We all know that 2013 wasn’t good for savers. Overall, deposit rates remained low, but there were a few hopeful signs for savers. With our database of more than 8,000 banks and credit unions, we have been tracking deposit rates, and we have some interesting statistics to share.
The largest rate declines were on short-term accounts at brick-and-mortar banks. In 2013 the average savings account rate declined by almost 12%, and the average 1-year CD rate declined by almost 15%. Internet savings account rates had a smaller decline. The average rate declined by more than 6%. 5-year CD rates had the smallest decline. The average rate declined by more than 5%. The chart below summarizes these rate declines:
The reason internet savings account rates had smaller declines is likely due to the competition that exists between internet banks. Several new internet banks were launched in 2013, and those additions put upward pressure on rates. Interest rates on 5-year CDs had a turning point in 2013. The talk from the Fed of tapering of its bond buying program spurred some banks to begin making small rate hikes on long-term CDs. That upward pressure continued in December when the Fed surprised the markets by announcing the start of tapering.
With the economy showing strength at the end of 2013 and with the Fed starting to taper its bond buying program, it's likely we'll see further small gains in long-term CD rates in 2014. However, short-term rates may remain relatively flat. The Fed did say at its December meeting that it intends to keep rates low for an even longer time after the unemployment rate threshold is reached.
Even if short-term rates remain flat, there will likely be a few good deals at internet banks as new banks try to attract depositors. In 2013 we saw a few good deals on savings accounts, money market accounts and reward checking accounts. That should continue in 2014. Savers just need to be willing to move their money when their banks start to lag on interest rates.
To find the best rates on CDs, savings accounts, money market accounts and checking accounts, please refer to the navigation menu at the top of this site.