About Ken Tumin

Ken Tumin founded the Bank Deals Blog in 2005 and has been passionately covering the best deposit deals ever since. He is frequently referenced by The New York Times, The Wall Street Journal, and other publications as a top expert, but he is first and foremost a fellow deal seeker and member of the wonderful community of savers that frequents DepositAccounts.

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Best Bank Account Interest Rates - Summary for April 16, 2011


Best Bank Account Interest Rates - Summary for April 16, 2011

It might seem impossible based on how much gas prices have gone up in the last few months, but March CPI data released on Friday showed underlying inflation remains contained. The Core-CPI which excludes energy and food increased less than economists were expecting. That's what the Fed focuses on, so that won't push the Fed any closer to hiking rates. In fact, higher gas prices are a headwind for economic growth. That might give the inflation doves on the Fed justification to continue the monetary policy that keeps rates at rock-bottom levels. We'll see in the future meetings if the inflation hawks on the Fed speak up. We may see some of this debate in the next FOMC meeting on April 26-27.

The effect of the latest Core-CPI numbers can be seen in the markets. The rate hike expectations from the Fed fund futures went down this week and so did Treasury yields. Details can be seen in the following summary which is based on bond rate data and the CME Group FedWatch.

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

  • Dec 2011: 33.0% down from 41.5% last week
  • Jan 2012: 54.1% down from 65.7% last week
  • Mar 2012: 67.1% down from 80.8% last week

Treasury Yields:

  • 5--year: 2.12% down from 2.31% last week
  • 10-year: 3.41% down from 3.58% last week
  • 30-year: 4.47% down from 4.64% last week

Series I Savings Bond Rate Deal

One good thing about rising gas prices is that they do affect the CPI-U which is used by the Treasury for setting the Series I Savings Bond inflation component. The change in the CPI-U from September to March determines the I Bond inflation component that takes effect in May. Based on the CPI-U released Friday, that rate should be 4.60%. Even if the I Bond fixed rate remains at 0% in May, the I Bond will be a good deal in May. You should be able to get an annualized yield close to 2.50% (at minimum) if you purchase an I Bond at the end of May 2011 and redeem them early in May 2012. And it's possible that you could receive a much higher yield. I described the details and limitations in my savings bond deal post.

Bank Failures

The number of bank failures dropped quite a bit in March and continued to be low in April until yesterday. Six banks failed on Friday which was the highest one-day total for this year. In addition to the six bank failures, the NCUA placed two credit unions into conservatorship including Texans Credit Union which has $1.6 billion in assets. It's one of the largest credit unions that the NCUA has placed into conservatorship.

Savings Account Rates

It has been a while since we've seen a good savings account deal. It might not seem that great, but compared to the competition, it's a good deal in my opinion. Salem Five Direct is offering a 1.25% APY on its eOne Savings Account that's guaranteed to last until April 1, 2012. Compared to the good old days, that's a low yield, but in today's rate environment, it's very competitive. What makes it such a good deal is a rate guarantee that's close to 11 months. If you're tired of seeing your savings account rates drop, this is the only way to ensure you won't see more drops for the next 11 months.

In terms of features, the eOne Savings Account isn't the best, but it's from a solid bank that has been offering internet accounts for about four years. I have more details in my Salem Five Direct savings account promotions review.

Rate Hikes:

  1. None

Rate Cuts:

  1. Discover Bank Savings - 1.15% (was 1.20%)
  2. Discover Bank Premium Savings - 1.25% (was 1.30%)

Certificate of Deposit Rates

CD rates were steady this week. There were just a few rate cuts on short-term CDs. Most notable were cuts by Fort Knox FCU which reduced rates on its CDs for terms of 2 years and under.

For the long-term, Navy Federal Credit Union continues to have the best deal with a 3.40% APY 7-year CD. Unfortunately, only those with a military connection can join Navy Federal. The second best 7-year CD deal is at Apple FCU which is offering 3.00% APY on its 7-year CD.

For the 5-year CD, Connexus Credit Union and Melrose Credit Union continue to be the leaders. Both of these have downsides. Connexus Credit Union requires an active checking, and both have harsh early withdrawal penalties. University Federal Credit Union's 5-year CD rate is lower, but it has a more favorable early withdrawal penalty. In my University Federal CD review I have more details on this CD and how you can be eligible to join the credit union.

The 5-year CD rate at Ally Bank is lower than the rates offered by the above credit unions, but Ally's early withdrawal penalty is much smaller (only 60 days of interest) as I described in my recent Ally Bank CD review. Note, there are some risks in relying on CD early withdrawals.

For those who prefer short-term CDs, I have been highlighting Ally Bank's 11-month No-Penalty CD which has a yield of 1.15% APY. This yield is higher than almost all other CDs with maturities of 3, 6 and 9 months. However, Salem Five Direct's savings account promotion is now a better deal since it offers a 1.25% APY that's guaranteed to last until April 1, 2012.

Reward Checking Accounts

I reviewed a new reward checking account this week that currently has the second best yield for balances of at least $25K in Tennessee (3.30% APY for up to $30K). However, this comes with a price. It's one of the very few reward checking accounts that has a potential monthly fee. A $1,000 minimum balance must be maintained to avoid a $20 monthly fee.

I also reviewed some more reward savings accounts this week. These are often called Kasasa Saver accounts and they link to reward checking accounts. They can be useful for those who have large balances that can't be covered by just the reward checking account. For example if you have $50K, and your reward checking only pays the top rate for up to $25K, a reward savings account can be useful for that second $25K. You can make more with a second reward checking account, but if you don't want the extra work and hassles, the reward savings account can be a good deal.

To find reward checking accounts available nationwide or to find those that are only available in your state, please refer to the reward checking section of DepositAccounts.com.

Recap for the Week - Links to This Week's Posts

Banking News/Resources

Savings/Checking Accounts - Nationwide

Checking/Savings Bonuses

Reward Checking Accounts

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. Quick Links: Refer to the following links for the savings accounts and CDs that interest you: Liquid Account Rates: Savings Accounts, Reward Checking, Bank alternatives CD Rates: 3 Mo CDs, 6 Mo CDs, 9 Mo CDs, 12 Mo CDs, 18 Mo CDs, 24 Mo CDs, 36 Mo CDs, 48 Mo CDs, 60 Mo CDs, 84 Mo CDs.

Rates as of April 16, 2011

Checking/Savings/Money Market Accounts:

  • Noteworthy Accounts Available Nationwide:

3-Month Certificates of Deposit:

  • Noteworthy Accounts Available Nationwide:

6-Month Certificates of Deposit:

  • Noteworthy Accounts Available Nationwide:

9-Month Certificates of Deposit:

12-Month Certificates of Deposit:

  • Noteworthy Accounts Available Nationwide:

18-Month Certificates of Deposit:

  • Noteworthy Accounts Available Nationwide:

24-Month Certificates of Deposit:

  • Noteworthy Accounts Available Nationwide:

36-Month Certificate of Deposit:

  • Noteworthy Accounts Available Nationwide:

48-Month Certificate of Deposit:

  • Noteworthy Accounts Available Nationwide:

60-Month Certificate of Deposit:

  • Noteworthy Accounts Available Nationwide:

84-Month Certificate of Deposit:

Various Deposit Account Deals

Bank Account Alternatives

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

Anonymous   |     |   Comment #1
No inflation? lol About as basic as you can get....bought some Velvetta cheese two months ago for $3.99 a box, NOT on sale, bought the identical item tonight for $5.19. You do the math. 
Anonymous   |     |   Comment #2
It is not us, you have to convince inflation is here and is having a direct adverse effect on the working class and retirees.

It's Bernanke and the Federal Reserve gang that need to be convinced.  Of course they discount food and energy in tallying their inflation figures.  So naturally looking through their eyes with blinders on, inflation is tame. 
Anonymous   |     |   Comment #3
I guess correction your post is required!


What you wrote is: >>You should be able to get an annualized yield close to 2.50% (at minimum) if you purchase an I Bond at the end of May 2011 and redeem them early in May 2012.<<


I think what you actually mean is "you purchase at end of April 2011, and redeem beginning May 2012.


Anonymous   |     |   Comment #4


Actually more correction is reuiqred to your post!

I think what you actually mean is "You should be able to get an annualized yield close to 4.50% (not 2.50%) you purchase at end of April 2011 (not end of May 2011), and redeem beginning May 2012".

KenBDG   |     |   Comment #5
My summary is consistent with my I Bond post. In that post I have two sections: purchase done in April and purchase done in May. The May purchase can provide the best short-term return so that's why I only mentioned that in this summary.

It's important to note that one loses 3 months of interest if redeemed before 5 years. Also, one has to wait for 12 months before redeeming the I Bond.
Anonymous   |     |   Comment #6
I read an article that said that based on the 1980s criteria of gauging inflation, the current inflation rate would be around 10%.  Prior to the 1973 Arab Oil Embargo, inflation was relatively tame in the US.  During the 1970's and early 1980s, you had market rates pushing well beyond 10% and inflation rates to match that.  Now since inflation is so low, market rates can also reflect that too.  Or is it?