This year has been another disappointing year for savers with no end in sight for the record low interest rate environment. The rates of most savings accounts have continued to fall. However, we have seen a small reversal of this trend in the last 4 months. A few internet banks have raised their money market and savings account rates. It seems likely that these rate increases were due to competition, especially from new internet banks like TIAA Direct, Barclays and CIT Bank.
We now have 5 internet banks that offer non-promotional savings or money market account rates over 1%. I thought it would be useful to compare the rate history of these 5 accounts. As with any financial product, history provides no guarantee about the future. However, it can provide some insights about what to expect. If you're trying to decide which of these 5 accounts to open, it may be useful in deciding which would be the best choice for the long run.
I excluded TIAA Direct since its savings and money market accounts are no longer available to new customers (at least for now). It's still offering 1.25% APY for existing customers.
I also excluded EverBank since its 1.25% rate is an intro rate for new customers. The rate is guaranteed for the first 6 months, but after that it will fall to the standard rate (which is currently 0.76%). Another downside is that the intro rate is limited to balances up to $50K for the money market account and $100K for the checking account.
The first bank that I included is UFB Direct which is a division of BofI Federal (formerly called Bank of Internet USA). Its money market account has a 1.25% APY on balances up to $250K. I was told by a bank official that this rate will likely last for some time, but there's no guarantee. UFB Direct launched the money market account in May with a 1.15% APY. It then increased it to 1.25% APY in June. Since this has a short history, I included its savings account in the table which was started when UFB Direct was launched in August 2011. That savings account had a very competitive rate for about 6 months. The rate then had a big rate drop in January and February as can be seen in the table.
The second bank in the table is Incredible Bank which is the internet division of River Valley Bank of Wisconsin. Incredible Bank was launched in November 2009 with an internet checking account. Its money market account came out in May 2011. Both the checking and money market accounts have continued to be very competitive. The money market account currently pays 1.05% APY for balances up to $250K. When the yield dropped to 0.95% in early June, I thought it would be a long time before we would see this above 1%. I was pleasantly surprised when the yield went up to 1.05% at the end of July.
Union Federal Savings Bank has been offering its internet money market account since 2008. I stopped closely tracking it in 2010 when the rate no longer became competitive. However, this year it has again become competitive. It now has a 1.05% APY on all balances (maximum balance is $1 million).
MyBankingDirect is the only bank which hasn't recently increased its rate. The internet bank is a division of New York Community Bank. I had first reported on MyBankingDirect way back in 2005. It has only been in the last two years that it has been a rate leader. My last review of its money market account was in June 2011 when the yield was 1.25%. It now pays 1.05% APY for balances of at least $5,000.
The last bank on the table is CIT Bank. It's a new internet bank that first came out with its savings account last April. Unlike the other accounts, its top rate (currently 1.05% APY) requires a minimum balance of $25,000.
Internet Money Market & Savings Account Rate Leaders
|Date||UFB Direct Sav (latest rates)||UFB Direct MMA (latest rates)||Incredible Bk MMA (latest rates)||Union Fed MMA (latest rates)||MyBankingDirect MMA (latest rates)||CIT Bank Sav (latest rates)|
|Aug 2012||0.80%||1.25% *||1.05%||1.05%||1.05%||1.05%|
* The above yields are based on the APYs that were in effect at the start of each month. The UFB Direct money market yield increased to 1.30% APY on 8/6/2012.
Finding the Best Savings, Money Market & Checking Account Rates
You can use our rate tables to search for the best rates available nationwide and in your state:
- savings account rate table
- money market account rate table
- checking account rate table
- reward checking account rate table
Update: Added note about UFB Direct's latest rate hike.