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

For the last three months, online savings account rates haven’t fallen as fast as they had in August and September. You can see this trend in our online savings account index which is the average rate of ten well-established online savings accounts.

The slowing of online savings account rate declines can also be seen at the major online banks. Fewer of the major online savings accounts have had rate cuts. I only list three with rate cuts in the last three weeks, and these three are not the most prominent online banks.

Three past rate leaders had rate cuts in the last three weeks. These are small banks with fairly new online accounts. They include Merchants Bank of Indiana, CFG Bank and First Foundation Bank. Their new rates are still on the high end for online savings accounts.

Banks that don’t have a long track record with online accounts often don’t keep their rates competitive. BankUnitedDirect is the latest example. I first reported on its Online Money Market Account in 2018. From 2018 to March 2020, the Online Money Market yield remained at a competitive 2.00%. As rates fell in 2020, the Online Money Market rate remained fairly competitive until October. In November, December and January, the rate fell considerably, and is now at a very uncompetitive 0.25%.

I’ve listed the most noteworthy rate changes that have occurred in the last three 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:

• PenFed CU Premium Online Savings (0.60% → 0.55%)
• Sallie Mae Bank Money Market (0.55% → 0.45%)
• Citizens Access Online Savings (0.50% → 0.40%)

Rate changes from the less well-known online banks:

• Merchants Bank of Indiana Money Market (1.00% → 0.75%)
• Communitywide FCU High Rate - Quarterly (0.90% → 0.70%)
• CFG Bank High Yield Money Market (0.72% → 0.68%)
• First Foundation Bank Online Savings (0.75% → 0.60%)
• INSBANK Online Money Market (0.65% → 0.60%)
• Vio Bank High Yield Online Savings (0.66% → 0.57%)
• USALLIANCE Financial CU High Dividend Savings (0.33% → 0.55%)
• Salem Five Direct eOne Savings (0.61% → 0.50%)
• Pen Air FCU Money Market (0.35% → 0.45%)
• Amboy Direct Personal eSavings (0.55% → 0.40%)
• Pacific National Bank Online Money Market (0.40% → 0.35%)
• BankUnitedDirect Online Money Market (0.35% → 0.25%)

Current rate leaders

We now list a total of four liquid accounts with yields of at least 1.00% without any small balance limitation. This is down from six in December.

A rate cut removed one account from this 1% group. Merchants Bank of Indiana lowered its Money Market yield from 1.00% to 0.75%.

An addition of an account offset the removal of Merchants Bank of Indiana. The new-to-summary (NTS) account is an IRA savings account from U.S. Postal Federal Credit Union. The IRA savings account has a 1.00% APY. The rate can be boosted to 1.15% APY when the member meets a relationship requirement. Membership to this credit union is open to people from any state through membership in the American Philatelic Society. Thanks to the DA reader for bringing this account to my attention.

The other three in this 1% group remain the same as three weeks ago.

The only fintech to remain in the 1% group is T-Mobile. Its checking account continues to earn 1% APY on all balances without any activity requirements. T-Mobile has partnered with BankMobile, a division of Customers Bank, to hold the FDIC-insured deposits. 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 include being enrolled in an active T-Mobile postpaid wireless plan and being enrolled in the perks program with your T-Mobile ID. Lastly, a monthly qualifying deposit of at least $200 is required. 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. Thanks to DA reader calwatch for bringing this account to my attention.

The other two institutions in the 1% group are credit unions.

The Premium Money Market from Advancial Credit Union continues to offer 1.01% APY for balances of at least $100k. This isn’t a new account or rate. Advancial hadn’t been listed in past summaries due to uncertainties in its field of membership being open to people in any state. Based on the latest information from Advancial, it appears people from any state can now become a member via an association membership. Please see this blog post for more details.

The highest rate for a liquid account continues to be the money market account from Connexus Credit Union which has a 1.15% APY on balances of at least $100k. Lower tiers include 1.00% APY ($50k), 0.75% APY ($20k), 0.60% APY ($10k), and 0.50% APY ($1k). To qualify for these rates, the member must also maintain an active checking account.

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. The only one with a rate guarantee that I’m aware of is the Yield Pledge Money Market account at TIAA Bank.

TIAA Bank Yield Pledge Money Market has a 1-year guaranteed rate for new accounts of 0.45%. This applies to balances up to $250k. A version of this offer has long been available at TIAA Bank/EverBank. However, I don’t remember a time when the intro rate was this low. After the 1-year intro period, an ongoing rate takes effect. The current ongoing rate 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 year, 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.

Due to the rate cut of Rising Bank’s 15-month No Penalty CD, CFG Bank’s 13-month Penalty Free CD (0.62%) takes the top spot for highest no-penalty CD rate.

In addition to Rising Bank’s rate cut (0.65% → 0.60%), two other banks lowered their no-penalty CD rates in the last three weeks. The other two are Investors eAccess 6-month No-Penalty CD (0.40% → 0.25%) and Citizens Access 11-month Liquid CD (0.15% → 0.05%). When rates get this low, there is no reason to open these CDs.

• 0.62% APY 13-month Penalty Free CD ($500 min) - CFG Bank
• 0.60% APY 15-month No Penalty CD ($1k min) - Rising Bank
• 0.60% APY 11-month Flex Time Deposit ($100k min) - My eBanc
• 0.55% APY 8-mo No-Penalty CD for AARP members ($500 min) - Marcus by Goldman Sachs
• 0.50% APY 11-month No Penalty CD (no min) - Ally Bank
• 0.45% APY 7-month No-Penalty CD ($500 min) - Marcus by Goldman Sachs
• 0.45% APY 11-month No Penalty CD ($5k min) - Colorado Federal Savings Bank
• 0.45% APY 11-month Flex Time Deposit ($10k min) - My eBanc
• 0.35% APY 11-month No-Penalty CD ($500 min) - Marcus by Goldman Sachs
• 0.30% APY 11-month No-Penalty CD ($1k min) - CIT Bank
• 0.25% APY 13-month No-Penalty CD ($500 min) - Marcus by Goldman Sachs
• 0.25% APY 6-month No-Penalty CD ($500 min) - Investors eAccess
• 0.15% APY 11-month No-Penalty CD ($10k min) - PurePoint Financial
• 0.10% APY 13-month No-Penalty CD ($10k min) - PurePoint Financial
• 0.10% APY 14-month No-Penalty CD ($10k min) - PurePoint Financial
• 0.05% APY 11-month Liquid CD ($5k min) - Citizens Access

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 to or close 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 0.02%. The Vanguard Municipal Money Market Fund yield is 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.

In the last three weeks, three of the nationally-available reward checking accounts had rate cuts, and there was one new-to-summary reward checking account.

The two accounts that had noteworthy rate cuts are the eCentive Account from Heritage Bank and the Panorama Checking from Western Vista Federal Credit Union. The Heritage Bank eCentive top rate fell from 1.19% to 1.09% APY for balances up to $25k. This account has a long history. We’ve been tracking its rate since 2009. From 2013 to 2017, the top yield held at 1.26%, it then shot up in 2018 to 3.33%. The rate started to fall in December 2019, but the big drop came on April 1, 2020 when the top yield fell from 3.03% to 1.53%. Since April, the rate has slowly been declining.

The other reward checking account that had a rate cut was the Panorama Checking at Western Vista FCU. Its top rate fell from 3.25% to 2.53% APY for balances up to $15k. We first started to track its rate in early 2020. At that time the top rate was 4.00% APY. In June of last year, the yield dropped to 3.25%.

The one new-to-summary reward checking account is the Kasasa Cash account at Virginia-based Select Bank. Its top yield is 2.01% APY for balances up to $50k. You can also link Select Bank’s Kasasa Saver savings account to this checking account. If the Kasasa Cash requirements are met, the Kasasa Saver earns 1.05% APY on up to $250k. The combination of the two allow you to earn up to 1.21% APY on balances up to $300k.

Overall, reward checking accounts have generally been more resistant to Fed rate cuts than online savings accounts. As you can see from above, they’re not immune. History during the last zero bound period (2008 to 2015) has shown that reward checking accounts can sustain rates significantly higher than online savings account rates during a zero interest rate environment.

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: The highest nationally-available CD rate is 1.50% APY at Affinity Plus Federal Credit Union. This has a 5-year term.

For short-term CDs with terms under two years, the top rate is 1.02% APY at Advancial Credit Union. This has a minimum deposit requirement of $50k and a term of 18 months.

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 January 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 January 12, 2021

Reverse Tier Checking/Savings/Money Market Accounts:

Reward Checking Accounts:

• Best Reward Checking Account Rates

• Noteworthy Accounts Available Nationwide:

*New To Summary as of January 12, 2021

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

*On November 16, 2020, Ally announced that it intends to terminate the Demand Notes program and redeem, in full, all outstanding Demand Notes as of February 26, 2021. Demand Notes account holders will be contacted prior to any redemption date, with additional details.

• Series I Savings Bond Purchased from November 1, 2020 to April 30, 2021

Accounts Removed, No Longer Available