The minutes to the Fed’s October meeting were released last Wednesday, and based on the minutes, the odds that the Fed will start tapering at its December meeting have increased. However, many economists think tapering won’t start until the Fed’s January or March meeting. Tapering of the bond purchases is just the first step in a long process of Fed tightening that will eventually lead to higher rates. But the Fed is thinking of ways to keep rates low as tapering takes place.
The minutes revealed that there was discussion of reducing the interest paid to banks on excess reserves held at the Fed. Some on the Fed feel this would make it clear to the markets of its intention to keep rates low. If the Fed decides to take this path, it would be bad news to savers. According to the Financial Times, bank executives are warning that such a cut on the reserve interest rate could force them to start charging depositors. That could mean negative effective yields.
The Fed is also considering offsetting the start of tapering with reducing the unemployment threshold. Currently, the Fed wants to see the unemployment rate fall to 6.5% before it considers raising rates. That’s yet another thing that could delay higher rates.
The tapering news from the Fed minutes did push up Treasury yields a bit. Last week’s change in Treasury yields and Fed funds futures are shown below. The following numbers are based on Daily Treasury Yield Curve Rates and the CME Group FedWatch.
Fed funds futures' probability of rate hike by:
For the third straight week, no banks failed so the total number of bank failures for the year remains at 23. As a comparison, at this time last year there had been 50 bank failures for the year.
This was a quiet week for rate changes. There were no rate changes on the top savings and money market accounts in my list. However, there was one addition. Emigrant Bank started another internet bank. This new one is called MySavingsDirect, and it’s offering a 1.00% APY on all balances. As I described in my blog post, there’s not a good chance this will last over the long-run.
With the addition of MySavingsDirect, we now have 5 institutions with non-promo rates at or above 1.00%. Three of those 5 are the new iGObanking.com money market account, the SmartyPig savings account and Palladian Private Bank savings account. All of these now offer a 1.00% APY. The highest rate continues to be at Connexus Y.E.S. Money Market Account which has a top-tier APY of 1.15% for a $100K minimum balance. An important downside of this account is that it requires an active checking account and direct deposit.
There was just one rate change to my list of nationally available reward checking accounts. Avidia Bank cut the yield of its reward checking account from 1.36% to 1.06%. The balance cap remains at $25K.
Avidia Bank and other banks with reward checking rates under 1.25% can’t compete with Bank of Internet USA’s Reward Checking account that pays 1.25% APY on balances up to $150K. If you’re going to settle for a low-rate reward checking account, at least pick one like Bank of Internet Reward Checking which has a large balance cap and a long history.
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.
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.
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 November 24, 2013
|Connexus Credit Union||1.15% ($100K) 1.00% ($50K) 0.75% ($20K)||MMA - active chk required|
|EverBank||1.10% (6mo intro rate) 0.61% ongoing rate||MMA/Checking - account review|
|MySavingsDirect||1.00%||savings account - account review|
|iGObanking.com||1.00% ($100K) 0.75% ($75K) 0.50% ($25K)||money market account - account review|
|SmartyPig||1.00%||savings account - account review|
|Palladian Private Bank||1.00% (min $10K)||savings account|
|SFGI Direct||0.91%||savings account, account review|
|Incredible Bank||0.91% ($2.5K min)||MMA account review|
|Bank5 Connect||0.90% (min $100)||online savings account (not available for MA and RI residents)|
|GE Capital Bank||0.90%||online savings account|
|Sallie Mae Bank||0.90%||MMA account review|
|Union Federal Savings Bank||0.90% (min $2.5K)||MMA account review|
|Barclays||0.90%||Savings account review|
|Redneck Bank||0.90% (up to $35K) 0.50% (over $35K)||MMA|
|AmericaNet Bank||0.90% (up to $35K) 0.50% (over $35K)||MMA|
|Evantage Bank||0.90% (up to $35K) 0.50% (over $35K)||MMA|
|CIT Bank||0.90% ($25K) 0.85% ($100)||savings account, account review|
|American Express Bank||0.85%||savings account, account review|
|Colorado Federal Savings Bank||0.85% ($2.5K min)||savings account, account review|
|Capital One 360||0.85% ($100K) 0.80% ($50K)||360 Checking|
|FNBO Direct||0.85%||savings account|
|GE Capital Retail Bank (formerly MetLife)||0.85% ($25K) 0.80% ($10K)||Savings/MMA|
|Mutual of Omaha Bank||0.85% (min $25)||MMA, account review|
|Sallie Mae Bank||0.80%||savings account, account review|
|Salem Five Direct||0.80%||savings, for new customers only|
|MyBankingDirect||0.80% (min $5K)||MMA|
|Discover Bank||0.80% (min $500)||savings account, account review|
|ableBanking||0.80% (min $1K)||MMA|
|Bank5 Connect||0.76% (min $100)||checking account (not available for MA and RI residents)|
|Bank of Internet USA||0.75%||MMA|
|Capital One 360||0.75%||360 savings account|
|Nationwide Bank||0.71% (min $1K)||MMA|
|Clear Sky Accounts||0.70% (max $250K)||savings account, account review|
|Alliant Credit Union||0.70% (min $100)||savings account, account review|
|Incredible Bank||0.66% ($1K min)||checking, account review|
|Alliant Credit Union||0.65%||Checking (req's elec. dep & e-stmts) account review|
|Consumers Credit Union||3.09% (up to $5K) 0.20% ($5K-$25K) 0.10% ($25K+)||Rewards Checking|
|Money One Federal Credit Union||3.01% (up to $10K) 0.51% ($10K+)||Kasasa Cash|
|INOVA Federal Credit Union||3.00% (up to $20K) 0.15% ($20K+)||Ovation Checking|
|Lake Michigan Credit Union||3.00% (up to $15K) 0.00% ($15K+)||Max Checking|
|Great Lakes Credit Union||3.00% (up to $10K) 0.05% ($10K+)||Ultimate Checking|
|Belvoir FCU||2.53% (up to $15K) 0.05% ($15K+)||CUXcel Checking|
|Lee Bank||2.50% (up to $15K) 0.50% ($15K+)||CACHEChecking|
|Capital Educators Federal Credit Union||2.50% (up to $10K) 0.20% ($10K+)||High Yield Checking|
|Security Bank||2.05% (up to $25K) 0.30% ($25K+)||Security Bonus Checking|
|XCEL Federal Credit Union||2.01% (up to $15K) 0.30% ($15K+)||Redneck Rewards Checking|
|Redneck Bank||2.00% (up to $10K) 0.50% (over $10K)||Redneck Rewards Checking|
|AmericaNet Bank||2.00% (up to $10K) 0.50% ($10K+)||AmericaNet Rewards Checking|
|Evantage Bank||2.00% (up to $10K) 0.50% ($10K+)||Evantage Rewards Checking|
|ABCO Federal Credit Union||1.76% (up to $25K) 0.20% ($25K+)||Premiere Checking|
|Provident Credit Union||1.76% (up to $25K) 0.11% ($25K+)||Super Reward Checking|
|Connexus Credit Union||1.75% (up to $25K) 0.31% ($25K+)||Xtraordinary Checking|
|Community Bank of Raymore||1.75% (up to $10K) 0.25% ($10K+)||Rewards Checking|
|Community Bank of Pleasant Hill||1.75% (up to $10K) 0.25% ($10K+)||Rewards Checking|
|First Tech Federal Credit Union||1.58% (up to $10K) 0.16% ($10K+)||Dividend Rewards Checking|
|Aspire Federal Credit Union||1.51% (up to $10K) 0.25% ($10K+)||Kasasa Cash|
|West Texas National Bank||1.26% (up to $25K) 0.25% ($25K+)||Ultimate Checking|
|Heritage Bank||1.26% (up to $25K) 0.10% ($25K+)||eCentive Account|
|First New England Federal Credit Union||1.25% (up to $15K) 0.10% ($15K+)||extra 1% w/relationship|
|Bank of Blue Valley||1.25% (up to $15K) 0.10% ($15K+)||$1K/month debit card req (account review)|
|Bank of Internet USA||1.25% (up to $150K) 0.00% ($150K+)||Rewards Checking|
|BankFirst Financial Services||1.25% (up to $25K) 0.15% ($25K+)||Kasasa Cash|
|Avidia Bank||1.06% (up to $25K) 0.05% ($25K+)||eChecking|
|Legence Bank||1.05% (up to $25K) 0.25% ($25K+)||Kasasa Cash|
|North Country Savings Bank||1.05% (up to $25K) 0.75% ($25K+)||Advantage Checking|
|State Bank of Toledo||1.00% (up to $25K) 0.15% ($25K+)||Hometown Rewards Checking|
|Duke Energy PremierNotes||1.40% rate for $50K+||Duke Energy PremierNotes review|
|Ally Financial Demand Notes||1.35%||Ally Demand Notes review|
|Ford Interest Advantage||1.10% rate for $50k+||Ford Interest Advantage review|
|GE Interest Plus||1.10% rate for $50k+|
|Vanguard Prime Money Market Fund||0.01% 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|