank - 2.27% (up to $25K) 0.25% ($25K+)
• Pacific Resource Credit Union - 2.27% (up to $15K) 0.61% ($15K+)
• Provident Credit Union - 2.26% (up to $25K) 0.31% ($25K+)
• Connexus Credit Union - 2.00% (up to $25K) 0.50% ($25K+)

Certificates of Deposit:

• Best CD Rates (Nationwide & by State)
• Best IRA CD Rates (Nationwide & by State)

• How to View Rates for Your State

• Survey of the Best CD Rates for July 15, 2011 (Nationwide & Local)

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

• GE Interest Plus - 1.30% rate for $50k+
• Ford Interest Advantage - 1.25% rate for $50k+, Ford Interest Advantage review
• Vanguard Prime Money Market Fund - 0.03% 7-day yield
• Vanguard Tax-Exempt Money Market Fund - 0.01% 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
• PayPal Money Market Fund is closing effective 7/29/11
• FW Thread on Treasury Bills
• I Savings Bonds for 2011, I Bond Article, I Bonds as CD Alternatives

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