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Best Bank Account Interest Rates - Summary for Week Ending April 20, 2013

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Best Bank Account Interest Rates - Summary for Week Ending April 20, 2013

The Labor Department released its Consumer Price Index (CPI) report for March last Tuesday. It showed low inflation with a CPI that declined by 0.2% in March. The core CPI which excludes energy and food increased, but only by 0.1%. For the last 12 months, it has increased by 1.9%. As you might expect, this gives the Fed a reason to keep its zero interest rate policy (ZIRP) going. The Calculated Risk Blog's summary for the week gave the following prediction:

With this low level of inflation and the current high level of unemployment, I expect the Fed will continue the large scale asset purchases (QE) at the current level.

The CPI news also has a more immediate effect on savers in its impact to the inflation component of I Bonds. The low CPI-U numbers over the last six months will cause the next I Bond inflation component to be on the low side. As I showed on Tuesday, the next I bond inflation component will be 1.18%. With this number, we can calculate the annualized returns for I Bonds purchased before May and redeemed between April 1, 2014 and July 1, 2014. This comes out to yields between 1.26% and 1.28% which compare favorably to 1-year CD rates.

Most at the Fed may think this long period of ZIRP is needed to help the economy, but the Fed may be overlooking the problems with ZIRP that go beyond its effect on savers. This was described by the former FDIC chair, Sheila Bair, in an interview with The Daily Ticker. She said that "the low interest rate strategy promoted by the Fed to goose the economy is backfiring."

U.S. savers aren't the only ones having to face ZIRP. As reported in this AP article, Central bank leaders of the G-20 counties are pledging stronger actions including aggressive monetary easing policies. As DA member Shorebreak mentioned in the forum thread this means "more QE, more ZIRP, more printing money out of thin air." As you might expect, savers from other nations are not happy. This article from the UK Save Our Savers reported on a study which shows UK savers have suffered a Cyprus-style 20% haircut due to "reduced interest and the effects of inflation."

The G-20 liquidity discussions did contribute to higher Treasury yields on Friday, but for the week, the longer-term Treasury yields went down for the week. The Treasury yield changes over the last week and the expectation of future Fed funds rates are shown below. Numbers are based on Daily Treasury Yield Curve Rates and the CME Group FedWatch.

Treasury Yields:

  • 6-month: 0.09% same as last week
  • 2--year: 0.24% same as last week
  • 5--year: 0.72% up from 0.70% last week
  • 10-year: 1.73% down from 1.75% last week
  • 30-year: 2.88% down from 2.92% last week

Fed funds futures' probability of rate hike by:

  • Jan 2015: 32% up from 30% last week
  • Apr 2015: 41% down from 45% last week

The FDIC was back in action this Friday with three bank failures. This was the first Friday this year with multiple bank failures. The total number of bank failures in the U.S. for the year is now up to eight. At this time last year there had already been 17 bank failures, and at this time in 2011, there had been 34 bank failures.

Savings & Checking Account Rates

Only one bank on my list cut rates this week. That was TIAA Direct which cut its savings and money market account rate from 0.92% to 0.86%. These accounts remain closed to new customers, but with this new lower rate, TIAA Direct shouldn't have to worry about restricting new accounts. TIAA Direct stopped accepting new customers last July. With the lower rates and the long period of not accepting new customers, you have to wonder if TIAA-CREF has lost interest in its internet bank (no pun intended).

The best non-promo rate for large balances continues to be Connexus Credit Union's Y.E.S. Money Market. It has a 1.15% APY for balances over $100K and 1.00% APY for balances of $50K to under $100K. The downside is that it requires an active checking account with direct deposit.

The highest rate without a checking requirement and without balance caps continues to be MyBankingDirect's money market account. It still has a 1.05% APY. This APY has held since June 2012. Its rates have been remained near the top of my list since June 2011.

Reward Checking Accounts

This was also a quiet week for reward checking accounts with no rate changes on my list of nationally available reward checking accounts.

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

Rate Hikes:

  1. None

Rate/Balance Cap Cuts:

  1. TIAA Direct Savings/MMA - 0.86% [was 0.92%] (still closed to new customers)

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 Savings/MMA - National
  • No new posts this week
CD Deals/Resources - National Checking/Savings/CC Bonuses Reward Checking Accounts
  • No new posts this week
CD and Money Market Deals - Local Posts from Previous Weeks

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 April 20, 2013

Checking/Savings/Money Market Accounts:

  • Noteworthy Accounts Available Nationwide:

Reward Checking Accounts:

  • Noteworthy Accounts Available Nationwide:

Certificates of Deposit:

Various Deposit Account Deals

Bank Account Alternatives - NOT FDIC Insured

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


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