Best Bank Account Interest Rates - Summary for Week Ending January 7, 2012

Some encouraging economic data came out this first week of 2012. The unemployment rate dropped to 8.5% which is the lowest level in almost three years. However, as the CR blog described in its summary for the week "This is better than recent reports, but still weak for a recovery." Also, it's probably not good enough for the Fed. The New York Fed President William C. Dudley said the following on Friday:

because the outlook for unemployment is unacceptably high relative to our dual mandate and the outlook for inflation is moderate, I believe it is also appropriate to continue to evaluate whether we could provide additional accommodation

We may see additional accommodation at the next Fed meeting on January 24-25 in the form of projections for the federal funds rate that could suggest near-zero rates past mid-2013. News of this came on Tuesday with the minutes from the Fed's December meeting.

The positive economic news did help to provide a little lift to Treasury yields and expectations of future federal funds rates. However, the worries over Europe's debt crisis continues to offset some of the positive US economic news. 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: 0.03% down from 0.04% last week
• 2--year: 0.25% up from 0.24% last week
• 5--year: 0.85% up from 0.83% last week
• 10-year: 1.96% up from 1.87% last week
• 30-year: 3.01% up from 2.89% last week

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

• Dec 2012: 10.0% up from 7.3% last week
• Mar 2013: 15.4% up from 8.1% last week
• July 2013: 25.2% up from 17.1% last week

There was some good news for savers this week. The Treasury announced an increase in the purchase limit of online savings bonds from $5,000 to $10,000 per savings bond series.

Also, no banks failed this week. We'll have to wait to next week for the first bank failure of 2012. In a Monday post I reviewed the bank and credit union failures in 2011.

Savings & Checking Account Rates

The New Year didn't start off good for savers. Several banks and credit unions lowered their savings and checking account rates. The rate cut that we learned about in December took effect at Alliant Credit Union this week.

Another cut that wasn't much of a surprise was at Capital One. The rate of its InterestPlus Savings account for Costco members fell from 0.91% to 0.85%. The rate of the non-Costco version fell to 0.80% in December, so this was to be expected.

A cut that was more of a surprise was at ING Direct which just reduced rates on its Orange Savings and Electric Orange accounts. The savings account rate fell from 0.85% to 0.80%, and the top two tiers of the EO account fell 5 basis points.

Rates above 1.00% are becoming rare. I only have five accounts with yields between 1.10% and 1.30%. Only two of those five are non-promotional rates. UFB Direct continues on top with a 1.30% APY, and Incredible Bank's money market account has a 1.10% APY.

UFB Direct's 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.

Reward Checking Accounts

I'm pleasantly surprised to see there continues to be no rate cuts on my short list of nationally available reward checking accounts. I have five on the list with yields between 2.00% and 2.52% for balances up to $25,000. I also added a new one with a 3.00% APY on balances up to $25K. However, there's a big "asterisk" with this one since it has the toughest monthly requirements that I've seen on any reward checking account. Customers have to spend a total of $1,000 per month using their debit card to qualify for 3.00%.

Most of the reward checking accounts are local deals, and we did see rate cuts on many of these last week. This was especially true of the 4.00% club. These are reward checking accounts with yields of at least 4.00% APY for balances up to at least $25K. The number of these went down this week from 7 to 3. I reviewed these on Wednesday.

There were also cuts on some popular reward checking accounts that used to be nationally available. ViewPoint Bank in Texas used to allow anyone in the nation to apply for its reward checking account, the Absolute Checking. It then was limited to only Texas residents. For all of 2010 and most of 2011, it maintained a 4.00% APY. This yield used to apply to balances up to $50K. That fell to $25K in November 2010. The rate finally started to fall in the second half of 2011. The yield fell to 3.00% in September, and this week it fell to 2.00%.

ViewPoint Bank shows that we shouldn't be too dependent on reward checking accounts. Rates and balance caps can fall dramatically. There was a time when reward checking accounts looked like they could replace CDs. They provided higher rates without locking up your money. However, unlike CDs, reward checking rates can fall quickly and unpredictably.

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% [was 1.15%]
2. Alliant CU Checking - 0.95% [was 1.10%]
3. Clear Sky Savings - 1.00% [was 1.04%]
4. Capital One/Costco InterestPlus Savings - 0.85% [was 0.91%]
5. ING Direct Electric Orange - 0.90% ($100K) 0.85% ($50K) [was 0.95%/0.90%]
6. ING Direct Savings - 0.80% [was 0.85%]
7. Hudson City Savings - 0.70% [was 0.90%]

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

• Are You Getting the Most Out of Online Banking?
• Treasury Direct Doubles Online Savings Bond Purchase Limits
• Fed's New Interest Rate Forecasts May Be Bad News For Savers
• Review of the 2011 Bank Failures and Their Effects on Depositors
• Six Saving Strategies for the New Year

Savings/Checking Accounts - Nationwide

• No new posts this week

CD Deals/Resources - National

• Survey of the Best CD Rates for January 6, 2012
• Update on PenFed's January 2012 CD Rates

Checking/Savings/CC Bonuses

• $150 Checking Account Bonus at Security Service FCU in Utah - Local Only

Reward Checking Accounts

• High-Rate Reward Checking Account at Bank of Blue Valley But There's a Catch
• The Shrinking List of 4.00% Reward Checking Accounts

CD and Money Market Deals - Local

• Top Mid-Term CD Rates at Weokie Credit Union in Oklahoma - Local Only
• Mid-Term CD Specials at Central Bank in Tampa Florida
• Top Long-Term CD Rates at Freedom Credit Union in PA - Local Only
• CD Rates Down But Still Competitive at Alaska USA FCU in AK, WA & CA
• Competitive CD Rates South of Dallas at Citizens State Bank
• Competitive CD Rates at Triumph Savings Bank in Dallas

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 January 7, 2012

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
• AmTrustDirect - 1.15% (min $5K) promo rate
• MyBankingDirect - 1.15% (min $5K) promo rate
• Incredible Bank - 1.10% MMA ($2.5K min) account review
• Incredible Bank - 1.01% Checking ($1K min) account review
• SFGI Direct - 1.01% account review
• Discover Bank - 1.00% Savings (min $500) account review
• Sallie Mae Bank - 1.00% MMA & Savings account review
• Clear Sky Accounts - 1.00% (max $250K) account review
• Alliant Credit Union - 1.00% (min $100) Savings account review
• Nationwide Bank - 0.95% MMA (min $1K)
• One United Bank - 0.95% ($100K) 0.85% ($1K) E-Money Market
• airbanking.com - 0.95% Savings
• Alliant Credit Union - 0.95% Checking (req's elec. dep & e-stmts) account review
• Capital One/Costco - 0.93% InterestPlus Savings ($10K min, includes 10% quarterly bonus) 0.85% (w/o bonus) account review
• American Express Bank - 0.90%, account review
• CNB Bank Direct - 0.90% account review
• ING Direct - 0.90% ($100K) 0.85% ($50K) Electric Orange Checking
• 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
• HSBC Advance - 0.80% Savings
• ING Direct - 0.80% Orange Savings
• Capital One - 0.75% Checking (rate guaranteed for 1 yr) account review
• Hudson City Savings Bank - 0.70% (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+)
• Bank of Blue Valley - 3.00% (up to $25K) 0.55% ($25K+), $1K/month debit card req (account review)
• 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+)
• Atlantic Coast Bank - 2.01% (up to $15K) 0.50% ($15K+)
• Community Bank of Raymore - 2.01% (up to $25K) 0.50% ($25K+)
• Community Bank of Pleasant Hill - 2.01% (up to $25K) 0.50% ($25K+)
• First New England Federal Credit Union - 2.01% (up to $15K) 0.10% ($15K+) (extra 1% w/relationship)
• 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 January 6, 2012 (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 - 0.01% 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)