The December FOMC meeting started today. The meeting announcement is scheduled for 2:00 PM ET Wednesday. A Fed Funds rate hike of 25 bps is widely expected. The more interesting news will come from the FOMC forecasts that are also scheduled to be released at 2:00 PM ET Wednesday. The forecasts include both economic projections and Fed Funds rate projections. The last projections showed that the majority at the FOMC anticipated three rate hikes in 2018. Some economists have predicted that tomorrow’s projections will increase this to four rate hikes in 2018. That may be a bit too optimistic as Economist Tim Duy describes in his Bloomberg article:
I anticipate the Fed will largely retain the policy rate forecast for 2018. This may come as a surprise given the dovish Fed minutes, but the recent surge in short-term rates indicates that financial markets are waking up to the reality that solid economic growth will prompt the bank to keep hiking rates despite low inflation.
Tim Duy concluded the article with a disturbing prediction:
All else equal, the stage will be set for an inversion of the yield curve by the end of next year.
This year we’ve seen the yield curve flatten for both Treasury yields and CD rates. Early this year it appeared only a matter of time before we would see 3% 5-year CDs. Except for a few rare cases, those CDs never came. However, internet savings account rates and short-term CD rates increased significantly. We now have internet savings accounts with APYs as high as 1.65% and nationally-available 1-year CD APYs as high as 1.80%.
If Tim Duy is correct and we see an inverted yield curve next year, 5-year CD rates may continue to disappoint next year.
The trend of a flattening yield curve took a break this week. Most Treasury yields (both short- and long-dated) went up in the last week. The only exception was the 2-year note which had no yield change in the last week. For the year, the flattening yield curve is apparent. Short-dated yields have risen considerably this year while long-dated yields have fallen.
The odds of a Fed rate hike on Wednesday as indicated by the Fed funds futures continue to be 100%. The odds of at least two rate hikes by next June increased slightly to 84.5% (up from 83.4% last week).
- 1-month: 1.26% up from 1.21% last week (0.52% on Jan 3)
- 6-month: 1.49% up from 1.48% last week (0.65% on Jan 3)
- 2--year: 1.83% same as last week (1.22% on Jan 3)
- 5--year: 2.18% up from 2.15% last week (1.94% on Jan 3)
- 10-year: 2.40% up from 2.36% last week (2.45% on Jan 3)
- 30-year: 2.79% up from 2.73% last week (3.04% on Jan 3)
Fed funds futures' probabilities of future rate hikes by:
- Dec 2017 - up by at least 25bps: 100% same as last week
- Dec 2017 - up by at least 50bps: 12.4% up from 9.8% last week
- Jun 2018 - up by at least 25bps: 100% same as last week
- Jun 2018 - up by at least 50bps: 84.5% up from 83.4% last week
- Jun 2018 - up by at least 75bps: 41.7% up from 38.7% last week
Savings and Money Market Account Rates
The above graph shows the rate trends of the average savings account rates. These average rates are based on all the rate data that we have collected over the years. This is an interactive graph. You can choose the look-back period (from 3 months to 5 years). As you can see in the graph, average savings account rates are rising slowly. They are still below the average from five years ago.
Rate hikes at internet banks have picked up in the last two weeks. The expected Fed rate hike may be having an impact.
We now have a new rate leader. Colorado Federal Savings Bank increased the rate of its new Premier Savings Account by 20 bps to 1.65% APY. This rate requires a minimum balance of $50k, and only new customers are eligible to open the account.
For a no-minimum savings account, DollarSavingsDirect and Salem Five Direct share the top spot with a 1.50% APY.
Live Oak Bank moved closer to these leaders at the start of December by raising its savings account rate 5 bps to 1.45% APY. It’s also a no-minimum savings account.
Last week Nationwide Bank increased the rate of its money market account by 10 bps to 1.40% APY for balances of at least $10k.
SFGI Direct increased the rate of its no-minimum savings account by 5 bps to 1.36% APY. If you’re looking for a top rate and an account that has a long history of being competitive, SFGI Direct’s savings account is a good choice.
Several of the big internet banks are holding their savings account rates at 1.30% APY. The latest big internet bank to reach this level is Discover Bank which increased its Online Savings Account rate from 1.20% to 1.30% APY.
Nationwide Bank’s money market account is now in my 1.40% club. This club includes banks and credit unions that offer nationally-available savings and money market accounts with non-promo rates of at least 1.40% APY. The count is now up to eight. The others in the club include Northpointe Bank’s Ultimate Money Market (1.50% APY), Incredible Bank’s savings account (1.55% APY), UFB Direct Money Market Savings (1.41% APY), DollarSavingsDirect Savings (1.50% APY), Live Oak Bank Savings (1.45% APY), Popular Direct Plus Savings (1.40% APY) and PurePoint Financial Online Savings (1.40% APY). I’m excluding Colorado Federal Savings Bank’s Premier Savings Account since only new customers are eligible. I’m also excluding the Mega Money Market accounts from All America Bank and Redneck Bank since these have $35k balance caps.
Reward Checking Accounts
There were again no changes to my list of nationally available 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.
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.
CD Deals: I just wanted to include this reminder of a few noteworthy CD deals that are available.
Navy Federal Credit Union has a special 32-month IRA CD with a 2.75% APY and a $250k maximum balance. There’s a special 15-month CD with a 2.25% APY and a $50k maximum balance. As is typical with recent Navy Fed special CDs, these allow add-on deposits. Please refer to this blog post for more details.
We keep seeing shorter-term CD rates reaching 2%. The latest internet bank to push the envelope is Popular Direct. It just started to offer an 18-month CD with a 2% APY. I’ll have more on this soon.
For mid-term CDs, the best deal continues to be at USALLIANCE Financial which has a special 35-month CD that earns 2.40% APY.
For long-term CDs, Mountain America Credit Union continues to hold the top spot with a 2.80% APY 5-year CD.Rates as of December 12, 2017
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:
|Colorado Federal Savings Bank||1.65% ($50k+)||Premier Savings (New customers) - Account review|
|Incredible Bank||1.55% ($25k+), 1.21% ($2.5k),||IncredibleBank Savings - Account review|
|DollarSavingsDirect||1.50% (no min)||Dollar Savings Account - Account review|
|Salem Five Direct||1.50%||eOne Savings, for new customers only Account review|
|Northpointe Bank||1.50% ($25k-$1m, guaranteed for 1 year)||Ultimate Money Market - Account review|
|All America Bank||1.50% (up to $35k), 0.50% ($35k+)||Mega Money Market Account - Account review|
|Redneck Bank||1.50% (up to $35k), 0.50% ($35k+)||Mega Money Market Account|
|Live Oak Bank||1.45% ($5 million max)||Savings Account - Account review|
|UFB Direct||1.41% ($5k min)||Money Market Savings - Account review|
|Popular Direct||1.40%||Popular Direct Plus Savings - Account review|
|Nationwide Bank||1.40% ($10k+), 1.15% APY (up to $10k)||Money Market - Account review|
|PurePoint Financial||1.40% ($10k min)||Online Savings - Account review|
|EBSB Direct||1.39% ($50k+), 0.20% ($5k+)||Money Market Direct - Account review|
|Self-Help Federal Credit Union||1.37% ($500k), 1.27% ($500)||Money Market - Account review|
|SFGI Direct||1.36%||Savings account - Account review|
|United Bank (MA)||1.36% ($500k max, guaranteed for 6mo)||Advantage Money Market, Not available in all states, Account review|
|CIT Bank||1.35% (up to $250k), 1.30% ($250k+)||Premier High Yield Savings - Account review|
|Signal Financial Credit Union||1.35% ($25k, enrollment in Premium Bundle)||Premium Money Market - Account review|
|EverBank||1.31% (1yr intro rate) 1.01% ongoing rate||Yield Pledge Money Market - Account review|
|Synchrony Bank (formerly GE Capital Retail Bk)||1.30%||High Yield Savings - Account review|
|Nationwide Bank||1.30%||Online Savings - Account review|
|Barclays||1.30%||Online Savings - Account review|
|GS Bank||1.30%||Online Savings Account - Account review|
|Sallie Mae Bank||1.30%||MMA - Account review|
|Discover Bank||1.30% (no min)||Online Savings - Account review|
|BankPurely||1.30% ($1 min)||SavingPurely - Account review|
|ableBanking||1.30% ($250 min)||Money Market Savings - Account review|
|Radius Bank||1.30% ($2.5k min)||Radius High-Yield Savings - Account review|
|Capital One||1.30% ($10k+), 0.60% (up to $10k)||360 Money Market|
|UFB Direct||1.30% ($25k+), 0.20% ($100)||Premium Savings - Account review|
|CIBC USA (formerly The Palladin PrivateBank)||1.30% (6mo intro rate) 1.10% blended APY||Savings Account - Account review|
|McGraw-Hill Federal Credit Union||1.30% ($75k), 1.10% ($20k),1.00% ($5k) (guaranteed through 12/31/18)||Ascend Account - Account review|
|Northern Bank Direct||1.26% ($250k max)||Money Market - Account review|
|Ally Bank||1.25%||Online Savings - Account review|
|American Express Bank||1.25%||High Yield Savings - Account review|
|Alliant Credit Union||1.25% ($100 min)||High-Rate Savings - Account review|
|Bethpage Federal Credit Union||1.25% ($500 min)||Money Market|
|BBVA Compass||1.25% ($10k min)||ClearChoice MMA Promo - Account review|
|Hanscom Federal Credit Union||1.25% ($25k min)||Higher Yield Savings|
|EverBank||1.21% (1yr intro rate) 0.71% ongoing rate||Checking - Account review|
|Dime Savings Bank||1.20%||Dime Direct Money Market, new money - Account review|
|Discover Bank||1.20% ($100k min), 1.15% ($2.5k)||MMA - Account review|
|Chevron Federal Credit Union||1.20% ($250k+), 1.10% ($2.5k+)||MarketEdge Savings|
|My e-BAnC by BAC Florida Bank||1.15%||Super Saver - Account review|
|FNBO Direct||1.15%||Online Savings|
|MyBankingDirect||1.15% ($5k+), 0.25% (less than $5k)||Earn >More Money Market|
|SmartyPig||1.15% ($10k min), 1.05% (less than $10k)||SmartyPig Savings - Account review|
|Nationwide Bank||1.15% ($10k), 1.00% ($1)||Nationwide Member Checking Account|
|Connexus Credit Union||1.15% ($100k), 1.00% ($50k,) 0.75% ($20k)||MMA - active chk required|
|Northpointe Bank||1.12%||Ultimate Savings - Account review|
|Northeast Bank||1.10%||Pearl Money Market Promo, new customers - Account review|
|Quorum Federal Credit Union||1.10%||HighQ Savings|
|iGObanking.com||1.10% ($25k min)||MMA, New accounts and new money only, Account review|
|TIAA Direct||1.10%($100k), 1.01% ($1) Money Market||Internet bank|
|Pacific National Bank||1.06%||Money Market Deposit Account - Account review|
|AloStar Bank of Commerce||1.05%||Savings account - Account review|
|Bank of Internet USA||1.05%||Smart Money Market|
|Bank of Internet USA||1.05%||Smart Savings|
Reward Checking Accounts:
- Noteworthy Accounts Available Nationwide:
|Consumers Credit Union||4.59% (up to $20k)||Rewards Checking - debit card and $1k credit card requirements|
|Consumers Credit Union||3.59% (up to $15k)||Rewards Checking - debit card and credit card requirements|
|One American Bank||3.50% (up to $10k), 0.25% ($10k+)||Kasasa Cash - Account review|
|Consumers Credit Union||3.09% (up to $10k)||Rewards Checking - debit card with NO credit card requirements|
|Evansville Teachers Federal Credit Union||3.00% (up to $15k), 0.00% ($15k+)||Vertical Dividend Checking - Account review|
|Lake Michigan Credit Union||3.00% (up to $15k), 0.00% ($15k+)||Max Checking|
|Signature Federal Credit Union||3.00% (up to $15k), 0.10% ($15k+)||Choice Checking|
|Great Lakes Credit Union||3.00% (up to $10k), 0.10% ($10k+)||Ultimate Checking|
|Partner Colorado Credit Union||3.00% (up to $10k), 0.50% ($10k+)||High Interest Checking|
|American Bank & Trust||2.51% (up to $10k), 0.25% ($10k+)||Kasasa Cash|
|Industrial Bank||2.50% (up to $15k), 0.25% ($25k+)||Kasasa Cash|
|Capital Educators Federal Credit Union||2.50% (up to $10k), 0.20% ($10k+)||High Yield Checking|
|New Buffalo Savings Bank||2.27% (up to $15k), 0.2497% ($15k+)||Kasasa Cash - Account review|
|Bellco Credit Union||2.25% (up to $25k), 0.25% ($25k+)||Boost Interest Checking - Account review|
|Main Street Bank||2.25% (up to $25k), 0.25% ($25k+)||Kasasa Cash - Account review|
|Altra Federal Credit Union||2.25% (up to $15k), 0.50% ($15k+)||A+ Checking|
|Coastal Credit Union||2.25% (up to $10k), 0.10% ($10k+)||Go Green Checking - Account review that includes companion Go Green MMA|
|Georgia Bank Company||2.15% (up to $25k), 0.40% ($25k+)||Kasasa Cash - Account review|
|TruStone Financial Credit Union||2.02% (up to $20k), 0.10% ($20k+)||TruRate Checking - Account review|
|BankFirst||2.02% (up to $10k), 0.15% ($10k+)||Kasasa Cash|
|Finex||2.018% (up to $25k), 0.20% ($25k+)||Axcess Rewards Checking, Premier Account (formerly First New England Federal Credit Union)|
|XCEL Federal Credit Union||2.01% (up to $25k), 0.03% ($25k+)||Kasasa Cash Checking|
|Bay State Savings Bank||2.01% (up to $20k), 0.25% ($20k+)||Kasasa Cash - Account review|
|Legence Bank||2.01% (up to $10k), 0.25% ($10k+)||Kasasa Cash|
|5Star Bank||2.00% (up to $25k), 0.15% ($25k+)||Kasasa Cash Checking Account review|
|Country Bank||2.00% (up to $20k), 0.25% ($20k+)||Kasasa Cash Checking Account review|
|Elements Financial||2.00% (up to $20k), 0.10% ($20k+)||High Interest Checking - Account review|
|MainStreet Bank||2.00% (up to $15k), 0.25% ($15k+)||Kasasa Cash - Account review|
|Blue Federal Credit Union||2.00% (up to $15k), 0.25% ($15k+)||Extreme Checking (up to 4% w/account relationships) - Account review|
|All America Bank||2.00% (up to $10k), 0.50% ($10k+)||Ultimate Rewards Checking|
|Redneck Bank||2.00% (up to $10k), 0.50% ($10k+)||Redneck Rewards Checking|
|United Educators Credit Union||2.00% (up to $10k), 0.25% ($10k+)||Kasasa Cash|
|KS StateBank||1.95% (up to $25k), 0.50% ($25k+)||Check PLUS - Account review|
|Campus Federal||1.95% (up to $10k), 0.05% ($10k+)||Lagniappe Checking|
|Connexus Credit Union||1.75% (up to $25k), 0.25% ($25k+)||Xtraordinary Checking|
|First Tech Federal Credit Union||1.58% (up to $10k), 0.16% ($10k+)||Dividend Rewards Checking|
|MemoryBank||1.50% (up to $250k)||EarnMore Interest Checking - Account review|
|Superior Choice Credit Union||1.50% (up to $30k)||AMP Checking|
|Marine Federal Credit Union||1.26% (up to $10k), 0.05% ($10k+)||Kasasa Cash Checking|
|Bank of Internet USA||1.25% (up to $150k), 0.00% ($150k+)||Rewards Checking|
|Heritage Bank||1.25% (up to $25k), 0.10% ($25k+)||eCentive Account|
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
|Duke Energy PremierNotes||1.41% rate for $50K+||Duke Energy PremierNotes review|
|Vanguard Prime Money Market Fund||1.24% 7-day yield|
|Ally Financial Demand Notes||1.15% rate for $50k+|
|Ford Interest Advantage||1.15% rate for $50k+||Ford Interest Advantage review|
|Fidelity Money Market Fund||1.00% 7-day yield|
|Vanguard Tax-Exempt Money Market Fund||0.89% 7-day yield|
|Fidelity Municipal Money Market Fund||0.63% 7-day yield|