Best Bank Account Interest Rates - Summary For October 12, 2021

Rate changes on savings, money market and checking accounts have become rare. There were only four noteworthy rate changes in the last two weeks. Two were rate hikes and two were rate cuts.

The most noteworthy one was the rate cut at Advancial Credit Union. Its Premium Money Market Account yield fell from 1.01% to 0.81% APY for balances of at least $100k. This had been one of only three liquid accounts that had a 1%+ yield for large balances.

Also noteworthy was the rate hike at PenFed. Its Premium Online Savings account rate increased from 0.45% to 0.50%. Before this rate hike, the account had a 0.45% rate since last March. The rates of this savings account have been inline with the rates of online savings account rates from banks for the last three years. Back in 2018 and 2019, its yield had been as high as 2.00%.

The other rate hike was at Varo Bank. This is a fintech company that acquired a bank charter. Its savings account yield was increased from 0.20% to 0.50%. This applies to all balances regardless of direct deposit. It also has a 3% APY that applies to balances up to $5k with direct deposit. Without direct deposit or if the balance exceeds $5k, the rate on the entire balance falls to 0.50%. Last year this non-qualifying rate had been quite competitive, but that changed early this year when the rate fell from 0.81% to 0.40% in January and then to 0.20% in March.

For the second straight month, our Online Savings Account Index, which tracks the average rate of ten well-established online savings accounts, had no change. The average remains at 0.446%. Most of the 2021 declines of this average occurred in the first four months of the year. During this time, the average fell from 0.512% to 0.446%. Since the start of May, there has been no net change in the average.

I’ve listed the most noteworthy rate changes that have occurred in the last two weeks. I created two lists. The first list includes rate changes from the major online banks. The second includes rate changes from past rate leaders which are generally not well-known names. All percentages are APYs:

Rate changes from the major online banks:

• None

Rate changes from the less well-known CUs & online banks:

• Advancial CU Premium Money Market ($100k+, 1.01% → 0.81%)
• Varo Bank Savings (0.20% → 0.50%)
• PenFed CU Premium Online Savings (0.45% → 0.50%)
• Evansville Teachers FCU Money Market Share ($25k+ 0.31% → 0.27%)

Current rate leaders

With the rate cut of Advancial’s Premium Money Market Account, we are down to just two liquid accounts in the 1% group. These are savings, money market or standard checking accounts that have at least a 1% APY without any small maximum balance limits.

There are two fintechs that partner with banks that continue to offer 1.00% APY on their checking accounts. They have no balance limitations and no activity requirements to qualify for the high rate.

The most recent fintech to be in the 1% group is M1 Finance. This is a brokerage firm and robo-advisor which also offers a checking account called M1 Spend. M1 Finance has partnered with Lincoln Savings Bank which holds the deposits and allows deposits to be FDIC insured. The Spend account has two options: basic and plus. The basic account offers no interest. The plus account offers 1% APY on all balances. The downside with M1 Plus is a $125-per-year maintenance fee that can’t be waived. However, it’s currently waiving this fee for the first year.

The other fintech that is still in the 1% group is T-Mobile Money. Like M1 Finance, T-Mobile Money offers a checking account that earns 1% APY on all balances without any activity requirements. Unlike M1 Finance, T-Mobile Money Checking Account has no monthly service fees. T-Mobile has partnered with BankMobile, which has partnered with Customers Bank, to hold the FDIC-insured deposits (As of January 4, 2021, BankMobile is no longer a division of Customers Bank.) The Checking Account can actually be considered a reward checking account since you can earn 4% APY on up to $3k if activity requirements are met. The requirements to earn 4% APY on up to $3k include: 1) enrolled in a qualifying T-Mobile postpaid wireless plan; 2) registered for perks with your T-Mobile ID; and 3) at least 10 qualifying purchases using your T-Mobile MONEY card (This requirement replaced direct deposit.) The portion of the balance above $3k earns 1.00% APY. Also, the entire balance earns 1.00% APY if the above requirements are not met. Since the 1.00% APY can be earned without meeting any activity requirements, I’ve included the account in the savings/money market category.

One major downside with both M1 Finance and T-Mobile Money is that neither allows joint accounts or accounts with POD/ITF beneficiaries. Unfortunately, this is typical with many fintech bank accounts.

Connexus Credit Union’s Money Market Account is now in third place with its 0.85% APY for balances of at least $100k. This account had been in the 1% group, but the rate fell in July. The rates for smaller balances are now 0.60% APY ($20k) and 0.25% APY ($1k). Balances under $1k earn no interest. One important change is that there is no longer an active checking account requirement to qualify for these money market rates.

The highest rate on a non-promotional and nationally-available liquid account that’s directly available from a bank is the ZYNLO Bank money market account. This account has a rate of 0.80% for balances up to $250k, and the minimum opening deposit is only $10. ZYNLO Bank had offered a promotion with a 1.25% APY, but that promotion ended in March. ZNYLO recently notified customers who had this promotional money market account that their promotional money market account (that currently earns 1.00% APY) will be closed on November 1st and all funds will be transferred into a ZYNLO standard money market product (with 0.80% APY on balances up to $250k). For more details on ZYNLO and the money market account, please refer to my ZYNLO Bank money market review.

New-To-Summary (NTS) savings or money market accounts

The only new savings/money market account added this week was the Bank Onward Bo Savings account, which has a 0.65% APY on all balances. Minimum opening deposit is $250. Bank Onward is the new online division of ConnectOne Bank, which has a history of offering a competitive online savings account. For more details about Bank Onward and its savings account, please refer to my Bank Onward Bo Savings account review.

Rate guarantees without withdrawal penalties

When rates are falling, the best savings and money market deals are specials that guarantee a rate for a period of time. As you would expect in our current rate environment, these specials have dried up. TIAA Bank was the last one to offer a rate guarantee, but that has ended. TIAA Bank’s Yield Pledge Money Market account no longer has a 1-year intro rate for new customers. There’s now just the ongoing rate which remains at 0.40% for all balances under $10 million.

No-penalty CDs have some of the liquidity of savings and money market accounts, but like CDs, they offer a rate lock which can be useful when rates are falling. No-penalty CDs have become more common at online banks in the last three years, and they are something to consider, especially if you already have a savings account at the bank.

Some banks like Marcus by Goldman Sachs make it easy to open and close the No Penalty CDs. You just lose access to the money in the No Penalty CD for the first six days from account funding. After that, you are free to close the CD without penalty

The main issue now is that their rates have been falling. Many now have rates lower than the bank’s savings account. The only reason to open a no-penalty CD with a rate that’s lower than the savings account rate is if you believe the savings account rate will fall below the no-penalty CD rate. Even if that occurs, you may earn more in the savings account if the rate falls slowly.

In the last two weeks, none of the no-penalty CDs listed in the table below had any rate changes. CFG Bank’s 13-month Penalty Free CD remains on top with a 0.62% APY.

Remember that when talking about no-penalty CDs (that function like Ally’s No Penalty CD), a longer term is always better. Since you can close these types of no-penalty CDs at any time after the first six days, I can’t think of a reason to choose a shorter-term no-penalty CD if the rate is the same.

Money Market Funds

Another option for your cash instead of savings accounts and money market accounts are money market funds from brokerages. These don’t have FDIC coverage, but they can be reasonable alternatives to deposit accounts. Back when the Fed was holding rates near zero from 2008 to 2015, money market funds had yields of around 0.01%. Now that the Fed has cut rates back to zero, money market fund yields have fallen back to 0.01%.

The 7-day yield of both the Fidelity Money Market Fund and the Fidelity Municipal Money Market Fund remains at 0.01%. This has held steady now for the last several months.

The 7-day yield of the Vanguard Federal Money Market Fund is now at 0.01%. This had been 0.02% in January. The Vanguard Municipal Money Market Fund yield remains at 0.01%.

Reward Checking Accounts

Reward checking account rates have been falling but there haven’t been widespread cuts that we’ve seen with online savings accounts. For the nationally-available reward checking accounts, there were no rate or balance cap reductions in the last two weeks.

A popular reward checking account that used to be nationally available will be having balance cap reductions. A reader forwarded me an email he received from The Bank of Denver notifying him of upcoming balance cap reductions on the Bank’s Kasasa Cash and Saver accounts. Effective November 17th, the Kasasa Cash balance cap will fall from $25k to $10k and the Saver balance cap will fall from $50k to $25k. The rates will remain the same (2.00% APY for the Kasasa Cash on balances up to $10k and 1.00% APY for the Kasasa Saver on balances up to $25k).

Overall, reward checking accounts have generally held up better in a zero-rate environment than online savings accounts, but as the above example shows, they’re not immune to cuts (either rate or balance cap cuts). History during the last zero-rate period (2008 to 2015) has shown that reward checking accounts can sustain rates significantly higher than online savings account rates.

Most reward checking accounts have fairly small balance caps and won’t provide much earnings on large balances. However, there are a few nationally-available ones in which you can earn high rates on fairly large balances. Below are four of these accounts.Two of the four are combo checking/savings accounts.

In the list below I added the blended APY for a $100k balance. For the combo account, this assumes that the funds are spread between the two accounts to maximize the APY.

• ECCU Kasasa Cash Checking: 3.00% APY on up to $10k and Kasasa Saver: 1.00% APY on up to $100k (1.20% blended APY for $100k balance)
• Quontic Bank High Interest Checking: 1.01% APY up to $150k, 0.35% APY $150k+ to $1m (1.01% APY for $100k balance)
• Nokomis Savings Bank Kasasa Cash: 2.00% APY up to $25k and Kasasa Saver: 0.50% APY on up to $100k (0.88% blended APY for $100k balance)
• Presidential Bank Advantage Checking: 2.25% APY up to $25K, 0.40% on portion above $25k (0.86% blended APY for $100k balance)

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 focuses on liquid accounts.

CD Deals: PenFed raised the yields of its 3-year CD (1.00% APY), 5-year CD (1.25% APY) and 7-year CD (1.50% APY). Its 7-year CD rate is now the highest CD rate that’s nationally available (regardless of term). PenFed is calling these a limited-time offer. These CDs have hefty early withdrawal penalties, which isn’t a good CD feature when rates may rise quickly in the next few years.

The next highest CD yield is 1.35%, and the two CDs with this yield have much shorter terms than seven years. Abound Credit Union is offering 1.35% APY on its 47-month CD Special, and NASA FCU has a 49-month CD Special with a 1.35% APY (up from 1.15% APY in September). For more details, please refer to this Abound CD review and this NASA FCU CD review.

For short-term CDs, SkyOne Federal Credit Union’s 18-month Fall CD Special (1.00% APY) has the highest rate for the smallest minimum deposit ($1k). Consumers Credit Union continues to have a 20-month CD Special with a yield of up to 1.00%. This requires a very large $250k minimum deposit. For a $100k minimum, the rate drops to 0.90%, and for a $250 minimum, the rate drops to 0.80%. I have more details in this blog post.

For 1-year terms, Lafayette Federal Credit Union’s 1-year CD (0.80%) has the highest rate. For banks, the highest 1-year CD rate is 0.75% at Live Oak Bank.

For terms under one year, Veridian Credit Union offers the highest rate. Its 9-month Jumbo CD Special has a 0.85% APY ($100k minimum), and its standard CD Special has a 0.75% APY ($500 minimum).

Luana Savings Bank has the highest 6-month CD rate. Its 6-month CD Special has a 0.75% APY with a minimum deposit of $100k (0.65% APY for a $50k minimum).

This is my new weekly summary with the Fed review split off on a separate blog post. My weekly summaries will now be focused entirely on deposit rates and deals. Please keep all discussion about the Fed, the economy and politics to my Fed/Economy review blog post.

Rates as of October 12, 2021

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)

*New To Summary, as of October 12, 2021

No-Penalty CDs

Reverse Tier Savings/Money Market Accounts/Checking:

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 - May Not Be FDIC Insured

• Investment Discussion Forum

• Series I Savings Bond Purchased after May 1, 2021