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Best Bank Account Interest Rates - Summary for August 14, 2014


Best Bank Account Interest Rates - Summary for August 14, 2014

It’s widely expected that the Fed will start rate hikes sometime in 2015. The chance of that happening seems to be improving due to recent positive news on the economy. The second quarter GDP report indicated an annual growth of 4% which was above expectations. The unemployment rate is falling. According to the Calculated Risk blog, "2014 is on pace to be the best year for employment gains since 1999." Even with this good economic news, I’m a little hesitant to believe a 2015 rate hike is a sure thing. The latest news that suggests we may not see a 2015 rate hike came from the second in command at the Fed, Stanley Fischer who’s the Fed Vice Chairman (Janet Yellen had this position before Bernanke stepped down). Fischer gave a speech on Monday at a conference in Sweden in which he warned of difficult times ahead for the economy. According to this New York Times article:

Sounding a somber note even as the economic outlook in the United States brightens, the Federal Reserve’s No. 2 official acknowledged on Monday that global growth had been "disappointing" and warned of fundamental headwinds that might temper future gains.

It’s another sign that the Fed is in no rush to raise interest rates. If the economy shows any signs of faltering in the next year, the Fed could easily push out the first rate hike into 2016.

Both Treasury yields and the Fed fund futures’ probabilities went down over the last week indicating a slightly lower chance of a rate hike next year. Below is a summary of the changes. The following numbers are based on Daily Treasury Yield Curve Rates and the CME Group FedWatch.

Treasury Yields:

  • 1-month: 0.04% up from 0.03% last week
  • 6-month: 0.06% up from 0.05% last week
  • 2--year: 0.43% down from 0.48% last week
  • 5--year: 1.59% down from 1.67% last week
  • 10-year: 2.43% down from 2.49% last week
  • 30-year: 3.24% down from 3.27% last week

Fed funds futures' probability of rate hike by:

  • Jan 2015: 4% down from 8% last week
  • Apr 2015: 21% down from 33% last week
  • Jul 2015: 59% down from 71% last week
  • Oct 2015: 87% down from 92% last week

Savings & Checking Account Rates

Last week was another quiet week in the savings and money market accounts that I track below. There were just two rate changes. Both were rate hikes!

The most significant news is the rate hike at Palladian Private Bank. It increased the rate of its savings account from 0.90% to 1.26% APY. At first it was guaranteeing this rate through next January. That guarantee didn’t last long. Now it’s like any other savings account in that it can change at anytime. Nevertheless, Palladian has some track record of keeping this savings account competitive. Since December, the savings account rate has been 0.90%, and before this it was 1.00%. Even if this 1.26% APY holds for only a few months, it seems likely that Palladian won’t lower the rate to uncompetitive levels.

The other rate change was much less interesting. Nationwide Bank increased the rate of its money market account by 2 basis points to 0.68%. It has been a long time since we’ve seen a rate hike at Nationwide Bank, so even this small increase is nice to see.

With the Palladian savings account rate hike, this account now qualifies for the 1% club. The number of institutions offering a non-promo 1% savings or money market account is now six. Out of these six, the accounts at Connexus Credit Union and SmartyPig have the longest history of top rates. Note, I exclude EverBank, Citizens State Bank and Salem Five Direct since their high rates are promotional.

Reward Checking Accounts

Last week was also a quiet week for the nationally available reward checking accounts. There were no rate changes.

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 reward checking, please refer to my blog post, 10 Common Traits of High-Yield Reward Checking.

Certificate of Deposit Rates

I’ve gone back to publishing my CD survey as a separate post. Please refer to my survey of the best CD rates. This recap will focus on banking news of the week and liquid accounts.

Rates as of August 14, 2014

Checking/Savings/Money Market Accounts:

  • Noteworthy Accounts Available Nationwide:
EverBank1.40% (6mo intro rate) 0.61% ongoing rateMMA/Checking - account review
Palladian Private Bank1.26% (min $10K)savings account
Connexus Credit Union1.15% ($100K) 1.00% ($50K) 0.75% ($20K)MMA - active chk required
Citizens State Bank (FL)1.06% ($10K) 0.75% ($2.5K) 0.50% ($250+K)MMA
Citizens State Bank (FL)1.06% ($10K) 0.75% ($2.5K) 0.50% ($250+K)Internet Savings
Quorum Federal Credit Union1.05%HighQ Savings Account
SFGI Direct1.01%savings account, account review
MySavingsDirect1.00%savings account - account review
SmartyPig1.00%savings account - account review
Salem Five Direct1.00%savings, for new customers only
Synchrony Bank (formerly GE Capital Retail Bk) 0.95%Savings
Incredible Bank0.95% ($2.5K min) MMA account review
CIT Bank0.95% ($25K) 0.90% ($100) savings account, account review
GE Capital Bank0.95%online savings account
Bank5 Connect0.90% (min $100) online savings account (not available for MA and RI residents)
Sallie Mae Bank0.90%MMA account review
Barclays0.90%Savings account review
Redneck Bank0.90% (up to $35K) 0.50% (over $35K)MMA
AmericaNet Bank0.90% (up to $35K) 0.50% (over $35K)MMA
Evantage Bank0.90% (up to $35K) 0.50% (over $35K)MMA
iGObanking.com0.90% ($100K) 0.90% ($75K) 0.90% ($25K)New accounts and new money only, account review
Ally Bank0.87%savings
First Trade Union Bank0.85% ($2.5K)FT High-Yield Savings, account review
Union Federal Savings Bank0.85% (min $2.5K)MMA account review
Ally Bank0.85%MMA
Discover Bank0.85% (min $500) savings account, account review
Colorado Federal Savings Bank0.85% ($2.5K min)savings account, account review
Synchrony Bank (formerly GE Capital Retail Bk)0.85%MMA
Mutual of Omaha Bank0.85% (min $25) MMA, account review
TIAA Direct0.80%high yield savings account
Capital One 3600.80% ($100K) 0.75% ($50K)360 Checking
American Express Bank0.80%savings account, account review
Sallie Mae Bank0.80%savings account, account review
Digital Credit Union0.80% ($100K) 0.65% ($50K)MMA
MyBankingDirect0.80% (min $5K) MMA
ableBanking0.80% (min $250) MMA
Discover Bank0.80% (min $100K) 0.70% ($2.5K) MMA, account review
Bank5 Connect0.76% (min $100) checking account (not available for MA and RI residents)
FNBO Direct0.75%savings account
Bank of Internet USA0.75%MMA
Capital One 3600.75%360 savings account
Clear Sky Accounts0.70% (max $250K) savings account, account review
Alliant Credit Union0.70% (min $100) savings account, account review
Nationwide Bank0.68% (min $1K) MMA
FNBO Direct0.65%checking account
Alliant Credit Union0.65%Checking (req's elec. dep & e-stmts) account review
Incredible Bank0.59% ($1K min) checking, account review

Reward Checking Accounts:

  • Noteworthy Accounts Available Nationwide:
Consumers Credit Union5.09% (up to $10K) 0.20% ($10K-$25K) 0.10% ($25K+)Rewards Checking - $1K debit card requirements
Consumers Credit Union4.09% (up to $10K) 0.20% ($10K-$25K) 0.10% ($25K+)Rewards Checking - debit and cc requirements
Consumers Credit Union3.09% (up to $10K) 0.20% ($10K-$25K) 0.10% ($25K+)Rewards Checking - debit with NO cc requirements
INOVA Federal Credit Union3.00% (up to $20K) 0.15% ($20K+)Ovation Checking (not available to PA residents)
Lake Michigan Credit Union3.00% (up to $15K) 0.00% ($15K+)Max Checking
Great Lakes Credit Union3.00% (up to $10K) 0.05% ($10K+)Ultimate Checking
Belvoir FCU2.53% (up to $15K) 0.05% ($15K+)CUXcel Checking
American Bank & Trust2.51% (up to $10K) 0.26% ($10K+)Kasasa Cash
Lee Bank2.50% (up to $15K) 0.50% ($15K+)Kasasa Cash
Capital Educators Federal Credit Union2.50% (up to $10K) 0.20% ($10K+)High Yield Checking
Flanagan State Bank2.25% (up to $10K) 0.25% ($10K+)Kasasa Cash
Security Bank2.05% (up to $15K) 1.00% ($15K-$25K) 0.30% ($25K+)Security Bonus Checking
XCEL Federal Credit Union2.01% (up to $15K) 0.30% ($15K+)Kasasa Cash Checking
ABCO Federal Credit Union1.76% (up to $25K) 0.20% ($25K+)Premiere Checking
Connexus Credit Union1.75% (up to $25K) 0.25% ($25K+)Xtraordinary Checking
First Tech Federal Credit Union1.58% (up to $10K) 0.16% ($10K+)Dividend Rewards Checking
Provident Credit Union1.56% (up to $25K) 0.08% ($25K+)Super Reward Checking
Aspire Federal Credit Union1.51% (up to $10K) 0.25% ($10K+)Kasasa Cash
First American Bank1.50% (up to $15K) 0.15% ($15K+)Everyday Rewards Checking
Community Bank of Raymore1.50% (up to $10K) 0.10% ($10K+)Rewards Checking
Community Bank of Pleasant Hill1.50% (up to $10K) 0.10% ($10K+)Rewards Checking
Redneck Bank1.50% (up to $10K) 0.50% (over $10K+)Redneck Rewards Checking
AmericaNet Bank1.50% (up to $10K) 0.50% ($10K+)AmericaNet Rewards Checking
Evantage Bank1.50% (up to $10K) 0.50% ($10K+)Evantage Rewards Checking
West Texas National Bank1.26% (up to $25K) 0.25% ($25K+)Ultimate Checking
Heritage Bank1.26% (up to $25K) 0.10% ($25K+)eCentive Account
Bank of Blue Valley1.25% (up to $15K) 0.10% ($15K+)$1K/month debit card req (account review)
Bank of Internet USA1.25% (up to $150K) 0.00% ($150K+)Rewards Checking
BankFirst Financial Services1.25% (up to $25K) 0.37% ($25K+)Kasasa Cash
Avidia Bank1.06% (up to $25K) 0.05% ($25K+)eChecking
Legence Bank1.05% (up to $25K) 0.25% ($25K+)Kasasa Cash
North Country Savings Bank1.05% (up to $25K) 0.75% ($25K+)Advantage Checking
First New England Federal Credit Union1.01% (up to $15K) 0.10% ($15K+)extra 1.01% w/relationship

Certificates of Deposit:

Bank Account Alternatives - NOT FDIC Insured

Ally Financial Demand Notes1.25% rate for $50k+Ally Demand Notes review
Duke Energy PremierNotes1.25% rate for $50K+Duke Energy PremierNotes review
Ford Interest Advantage1.05% rate for $50k+Ford Interest Advantage review
Vanguard Prime Money Market Fund0.01% 7-day yield
Vanguard Tax-Exempt Money Market Fund0.01% 7-day yield
Fidelity Money Market Fund0.01% 7-day yieldreviews on Fatwallet
Fidelity Municipal Money Market Fund0.01% 7-day yield

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

gregk   |     |   Comment #1
My question: Will Penfed again offer 3% (or even higher) 5 & 7 year CD's come December 2014 & January of next year given the current outlook?
Anonymous   |     |   Comment #2
I hope so but my guess is they raised all the money they needed with the 3% CD stampede a few months ago so now they're focusing on ways to lend out that money (see their ads for car and home loans and credit cards).
Anonymous   |     |   Comment #7
I did not add new money to Penfed,  I closed a CD and took the penalty and then opened a higher rate CD.   Remember that any EWP penalty is tax deductible.  Add that caveat when using Ken's 5 year early close rates
Anonymous   |     |   Comment #3
Let's hope it's for 3+%.
Anonymous   |     |   Comment #4
3+% in this interest rate climate?  Wishful thinking!
gregk   |     |   Comment #5
Who expected it last year either?  It was like manna from heaven.
hoho   |     |   Comment #6
I think Penfed was stressed by offering such high rate with people closing CDs and opening new ones. Customer service had to struggle. They will probably offer rates on the high side but not the big spread they had last year.
gregk   |     |   Comment #8
With the end of QE in October and all indicators pointing to a Fed rate hike sometime during 2015 in response to rising inflation and a tighteneing job market, it would seem PenFed has an even better rationale than previously for again crossing the 3% 5 year threshold (was there, in fact, ANY known rationale for them doing it last year?).  In any case, I have to question the wisdom of anyone in this uncertain rate environment now biting on one of the numerous 2% long term CD offers Ken seems to be writing up daily here.  I won't touch anything below 3% (even for 3 or 4 year maturities) and intend to keep uncommitted funds entirely liquid until I see how the economy shakes out over the coming months, - and what PenFed decides on during their traditional year-end "rate sale".  If I find myself disappointed in both respects by the start of 2015 and the outlook pessimistic again, a fallback option will be more fully investing in my Toby CD, though I'm still "rate-hopeful" enough for the coming half-decade or so as to be considerably dis-incentivized to that by Toby's stiff 2 year EWP.  It might take a "throw-up-my-hands" capitulation by me to do it, but still, never will I accept 2% for anything longer than a year or two.  RCA's, even with all the exasperation they entail when you're juggling a dozen of them are a better alternative given my own mindset and circumstances, and Connexus CU's 1.15% MM the sullen strategy of ultimate last resort.  10 years ago when planning my retirement I calculated 5% as the very least CD return I could reasonably expect to earn on my investable funds.  As it turns out now, inasmuch as my cumulative ROR stands at about 2.5%, I was wildly off in that expectation, = but having fit into that straitjacket semi-comfortably by now, is there anything that could be worse I should fear?
lou   |     |   Comment #9
Great comment, gregk. I agree with everything you said. No way I would buy any of these 2% 5-year CDs today.

The next 5 years is unlikely to replicate the last 5 years, even though most of the posters are convinced rates will never go up again. It takes this type of capitulation before we are likely to see any movement in interest rates. I would say we are very close to seeing it.
hoho   |     |   Comment #10
You could get a Synchrony 5 year and close it and pay the EWP if the rates go up. If they don't go up you can still get %2.3 for 5 years.
hoho   |     |   Comment #11
Even if the Fed raises rates the big question is how much will they go up? I'm sure it will be a slow process as to not hurt the economy.
Anonymous   |     |   Comment #12
Correct..and they stated it in their minutes.