Best Bank Account Interest Rates - Summary for June 13, 2017

The Fed has begun its two-day FOMC meeting. The FOMC statement is scheduled to be released at 2:00pm EDT Wednesday. At this same time, the Fed is also scheduled to release its federal funds rate projections and its quarterly economic projections. Then at 2:30pm, Fed Chair Janet Yellen is scheduled to hold a press conference.

A Fed rate hike on Wednesday appears to be almost a sure thing. What’s less certain is the federal funds rate projections. Do most Fed members still anticipate three rate hikes in 2017? Also, do the projections indicate fewer anticipated rate hikes in 2018? Economist Tim Duy described his prediction about the Fed’s new projections in this Bloomberg article:

The bottom line is that the Fed will resist pulling back on rate projections if they can justify holding their inflation forecast and unemployment remains poised to decline further in the months ahead.

If the Fed does resist in pulling back on rate projections, that will be good news for savers. With at least one more Fed rate hike anticipated for this year after Wednesday and more to come in 2018, that should help push banks to raise deposit rates. The primary issue that could derail higher deposit rates is if the economy disappoints. As Tim Duy warned in his article:

If weak inflation remains persistent through the second half of this year, the Fed would then be forced to rethink their 2018 plans.

Both the federal funds futures and Treasury yields have been moving in the right direction over the last week. The federal funds futures now show a 99.6% chance of a rate hike on Wednesday. The chance of another rate hike in December went up a little from last week, rising to just above 50-50.

All Treasury yields went up from last week, with the largest increase seen on the 2-year and 5-year Treasury yields (up by 8 bps from last week).

The following numbers are based on Daily Treasury Yield Curve Rates and the CME Group FedWatch.

Treasury Yields:

• 1-month: 0.89% up from 0.83% last week (0.52% on Jan 3)
• 6-month: 1.12% up from 1.08% last week (0.65% on Jan 3)
• 2--year: 1.38% up from 1.30% last week (1.22% on Jan 3)
• 5--year: 1.79% up from 1.71% last week (1.94% on Jan 3)
• 10-year: 2.21% up from 2.14% last week (2.45% on Jan 3)
• 30-year: 2.87% up from 2.81% last week (3.04% on Jan 3)

Fed funds futures' probabilities of future rate hikes by:

• Jun 2017 - rate hike: 99.6% up from 95.8% last week
• Dec 2017 - at least one more rate hike: 52.2% up from 49.9% last week
• Dec 2017 - at least two more rate hikes: 10.4%

Savings and Checking Account Rates

We continue to see a few more rate hikes in my list of top nationally available savings and money market accounts.

In the last two weeks, three large internet banks increased their savings account rates. These include GS Bank (1.05% to 1.20% APY), Synchrony Bank (1.05% to 1.15% APY) and Discover Bank (1.01% to 1.10% APY). It seems likely that the expected Fed rate hike on Wednesday along with competition are contributing to these higher rates.

In addition to these large internet banks, Live Oak Bank introduced a new internet savings account that earns 1.25% APY on all balances up to $250k.

The highest rate isn’t from an internet bank. It’s the money market account from Self Help Federal Credit Union. Self Help increased the top-tier APY of the MMA from 1.36% to 1.41%. This requires a large balance of $500k. Its bottom-tier APY increased to 1.31%, and this requires only a $500 balance.

I not only include savings and money market accounts on this list, but also standard checking accounts. If a standard checking account has a top rate, there’s no reason to ignore it. Checking accounts offer more liquidity than savings accounts due to check writing privileges, and unlike savings and money market accounts, checking accounts aren’t limited to six withdrawals per statement period.

Due to this extra liquidity, the standard checking accounts typically have lower rates than savings and money market accounts. Sometimes, however, there are exceptions. The latest exception is the Nationwide Member Checking Account. In early May, the APY of this account increased from 0.50% to 1.00%, and then this week, Nationwide Bank increased the rate again. It’s now at 1.15% APY for balances of at least $10k. I’ll soon be publishing a review of this checking account.

With the addition of Live Oak Bank, my new 1.25% club has again added a member. This 1.25% club is the group of nationally available checking, savings and money market accounts that have rates of at least 1.25% APY. We now have seven accounts in this club (ableBanking, Self-Help FCU, BankPurely, UFB Direct, PurePoint Financial, Dollar Savings Direct and Live Oak Bank). Just like the 1% club, I’m going to exclude accounts that have rates that are clearly promotional and temporary. These include savings accounts at Salem Five Direct and The Palladian PrivateBank and the Ascend Money Market account at McGraw-Hill FCU. I also exclude accounts that have small balance caps like Redneck Bank’s Mega Money Market account.

Reward Checking Accounts

We still aren’t seeing many rate increases on reward checking accounts. Reward checking rates have been slower to respond to the Fed rate hikes as compared to internet savings account rates. Since much of the rates of reward checking accounts are paid for by debit card activity, banks may continue to go slow with rate hikes.

The only change to my list of nationally available reward checking accounts was the addition of the Kasasa Cash account from Security State Bank. The account earns 3% APY on balances up to $10k.

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, Overview of Reward Checking and Our Reward Checking Table.

Certificate of Deposit Rates

I’m now 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.

Hot CD Deals: I just wanted to include this reminder of a few hot CD deals that are available.

INOVA Federal Credit Union just came out with a special 42-month CD that earns 2.30% APY. As an additional incentive, they’re offering a $75 gift card when you open this CD with a minimum deposit of $100k of new money.

Ally Bank’s 5-year CD (2.25% APY for all balances) isn’t the 5-year rate leader, but its 5-year CD is very competitive when you factor in the mild early withdrawal penalty (150 days of interest).

For those who prefer short-term CDs, Ally Bank just increased the rate of its 11-month No Penalty CD to 1.35% APY for minimum deposits of $25k. With this no-penalty feature, you can make this CD have any term that you want from 7 days to 11 months.

Checking/Savings/Money Market Accounts:

• Best Savings Account Rates (Nationwide and by State)
• Best Money Market Rates (Nationwide and by State)
• Best Checking Account Rates (Nationwide and by State)

• Noteworthy Accounts Available Nationwide:

Reward Checking Accounts:

• Best Reward Checking Account Rates

• Noteworthy Accounts Available Nationwide:

Certificates of Deposit:

• Best CD Rates (Nationwide and by State)
• Best IRA CD Rates (Nationwide and by State)
• Survey of the Best CD Rates (Nationwide and Local)

Bank Account Alternatives - NOT FDIC Insured

• Investment Discussion Forum

• Series I Savings Bond Purchases from May 2017 through October 2017

Removed, Following Rate Drop

Post Publication Edits

6/15/2017: My e-BAnC by BAC Florida Bank Super Saver rate raised.

6/15/2017: MySavingsDirect MySavings Account rate raised.

6/16/2017: SallieMae Bank Money Market Account rate raised.