Best Bank Account Interest Rates - Summary For October 27, 2020

When the Fed slashed rates in March back down to the zero bound, I had thought that online savings account rates would likely reach a bottom similar to the bottom reached during the last zero bound period (2008-2015). During that period, most online savings account rates fell to a bottom that ranged between 0.70% to 1.00%. I’m afraid after seven months of this new zero bound period, most online savings account rates have fallen through this range. I don’t think we’ve reached the bottom yet, and I’m afraid the new range may be under 0.50% before all is said and done.

Out of the four major online banks that lowered their savings or money market account rates in the last two weeks, three lowered them below 0.60%. These include Sallie Mae Bank and CIT Bank which lowered their money market rates to 0.55%. The third one is Barclays which lowered its savings account rate to 0.50%. Synchrony Bank’s savings account rate fell from 0.65% to 0.60%.

In addition to the major online banks, several of the smaller ones lowered their online savings account rates to new lows. Several of these smaller ones had been rate leaders. Their new rates are generally higher than what the major online banks offer, but they’re not much higher. These include CFG Bank (0.86% → 0.80%), First Foundation Bank (1.00% → 0.75%), SFGI Direct (0.81% → 0.67%) and Vio Bank (0.76% → 0.66%).

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:

• Synchrony Bank High Yield Savings (0.65% → 0.60%)
• CIT Bank Money Market (0.60% → 0.55%)
• Sallie Mae Bank Money Market (0.60% → 0.55%)
• Barclays Online Savings (0.60% → 0.50%)

Rate changes from the less well-known online banks:

• CFG Bank High Yield Money Market (0.86% → 0.80%)
• First Foundation Bank Online Savings (1.00% → 0.75%)
• Gold Coast Bank Money Market (1.01% → 0.75%)
• My eBanc eRelationship Savings (0.80% → 0.70%)
• SFGI Direct Savings (0.81% → 0.67%)
• Vio Bank High Yield Online Savings (0.76% → 0.66%)
• TAB Bank High Yield Savings (0.90% → 0.65%)
• Salem Five Direct eOne Savings (0.80% → 0.61%)
• BankUnitedDirect Online Money Market (0.75% → 0.60%)
• BankDirect Money Market Plus (0.75% → 0.60%)
• All America/RedNeck Bank Mega Money Market (0.80% → 0.60%)
• Amboy Direct Personal eSavings (0.70% → 0.55%)
• Virtual Bank eMoney Market Spc (0.70% → 0.55%)
• Nationwide by Axos Bank Money Market Plus (0.60% → 0.50%)
• First Central Savings Bank E-Premier Money Market (0.90% → 0.40%)
• Quontic Bank Personal Money Market (0.55% → 0.40%)

Current rate leaders

We lost two 1% accounts, but gained one. We now list a total of five liquid accounts with yields of at least 1.00% without any small balance limitation.

The two 1% accounts that we lost are Gold Coast Bank Money Market and First Foundation Bank Online Savings account. Gold Coast Bank’s 1.01% APY didn’t last long. Just a few days after I added it to this last summary, the top tier APY fell from 1.01% to 0.75%. First Foundation Bank lasted longer. Its 1.00% APY had held since early August. Its rate fell to 0.75% on October 20th.

The one 1% account that we gained is the Money Market account at Merchants Bank of Indiana. Its APY has been holding at 1.00% since March. Thanks to DA reader enelrad1123 who mentioned this account in the DA Forum. According to the Bank, people from any state are eligible to open this account via the Bank’s online application. I’ll have a review of this account soon, but based on history of other small banks offering 1% rates, I wouldn’t be surprised to see this rate fall soon.

The other three 1% accounts are offered by fintechs that have partnered with banks to hold the FDIC-insured deposits. These fintech accounts don’t seem to be designed for savers who want to deposit $100k+ of funds. They appear to be targeting customers, specifically the younger generation, who are just starting to build up their savings. Nevertheless, the accounts from these fintechs don’t have balance limitations, so it is possible to earn 1% on large balances. All have variable rates, and they will likely lower their rates as demand picks up.

The first fintech is Affirm which I’ve included in the summary since July when the yield was 1.30%. In August, the yield fell to 1.00%, and that yield has held since then. The savings account is held by Affirm’s bank partner, Cross River Bank, which gives the account FDIC insurance. The account currently has a 1.00% APY on all balances with no minimum balances or monthly service fees.

The second fintech is T-Mobile. Its 1% account is a checking account.. 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 third fintech is Chime which has a savings account which currently offers 1.00% APY on all balances. The savings account requires you to also have and keep active the Chime’s checking account, called the Chime Spending Account. Both accounts are held by The Bancorp Bank, member FDIC. Due to this relationship requirement, you won’t see this account listed in the DA savings account rate table.

The fifth 1% account is the only one offered by a credit union. Connexus Credit Union’s Money Market Account continues to hold the top spot for accounts without balance caps. The account 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.

The account with the highest rate in the summary continues to be the Superior Money Market account from Affinity Plus Federal Credit Union. This account has a 2.02% APY, but this yield only applies to balances up to $25k. The rate falls to 0.70% on balances over $25k. Also, these rates require that you maintain a monthly direct deposit of at least $500.

Besides the above accounts, the only ones that still have at least 1.00% APY are either special CDs with add-on deposit features or the SmartyPig Savings account which has small balance caps.

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.

Earlier this month, TIAA Bank lowered the promo rate of its Yield Pledge Money Market account from 0.75% to 0.55% 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, an ongoing rate takes effect. The current ongoing rate is now 0.50% 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. 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.

The best deal for no-penalty CDs is now the 13-month online CD at CFG Bank (0.68% APY for a $500 minimum). It offers a one-time penalty free withdrawal.

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

Unfortunately, banks continue to lower their no-penalty CD rates. In the last two weeks, these include CFG Bank, M.Y. eBanc and CIT Bank.

Below is a list of noteworthy no-penalty CDs.

• 0.68% APY 13-month Penalty Free CD ($500 min) - CFG Bank
• 0.65% APY 8-mo No-Penalty CD for AARP members ($500 min) - Marcus by Goldman Sachs
• 0.60% APY 11-month No Penalty CD (no min) - Ally Bank
• 0.60% APY 11-month No Penalty CD ($500 min) - USALLLIANCE Financial
• 0.60% APY 11-month Flex Time Deposit ($100k min) - M.Y. eBanc
• 0.55% APY 7-month No-Penalty CD ($500 min) - Marcus by Goldman Sachs
• 0.50% APY 11-month Liquid CD ($5k min) - Citizens Access
• 0.45% APY 11-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) - M.Y. eBanc
• 0.40% APY 6-month No-Penalty CD ($500 min) - Investors eAccess
• 0.35% APY 13-month No-Penalty CD ($500 min) - Marcus by Goldman Sachs
• 0.30% APY 11-month No-Penalty CD ($1k min) - CIT Bank
• 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

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 happened at Fidelity a couple of months ago. Now it has happened at Vanguard.

The 7-day yield of both the Fidelity Money Market Fund and the Fidelity Municipal Money Market Fund remains at 0.01%. At Vanguard, the Cash Reserves Federal Money Market Fund 7-day yield fell to 0.01% in early September and it remains at this level. The Vanguard Municipal Money Market Fund yield remains over 0.01%, but not by much. It’s now 0.05%, up 1 bp from two weeks ago.

Many of these brokerage firms have been waiving their management fees on their money market funds which allow them to avoid negative rates. In the performance and risk section of Fidelity Municipal Money Market Fund page, it lists a “7-Day Yield Without Reductions” of -0.14%. The pop-up explanation box warns that the fee waiver may not continue.

The 7-Day Yield Without Reductions is the yield without applicable waivers or reimbursements. Voluntary waivers and/or reimbursements may be discontinued any time.

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 my list of nationally-available reward checking accounts, two banks lowered their reward checking rates. One American Bank lowered its Kasasa Cash APY from 2.00% to 1.50% for balances up to $10k. All America Bank (and its Redneck Bank division) lowered the APY of its Rewards Checking from 1.00% to 0.80% for balances up to $10k.

The best reward checking account for balances of $25k remains the Free Kasasa Cash account at The Bank of Denver. The top rate is 2.50% APY for balances up to $25k. The companion savings account, the Free Kasasa Saver, is also a good deal. That has a 1.50% APY on balances up to $50k. If you max out both accounts with a balance of $75k, you can earn interest of $1,375 for the year. That equals an APY of 1.83%. That’s now 3x the rate available from most of the major online savings accounts.

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 best nationally-available CD rates continue to be at Barksdale FCU. However, the credit union lowered its CD rates in early October. Its 5-year CD just barely holds the number one spot with a 1.51% APY. Its shorter-term CDs also had rate cuts, but they remain very competitive. Its 1-year CD rate is now 1.11% APY. For an overview of these CDs, please refer to last week’s CD rates survey.

If you can’t qualify for membership into Barksdale, you can also get a 5-year CD yield of 1.51%, but this requires a $250k deposit. There are three lower-rate tiers, with the lowest having a balance tier of $500. This is available nationally at Wings Financial Credit Union.

Lastly, the best short-term CD deal is a new 15-month CD special at American Heritage FCU with a 1.25% APY. Minimum deposit is $500.

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 27, 2020

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 27, 2020

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