Best Bank Account Interest Rates - Summary For August 4, 2020

A new month has brought a new round of rate cuts. Unfortunately, we’ve had some large rate cuts at the well-established online banks. Online savings account rates have been slashed by 20 to 30 bps at Capital One, Barclays, Synchrony and Marcus by Goldman Sachs. Synchrony’s new rate is 0.75%, and the new rate of the other three is 0.80%. These rates are all-time lows at Barclays, Synchrony and Marcus by Goldman Sachs.

New online banks will often have rates higher than the well-established banks for at least the first year or so. Several of these new online banks have lowered their savings account yields in the last two weeks to around 1%. These include Vio Bank (1.04%), ConnectOne Bank (1.01%) and WauBank (1.00%).

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:

• Discover Bank Online Savings (1.01% → 0.95%)
• Marcus by Goldman Sachs AARP Savings (1.15% → 0.90%)
• Discover Bank Money Market (0.90% → 0.85%)
• Marcus by Goldman Sachs Savings (1.05% → 0.80%)
• Capital One 360 Performance Savings (1.00% → 0.80%)
• Barclays Online Savings (1.00% → 0.80%)
• Synchrony Bank High Yield Savings (1.05% → 0.75%)

Rate changes from the less well-known online banks:

• Nationwide by Axos Bank My Savings (1.15% → 1.05%)
• Citi Accelerate Savings (1.10% → 1.05%)
• Vio Bank Online Savings (1.11% → 1.04%)
• Quontic Bank Personal Money Market (1.10% → 1.01%)
• Bellco CU Premier Money Market (1.25% → 1.00%)
• WauBank High-Yield Savings (1.10% → 1.00%)
• ConnectOne Bank Savings - Online (1.10% → 1.00%)
• BMO Harris Platinum Money Market (1.10% → 0.95%)
• BrioDirect High-Yield Savings (0.95% → 0.90%)
• Nationwide by Axos Bank Money Market Plus (1.00% → 0.90%)
• Axos Bank High Yield Savings (1.10% → 0.90%)
• ableBanking Money Market Savings (1.05% → 0.90%)
• PenFed CU Premium Online Savings (1.00% → 0.90%)
• Amboy Direct Personal Savings (1.05% → 0.85%)
• DollarSavingsDirect Savings (1.00% → 0.85%)
• State Bank of India Money Market Deposit (0.95% → 0.80%)
• Popular Direct Ultimate Savings (1.01% → 0.75%)
• MySavingsDirect Savings (0.75% → 0.65%)

Current rate leaders

Affinity Plus Federal Credit Union continues to hold the top rate spot with its Superior Money Market account that earns 2.02% APY. There are a couple of important caveats. First, the 2.02% APY only applies to balances up to $25k. The rate falls to 0.75% on balances over $25k. Second, these rates require that you maintain a monthly direct deposit of at least $500.

The second highest rate continues to be 1.30% APY. This is offered by the fintech company Affirm. This isn’t a new fintech company, but it just recently began to offer an app-based savings account. For more than seven years, it has offered customers an app-based alternative to credit cards. The savings account is held by Affirm’s bank partner, Cross River Bank, which gives the account FDIC insurance. The account currently has a 1.30% APY on all balances with no minimum balances or monthly service fees. It’s a new account, and we’ll have to see how long the rate will remain competitive. Most of its customers have been those with small savings. If this top rate attracts many large savers, expect a rate reduction. Few new online savings accounts have remained rate leaders over the long run.

The next highest yield for an online savings account without small balance limitations is 1.25%. However, this requires a minimum balance of $25k. Amounts under $25k earn no interest. This is the Ascent Money Market Savings Account from Customers Bank. Last October Customers Bank was offering 2.25% APY on this account with a rate guarantee until 6/30/20. Several DA readers opened these accounts, and reports are that their rates fell to 1.25% APY in July, and that rate for existing customers is scheduled to hold through at least 8/15/20. Customers Bank has been offering several versions of this promotion for the last two years.

Right behind Customers Bank is another fintech company, called Varo. Varo’s savings account can earn 2.80% APY, but only for balances up to $10k. The 2.80% APY also has monthly activity requirements that are similar to reward checking requirements. However, if you just want the functionality of a basic savings account, you can earn 1.21% APY without balance limits or activity requirements. I reviewed Varo on July 24th. Since that time, Varo has made news as the first fintech to acquire a national bank charter. Currently, the savings accounts are held by The Bancorp Bank. Later this year, accounts should be moved over to Varo Bank.

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. Patriot Bank and CFBank recently ended their rate guarantees. The only one with a rate guarantee that I’m aware of is the Yield Pledge Money Market account at TIAA Bank.

In July TIAA Bank lowered the promo rate of its Yield Pledge Money Market account from 1.01% to 0.75% APY. 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, a tiered-rate structure takes effect. The current ongoing APYs range from 0.50% for under $10k to 0.70% for over $100k.

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. The main issue now is that their rates have been falling.

There has been one nice surprise with these no-penalty CDs. Marcus by Goldman Sachs came out with a new 8-month No-Penalty CD with a 1.10% APY. That’s 20 bps higher than any other no-penalty CD rate. The only caveat is that it’s a promotional account that’s only available to AARP members (see review). Marcus by Goldman Sachs is also offering a promotional rate on its online savings account for AARP members that guarantees for 24 months a rate 10 bps higher than the standard online savings account rate. The appeal of that deal went way down after the recent rate cut that lowered the standard online savings account yield from 1.05% to 0.80%. That took the AARP promo rate down to 0.90%. So now, the AARP No-Penalty CD is clearly the best deal.

Some banks like Ally and 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. Ally makes it very quick and easy to move the CD funds into your savings or checking account.

Unfortunately, three banks lowered their no-penalty CD rates in the last two weeks. These include Ally Bank, CIT Bank, and M.Y. eBanc.

Below is a list of noteworthy no-penalty CDs.

• 1.10% APY 8-mo No-Penalty CD for AARP members ($500 min) - Marcus by Goldman Sachs
• 0.90% APY 13-month Penalty Free CD ($500 min) - CFG Bank
• 0.90% APY 11-month No Penalty CD (no min) - Ally Bank
• 0.90% APY 7-month No-Penalty CD ($500 min) - Marcus by Goldman Sachs
• 0.80% APY 11-month No-Penalty CD ($500 min) - Marcus by Goldman Sachs
• 0.80% APY 11-month Flex Time Deposit ($100k min) - M.Y. eBanc
• 0.75% APY 11-month Liquid CD ($5k min) - Citizens Access
• 0.70% APY 13-month No-Penalty CD ($500 min) - Marcus by Goldman Sachs
• 0.70% APY 11-month No Penalty CD ($5k min) - Colorado Federal Savings Bank
• 0.65% APY 11-month Flex Time Deposit ($10k min) - M.Y. eBanc
• 0.50% APY 11-month No-Penalty CD ($1k min) - CIT Bank
• 0.50% APY 11-month No-Penalty CD ($10k min) - PurePoint Financial
• 0.45% APY 13-month No-Penalty CD ($10k min) - PurePoint Financial
• 0.40% APY 14-month No-Penalty CD ($10k min) - PurePoint Financial
• 0.40% APY 6-month No-Penalty CD ($500 min) - Investors eAccess

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.

Competition from 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 will likely fall back to near 0.01%. This has already happened at Fidelity.

The 7-day yield of both the Fidelity Money Market Fund and the Fidelity Municipal Money Market Fund remains at 0.01%.

Vanguard money market fund yields are still well above 0.01%, but their yields keep falling. The Vanguard Prime Money Market Fund 7-day yield fell 3 bps to 0.10% in the last two weeks. Vanguard Municipal Money Market Fund 7-day yield also fell 3 bps. Its yield is now 0.19%.

Reward Checking Accounts

In my list of nationally available reward checking accounts, only two had rate cuts of the top tiers. These are the eCentive Account at Heritage Bank and the Dividend Rewards Checking at First Tech Federal Credit Union. The top rate of the eCentive Account fell from 1.53% to 1.39% APY for balances up to $25k. The top rate of the Dividend Rewards Checking fell from 1.50% to 1.25% APY. This now applies to balances up to $10k. This cap had been $15k before this rate cut.

The unique aspect of these two accounts is that both have long histories, which provide insights about where other reward checking rates are headed. The eCentive Account had its lowest top rate of 1.26% from 2013 to 2017. The Dividend Rewards Checking has reached a new low. Its previous low was 1.58% from 2013 to 2018.

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: Unfortunately, there aren’t many CD deals. Those that pop up rarely last long.

There are no longer any institutions that offer nationally available CDs with yields of at least 2.00%. The highest 5-year CD rate that’s nationally available is now 1.56% APY at Connexus Credit Union. Connexus is considered to have easy membership requirements in which an association can be joined to qualify for credit union membership.

There’s a chance you can still get 2%+ on a CD from a local bank or credit union. Two that I mentioned last week in my bi-weekly CD summary are still offering 2%+ CDs. First is Generations Credit Union which is offering a 5-year CD with a 2.12% APY. Anyone in Washington State is eligible, but CDs can only be opened at a branch. On the East Coast, Asian Bank continues to offer 2.02% APY on 4-year and 5-year CDs. Asian Bank also is offering a very competitive 15-month CD with a 1.68% APY. Asian Bank’s market area includes southeast Pennsylvania, portions of south New Jersey, portions of New York City and Westchester County, and northern Delaware.

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.

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

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 from May 1, 2020 to October 31, 2020