Best Bank Account Interest Rates - Summary for Week Ending December 31, 2011

Happy New Year! We're just hours away from 2012, and I wish all of my readers a healthy and joyful new year. We all know that 2011 was tough on savers, and it looks like we'll have to remain patient in 2012. There continues to be signs of U.S. economic improvement this last week of 2011. However, Europe remains a headwind to economic growth, and this will likely continue into 2012. That appears to be why most Treasury yields declined this week. According to Bloomberg:

The benchmark 10-year note yield closed at 1.88 percent yesterday in New York, according to Bloomberg Bond Trader prices, its lowest at year-end since at least 1963. It tumbled 142 basis points, or 1.42 percentage points, from Dec. 31, 2010, in the biggest annual decrease since the 181 basis-point drop in 2008.

When banks and credit unions have more deposits then they can use for loans, they will often invest the surplus in Treasuries. So Treasury yields provide some indications of future deposit rates. Economic growth that increases loan demand can help offset low Treasury yields. That may help prevent deposit rates from falling in 2012. Also, as the economy grows, unemployment rates will fall and the Fed will eventually hike rates. Based on last week's changes in Treasury yields and the Fed funds rate futures, we're going to have to be patient in 2012. The summary of the yields is shown below (Numbers are based on Yahoo bond rate data and the CME Group FedWatch.)

Treasury Yields:

• 6-month: 0.04% up from 0.02% last week
• 2--year: 0.24% down from 0.28% last week
• 5--year: 0.83% down from 0.97% last week
• 10-year: 1.87% down from 2.02% last week
• 30-year: 2.89% down from 3.05% last week

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

• Dec 2012: 7.3% down from 14.6% last week
• Mar 2013: 8.1% down from 18.6% last week
• July 2013: 17.1% down from 33.0% last week

There were no bank or credit union failures on Friday. So we're ending 2011 with a total of 92 bank failures and 16 credit union liquidations (15 federally insured and 1 ASI insured). Last year there were 157 bank failures and 19 credit union liquidations. I'm currently working on my full 2011 summary of bank and credit union failures, and I should have it published in the next day or two.

Savings & Checking Account Rates

I confirmed with an Alliant Credit Union rep that Alliant Credit Union's savings account yield will be falling from 1.15% to 1.00% in January. They were able to keep the 1.15% APY for all of 2011. So hopefully they will be able to keep 1.00% APY for all of 2012.

UFB Direct continues to hold a big lead with the best savings account rate. Its 1.30% APY has held since August. It will be interesting to see how this does in 2012. UFB Direct is the new internet division of BofI Federal Bank (formerly named Bank of Internet USA). Since UFB Direct is focused on airline mileage rewards, it's hard for me to believe that they will keep the savings account with such a competitive yield.

Based on a readers comment, I added three banks to the list. These include Nationwide Bank's money market account, One United Bank's E-Money Market account and HSBC Advance's savings account. I used to include these accounts in my weekly summary in previous years. I removed them from the list when their rates fell too low. They're still not good deals compared to the rate leaders. However, their rates have fallen less than others. So I added them back to the list.

To offset the new additions, I decided to remove SmartyPig savings account from the list. With a rate of only 0.70%, it was at the bottom of the list. Also, the $50K balance cap was another factor for its removal. If they can maintain this rate while rates of other banks fall, I may put it back on the list.

I decided to keep Capital One's checking account on the list. Its rate is only 0.75%. However, they still have a 1-year rate guarantee. Customers who open this account may appreciate that rate guarantee by the time summer arrives.

Reward Checking Accounts

There continues to be no rate cuts on my short list of nationally available reward checking accounts. It'll be interesting to see if this continues as January starts. I have five on the list with yields between 2.00% and 2.52% for balances up to $25,000. Those yields may sound low, but we need to compare it to internet savings accounts, most of which now have yields of 1.00% or lower. Based on the math behind reward checking, it seems the best we can reasonably hope for are yield spreads of around one percentage point.

The institution with the best nationally available rate on balances up to $25K is currently ABCO Federal Credit Union. It's a New Jersey credit union which makes it easy for anyone to join via an association membership. There were concerns that a branch visit may be required to open an account. However, I received confirmation this week from an ABCO FCU rep that accounts can be opened by mail.

Please note that banks and credit unions have often added restrictions on opening new reward checking accounts. I don't do weekly checks of the availability of these accounts. So if you try to apply for one of these accounts, and you find that you don't qualify due to where you live, please leave a comment.

If you're lucky, you'll live in an area where you can qualify for one of the few 4-percent club members. There are now only 5 of these left. These are reward checking accounts that offer at least 4.00% APY on balances of at least $25K. Two of them have fallen off the list as we start the new year.

To see the reward checking account rates available 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. Alliant CU Savings - 1.00% sch for Jan [currently 1.15%]
2. Alliant CU Checking - 0.95% sch for Jan [currently 1.10%]

Certificate of Deposit Rates

My recap of CD rate changes and the list of CD deals will now be in my survey of the best CD rates. This recap 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

• 10 Top Deposit Account News Stories of 2011
• How to Fight Your Retirement Fears

Savings/Checking Accounts - Nationwide

• Competitive CD & Money Market Rates at Nationwide Bank
• Top CD and Savings Account Rates Continue at KeySource Commercial Bank in NC

CD Deals/Resources - National

• Survey of the Best CD Rates for December 30, 2011
• CD Rate History Review and CD Strategies for 2012

Checking/Savings/CC Bonuses

• Kindle Fire Checking Account Bonus at Washington Savings Bank in MA & NH - Local Only

Reward Checking Accounts

• Reward Checking & Savings Accounts at Washington Savings Bank in MA & NH

CD and Money Market Deals - Local

• Competitive Long-Term CD Rates at Charter Oak FCU in CT - Local Only
• Special 3-Year CD Rate at Florida Credit Union - Local Only
• Top CD & Savings Account Rates at American Plus Bank in CA - Local Only
• 4-Month CD Special at First Entertainment Credit Union in SoCal - 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 December 31, 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
• Flagstar Bank - 1.25% savings (4-month promo) promo review
• Alliant Credit Union - 1.15% (min $100) Savings (January APY 1.00%) account review
• MyBankingDirect - 1.15% (min $5K) promo rate
• AmTrustDirect - 1.15% (min $5K) promo rate
• Alliant Credit Union - 1.10% Checking (January APY 0.95%) (req's elec. dep & e-stmts) account review
• Incredible Bank - 1.10% MMA ($2.5K min) account review
• Clear Sky Accounts - 1.04% (max $250K) account review
• SFGI Direct - 1.01% account review
• Incredible Bank - 1.01% Checking ($1K min) account review
• Sallie Mae Bank - 1.00% MMA & Savings account review
• 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
• airbanking.com - 0.95% Savings
• ING Direct - 0.95% ($100K) 0.90% ($50K) Electric Orange Checking
• One United Bank - 0.95% ($100K) 0.85% ($1K) E-Money Market
• Nationwide Bank - 0.95% MMA (min $1K)
• CNB Bank Direct - 0.90% account review
• American Express Bank - 0.90%, account review
• Hudson City Savings Bank - 0.90% (min $2.5K)
• Ally Bank - 0.89% MMA/savings account review
• Capital One - 0.88% InterestPlus Savings ($10K min, includes 10% quarterly bonus) 0.80% (w/o bonus) account review
• Colorado Federal Savings Bank - 0.85% ($2.5K min) account review
• ING Direct - 0.85% Orange Savings
• HSBC Advance - 0.80% Savings
• Capital One - 0.75% Checking (rate guaranteed for 1 yr) 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) 0.56% ($10K-$25K) 0.35% ($25K+)
• Lake Michigan Credit Union - 3.00% (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) 0.50% ($15K+)
• Provident Credit Union - 2.26% (up to $25K) 0.31% ($25K+)
• First New England Federal Credit Union - 2.03% (up to $15K) 0.10% ($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+)
• Connexus Credit Union - 2.00% (up to $25K) 0.50% ($25K+)
• Heritage Bank - 1.71% (up to $25K) 0.10% ($25K+)
• Avidia Bank - 1.66% (up to $25K) 0.10% ($25K+)
• North Country Savings Bank - 1.50% (up to $50K) 0.75% ($50K+)
• West Texas National Bank - 1.26% (up to $25K) 0.25% ($25K+)
• Bank of Internet USA - 1.25% APY (all balances)

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 December 30, 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 - 0.02% 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 has ended effective 7/29/11
• FW Thread on Treasury Bills
• Series I Savings Bonds for November 2011, I Bond Article, I Bonds as CD Alternatives

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