Best Bank Account Interest Rates - Summary for Week Ending September 24, 2011

As expected, the Fed announced the start of Operation Twist on Wednesday. Operation Twist is the informal name for the Fed's attempt to reduce long-term rates by buying long-term debt while selling shorter-term securities. This is already having an effect on Treasury yields. The long-term yields have gone down quite a bit. Short-yields have inched up a little, but I doubt this will help savers any. As this Bloomberg article describes, Operation Twist "will exacerbate problems for banks by eating into already anemic profit margins." Thus, this will likely pressure banks to lower their savings and money market rates.

Another thing causing downward pressure on deposit rates is the worry about the economy. The Fed's statement warned that "there are significant downside risks to the economic outlook," and many investors are not optimistic about Operation Twist improving the economy. These worries impacted the stock market which had a big decline this week. With the stock market tanking, more money will be moved into bank accounts which will be yet another reason for banks to lower deposit rates.

The summary below shows the big drop in long-term yields, and the slight increase in short-term yields. The probabilities of future Fed rate hikes went up a little. However, these remain very low due to the Fed's mid-2013 pledge (Numbers are based on Yahoo bond rate data and the CME Group FedWatch)

Treasury Yields:

• 6-month: 0.01% up from 0.00% last week
• 2--year: 0.21% up from 0.16% last week
• 5--year: 0.86% down from 0.91% last week
• 10-year: 1.83% down from 2.05% last week
• 30-year: 2.90% down from 3.31% last week

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

• Dec 2012: 8.3% up from 7.2% last week
• Mar 2013: 12.5% up from 12.1% last week

Two small banks failed on Friday. One was in Virginia, and the other was in California. That increased the 2011 total number of failed banks in the nation to 73. As of this time last year there had been 127 bank failures for 2010.

Savings & Checking Account Rates

Two of the big internet banks cut their savings account rates this week. Capital One slashed its InterestPlus savings account rate by 15 basis points, and Discover Bank cut its online savings account rate by 10 basis points.

The only good news is that it has been reported that Alliant Credit Union will be keeping its savings account yield at 1.15% APY through at least October.

There are only four banks offering nationally available savings or money market rates above 1.15% APY. Bank of Internet's new division, UFB Direct, continues to offer 1.30% APY on all balances, and Incredible Bank continues to offer a money market account with a 1.25% APY on balances up to $250K. The two internet divisions of New York Community Bank continue to offer the 1.25% APY promotion for balances up to $150K.

Reward Checking Accounts

This was another week with no rate cuts on the reward checking accounts on my list below. However, it should be noted that I'm only listing the top reward checking accounts that are available nationwide. This is now a small list compared to the banks and credit unions which limit their reward checking accounts to residents in their local areas.

Out of all reward checking accounts including those that are just local deals, there are 12 that offer yields of at least 4.00% for balances up to at least $25K (the 4 percent club). However, one will be falling out of this club in October. That is Class Act Federal Credit Union based in Kentucky. The yield will be falling to 3.00%, and the balance cap will be falling from $25K to $20K (hat tip to 51hh for the news). Many banks and credit unions don't announce upcoming rate cuts, so there may be more to report when October starts.

To find the best rates and balance caps in your state, please refer to the reward checking rate table. If you're new to these tables, my rate table guide should be useful, and if you're new to reward checking, my blog post, 10 Common Traits of High-Yield Reward Checking, should also be useful.

Rate Hikes:

1. None

Rate Cuts:

1. Discover Bank Savings - 1.00% (was 1.10%)
2. Colorado FSB Savings - 0.95% (was 1.00%)
3. Capital One Checking - 0.91% (was 1.01%)
4. Capital One/Costco InterestPlus Savings - 0.91% (was 1.06%)
5. Capital One InterestPlus Savings - 0.86% (was 1.01%)

Certificate of Deposit Rates

I reported yesterday that the NCUA has ruled in favor of Fort Knox Federal Credit Union's right to increase the early withdrawal penalty on existing CDs. I have the full details in my blog post. My recap of CD rate changes and the list of CD deals will now be in my Friday survey of the best CD rates. My Saturday recaps will now focus on banking news of the week and liquid accounts.

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

Banking News/Resources

• Two Banks Fail in Virginia and California
• NCUA Rules in Favor of Credit Union That Raised Early Withdrawal Penalty on Existing CDs
• FOMC Meeting: Fed Begins Operation Twist
• Update on DepositAccounts.com Bank Alerts and Bank Promotions

Savings/Checking Accounts - Nationwide

• No new posts

CD Deals - National

• Top 5-Year CD Rates at Firstmark Credit Union in San Antonio - Easy Membership

Checking/Savings/CC Bonuses

• Special CD and Checking Promo at NuVision Federal in SoCal - Local Only
• Larger Checking Account Fees at Citi, But Bonuses Continue

Reward Checking Accounts

• No new posts

CD and Money Market Deals - Local

• Survey of the Best CD Rates for September 23, 2011
• Special 5-Year CD Rate & Gift at First National Bank of Long Island in NY - Local Only
• Competitive CD Rates at City of Boston Credit Union - Local Only
• Special 1-Year & 18-Month CD Rates at Peoples Federal Savings - MA Only
• Competitive 18-Month CD Rate at Embarcadero Bank in San Diego - Local Only
• Top Long-Term CD Rates at Liberty Savings in New Jersey - Local Only
• Competitive CD & IRA CD Rates at United Central Bank in Several States
• Competitive 5-Year CD Rate at Washington Federal in Western States
• Top CD Rates Continue at the Exclusive Progressive Credit Union in New York City

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 September 24, 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:

• UFB Direct (Bank of Internet) - 1.30% Savings account review
• MyBankingDirect - 1.25% (min $5K) promo rate
• AmTrustDirect - 1.25% (min $10K, max $150K) promo rate
• Incredible Bank - 1.25% MMA ($2.5K min) account review
• ING Direct - 1.15% ($100K) 1.10% ($50K) Electric Orange Checking
• Alliant Credit Union - 1.15% (min $100) account review
• Incredible Bank - 1.11% Checking ($1K min) account review
• SFGI Direct - 1.11% (not accepting new accounts) account review
• Sallie Mae Bank - 1.10% MMA account review
• SmartyPig - 1.10% (min $25, max $50K) withdrawal restrictions, account review
• CNB Bank Direct - 1.05% account review
• Clear Sky Accounts - 1.04% (max $250K) account review
• American Express Bank - 1.00%, account review
• ING Direct - 1.00% Orange Savings
• Discover Bank - 1.00% Savings (min $500) account review
• Capital One/Costco - 1.00% InterestPlus Savings ($10K min, includes 10% quarterly bonus) 0.91% (w/o bonus) account review
• Ally Bank - 0.99% MMA account review
• airbanking.com - 0.95% Savings
• Colorado Federal Savings Bank - 0.95% ($2.5K min) account review
• Capital One - 0.93% InterestPlus Savings ($10K min, includes 10% quarterly bonus) 0.85% (w/o bonus) account review
• Capital One - 0.91% Checking (rate guaranteed for 1 yr) 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

• How to View Rates for Your State

• Noteworthy Accounts Available Nationwide:

• Consumers Credit Union - 4.09% (up to $10K) 0.56% ($10K-$25K) 0.35% ($25K+) effective Oct 1st
• Lake Michigan Credit Union - 4.00% (up to $15K) 0.00% ($15K+)
• ABCO Federal Credit Union - 2.52% (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)
• Community Bank of Pleasant Hill - 2.01% (up to $25K) 0.50% ($25K+)
• Community Bank of Raymore - 2.01% (up to $25K) 0.50% ($25K+)
• Atlantic Coast Bank - 2.01% (up to $15K) 0.50% ($15K+)
• Avidia Bank - 2.01% (up to $25K) 0.15% ($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 September 23, 2011 (Nationwide & Local)

Various Deposit Account Deals

• Bank Promotions
• Best IRA CD rates, local and nationwide deals
• Latest CD and Savings Account Deals with No Major Deposit Limitiations

Bank Account Alternatives

• Ford Interest Advantage - 1.25% rate for $50k+, Ford Interest Advantage review
• GE Interest Plus - 1.20% rate for $50k+
• Vanguard Prime Money Market Fund - 0.03% 7-day yield
• Vanguard Tax-Exempt Money Market Fund - 0.03% 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 has ended 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)