Since 2008 I've been developing short lists of what I consider to be top savings accounts. My last short list of top savings accounts was in February. In this post, I'll update this short list replacing some old ones that no longer deserve to be on the list with some new ones.
History of Top Rates
The most obvious feature of a top savings account is a top interest rate. However, as we have seen over the years, banks can make drastic changes to their savings account rates. It's not just cutting rates to be inline with the interest rate environment. The banks either started the accounts with teaser rates with no intention to stay competitive or they decided later that it wasn't worth staying competitive (perhaps due to having too much deposits and not enough loans).
One good example of an internet savings account that became uncompetitive is OnBank, the online division of M&T Bank, N.A. It was on my short list in 2008 since it had a top rate with several months of history. However, it quickly became uncompetitive in 2009. In May 2009, the rate had fallen to 0.50%, and the rate is still 0.50%. Even by today's standard, a rate of 0.50% is not competitive for internet savings accounts.
In my short list, the savings account not only has to have a top rate today, but it also must have at least one year of history with competitive rates.
Alliant Credit Union
One institution that has been on my list since last year is Alliant Credit Union which has continued to offer a very competitive savings account yield. The rate is not quite as competitive as it used to be, but it has the longest history by far of any other savings account.
Discover Bank was also on my list from last year. Its online savings account is not that old. I first reported on it in July 2009. Before that time Discover Bank only offered a money market account with rates that weren't that great. But for more than a year, the savings account rates have held up well. In addition, Discover Bank made a major upgrade to their online banking center with several improvements including to their ACH bank-to-bank transfer service.
Two New Banks
I added two new banks to my list: SmartyPig and AmericaNet/Evantage Bank. AmericaNet and Evantage Bank are actually two separate banks, but they are owned by the same family. Thus, the accounts are virtually identical. Redneck Bank is also part of this group, but new accounts can no longer be opened.
Since these banks have balance caps and are not the typical online savings accounts, I was a little hesitant to add these. However, they both offer top rates, and they both have a history of high rates that's now over two years. The balance cap is likely one reason why they have been able to maintain the high rates. So that is an important feature to consider if a high rate is more important to you than a balance cap.
SmartyPig's balance cap is $50K. If you have a balance over $50K, the entire balance only earns 0.50%. AmericaNet and Evantage Bank have a $35K balance cap. The portion of the balance over $35K earns only 1.00% APY.
Two Banks with Rates That Didn't Hold Up
Two of the banks that were on my list in December and February no longer deserve to be included. CNB Bank Direct's savings account is still fairly competitive with a 1.25% APY, but that's not good enough for the top list. 1st Constitution Direct is now paying only 1.10% APY, and this requires a $10K balance. That definitely doesn't deserve to on the top list.
Other Aspects Besides Rates
For the past lists I've also considered aspects like ACH transfer capabilities. Both Alliant Credit Union and Discover Bank do well in this area. However, Evantage/AmericaNet Bank's ACH transfer capability has many limitations and issues. If you plan have an account at one of these banks, it's best to initiate transfers using another bank (like Discover).
The ratings that I've included in today's list are based on DepositAccounts.com's Bank Health Ratings in which 5 out of 5 is the most healthy bank. This rating is heavily based on the well-known Texas Ratio metric so I've also included the Texas Ratio. The lower the Texas Ratio, the more healthy the bank is. Any bank with a Texas Ratio near or greater than 100% is considered at risk. These metrics are based on 6/30/2010 FDIC data (the latest that's available as of today).
Top Savings Accounts Available Nationwide
|Bank/Credit Union||12/22/09 APY||2/25/10 APY||10/15/10 APY||Health Score & TX Ratio based on 6/30/10 data|
|SmartyPig (BBVA Compass)||2.01% (no cap)||2.01% (no cap)||1.75% ($50K max)||4/5, 18.17%|
|AmericaNet & Evantage Bank||2.00% ($35K max)||2.00% ($35K max)||2.00% (1.75% eff 11/18, $35K max)||3/5, 17.99% | 3/5, 11.27%|
|Alliant Credit Union||2.00%||2.00%||1.35%||4/5, 4.30%|
|Discover Bank Savings||1.75%||1.35%||1.35%||4/5, 14.57%|
|Previously on the Top List|
|CNB Bank Direct||1.70%||1.35%||1.25%||3/5, 19.67%|
|1st Constitution Direct||1.50%||1.25%||1.10%||4/5, 11.17%|
Searching for the Best Checking, Savings and Money Market Rates
In addition to savings accounts, you may also want to consider internet checking accounts and high-yield reward checking accounts. For the best rates, please refer to the following: