Best Bank Account Interest Rates - Summary for Week Ending August 6, 2011
In July there were worries that there would be no agreement to raise the debt ceiling. One of the possible consequences could have been higher Treasury yields and higher deposit rates. The opposite actually occurred last week. As many had predicted, a last minute deal to raise the debt ceiling passed. Then came some bad economic news along with news of financial problems growing worse in Europe. That helped trigger a stock market crash and a flight to safety on Thursday which pushed down Treasury yields.
But the Treasury yields may not stay down. Late Friday, the S&P downgraded the U.S. credit rating from AAA to AA+. Now the question is how will this impact Treasury yields? This Time.com article speculated about the consequences of a downgrade last Wednesday. It referenced a NYT chart that showed countries with slightly lower credit ratings had bond yields that averaged 1.15% higher than the countries with AAA ratings. However, this WSJ article had some good points about why Treasury yields won't rise:
investors are most concerned about a weakening U.S. economy, an environment that should support Treasury prices until fears of a recession abate. Meanwhile, the so-called bond vigilantes, who are supposed to enforce fiscal discipline, have been notably absent since the financial crisis. And remember, Japan lost its triple-A rating in 2001 and its 10-year note yields about 1%.
So just like the debt ceiling crisis, the credit rating downgrade may not have any effect on Treasury yields. It may actually have the opposite effect. The downgrade may add to the fear in the market which tends to drive investors away from equities and into Treasuries which pushes down yields.
The fifth FOMC meeting of the year is scheduled for this Tuesday, and it will be interesting to see if there are any signs of QE3. This CNBC article speculates that QE3 might involve the Fed purchasing Treasury securities with maturities of 10 years or greater to hold down long-term rates with the intent of stimulating the economy.
With worries of a pending global recession, the expected timeline of higher Fed fund rates has been pushed out. It's starting to look like we may not see a Fed funds rate hike until 2013. The details of reduced expectations for Fed fund rate hikes and lower Treasury yields can be seen below. These numbers are based on Yahoo bond rate data and the CME Group FedWatch.
- 5--year: 1.25% down from 1.35% last week
- 10-year: 2.56% down from 2.80% last week
- 30-year: 3.84% down from 4.12% last week
- Apr 2012: 5.9% down from 30.0% two weeks ago
- Jun 2012: 5.9% down from 32.3% two weeks ago
- Dec 2012: 26.9% down from 67.6% two weeks ago
Savings Account Rates
Several internet banks cut their savings account rates in the last two weeks. SFGI Direct not only reduced its savings account rate, but it also temporarily stopped accepting new applications. It has done this a few other times in the past. Hopefully, it will eventually open up the application process. With its new 1.11% APY, it shouldn't have to worry about too many new applications. Of course if rates continue to decline, this may look more appealing in a few months.
Not all savings account news was bad. Bank of Internet USA introduced a new internet division called UFB Direct which offers a new checking and savings account that earn airline miles. The most noteworthy feature of these accounts is the savings account yield of 1.30% APY. This is now the top savings account rate on my list. The chief marketing officer claims it's not a promotional rate. Nevertheless, I'll be surprised if the 1.30% APY lasts into 2012. Before UFB Direct, Bank of Internet's highest savings account rate was only 0.80%. My guess is that the 1.30% will fall sometime around November. So you may have a chance at a very competitive savings account yield for at least a few months.
One other change to my savings account list is the addition of Sallie Mae Bank's money market account. Its yield is 5 basis points higher than the savings account yield (1.15% APY vs 1.10% APY). We've been listing this money market account with this yield in the rate tables since March, but I haven't been including it in my top savings account list. Like the savings account, the money market account has no monthly fees and no rate tiers. The one downside compared to the savings account is that it has no annual match on Upromise rewards.
Rate Hikes:
- UFB Direct (Bank of Internet) savings - 1.30% (newly added)
Rate Cuts:
- SFGI Direct Savings - 1.11% (was 1.16%) - not accepting new applications
- Discover Bank Savings - 1.10% (was 1.15%)
- CNB Bank Direct - 1.05% (was 1.15%)
- Hudson City Savings Account - 0.90% (was 1.00%)
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
I'm happy to report that there were no rate cuts to any of the top nationally available reward checking accounts. My list below only includes those which are available to people in any state and those that have top yields of at least 2.00% for balances of at least $10K.
Hopefully, none of these banks and credit unions will do what Liberty National Bank did. As I reported on Tuesday, Liberty National Bank will be converting the reward checking accounts of its out-of-state customers to free checking accounts. Even though it has been common for banks to stop offering their reward checking accounts nationwide, it has been rare for them to force changes on existing customers. Nevertheless, if you have a choice between a nationwide deal and a local deal, I would give the edge to the local deal if all other things are equal.
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- Two Banks in Illinois and Washington State Closed by Regulators
- Recap of Recent Bank Deals and News
- 10 Money Saving Apps for Your Mobile Device
- Bank of Internet's New Airline Miles Rewards Savings & Checking Accounts
- Savings Accounts with Consistently Top Rates
- No new posts
- Top CD Rates at Signature Bank in New York City - Local Only
- Top CD Rates at HAPO Community Credit Union - Washington State Only
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)
- Noteworthy Accounts Available Nationwide:
- UFB Direct (Bank of Internet) - 1.30% Savings
- Capital One/Costco - 1.26% InterestPlus Savings ($10K min, includes 10% quarterly bonus) 1.15% (w/o bonus) account review
- Incredible Bank - 1.25% MMA ($100K min) 1.15% (under $100K) account review
- AmTrustDirect - 1.25% (min $10K, max $150K) promo rate
- MyBankingDirect - 1.25% (min $5K) promo rate
- 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
- Sallie Mae Bank - 1.15% MMA (Upromise rewards) account review
- Alliant Credit Union - 1.15% (min $100) account review
- ING Direct - 1.15% ($100K) 1.10% ($50K) Electric Orange Checking
- SFGI Direct - 1.11% (not accepting new accounts) account review
- Colorado Federal Savings Bank - 1.10% ($2.5K min) account review
- SmartyPig - 1.10% (min $25, max $50K) withdrawal restrictions, account review
- Clear Sky Accounts - 1.10% (max $250K) account review
- airbanking.com - 1.10% Savings
- Discover Bank - 1.10% Savings (min $500) account review
- CNB Bank Direct - 1.05% account review
- Ally Bank - 1.04% MMA account review
- EverBank - 1.01% MMA ($5K min)
- ING Direct - 1.00% Orange Savings
- American Express Bank - 1.00%, account review
- Hudson City Savings Bank - 0.90% (min $2.5K)
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
- 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 Raymore - 2.51% (up to $25K) 0.50% ($25K+)
- Community Bank of Pleasant Hil - 2.51% (up to $25K) 0.50% ($25K+)
- Pacific Resource Credit Union - 2.27% (up to $15K) 0.61% ($15K+)
- Provident Credit Union - 2.26% (up to $25K) 0.31% ($25K+)
- First New England Federal Credit Union - 2.03% (up to $15K) 0.25% ($15K+) (extra 1% w/relationship)
- 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)
- Survey of the Best CD Rates for August 5, 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 - 0.02% 7-day yield
- Vanguard Tax-Exempt Money Market Fund - 0.02% 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
Anonymous - #1, Sunday, August 7, 2011 - 12:14 PM
anybody aware of a list of CD issuers with a 3 month early withdrawal fee? most are 6 month. I am looking for a similar Ally Bank type situation.
KenBDG - #2, Sunday, August 7, 2011 - 12:59 PM
Consumers Credit Union has a 4-month early withdrawal penalty on its long-term CDs. I reviewed their special 59-month CD in late July. Unfortunately, their CD rates have recently fallen 50 basis points.
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