Last week’s Fed meeting went as expected. The Fed decided to hold off on a rate hike. The FOMC statement had nothing to suggest any change to their gradual rate hike policy which means that a December rate hike is very likely.
Another thing to note about last week’s Fed meeting was that there was no mention of the volatility in the financial markets that has occurred since the previous Fed meeting. This suggests that the recent volatility is not enough to impact their decision making. As we keep seeing big stock market losses (like on Monday), it’s good to know that it shouldn’t be swaying the Fed.
The Fed is focused on the economy, and as long as economic growth remains strong, their gradual rate hike policy should continue.
The yields of Treasury notes fell today as oil prices plunged. The fall of oil prices is pushing down inflation expectations, and that is reducing yields on the longer-term Treasuries. From last week, the 10-year yield had the largest decline falling 8 bps to 3.14%. The yield curve as defined by the 10-2 spread (the difference between the yields of the 10-year and 2-year Treasury notes) narrowed from last week, decreasing from 29 bps to 25 bps.
The stock market volatility may be affecting Fed funds futures. The odds of future Fed rate hikes did go down some from last week. The odds of a 25-bps Fed rate hike in December fell from 79.3% last week to 75.8% today. The odds that the Fed rate hike will be at least 50 bps higher by March are now under 50-50. Those odds fell from 57.2% last week to 49.8% today.
- 1-month: 2.24% up from 2.23% last week (1.07% a year ago)
- 6-month: 2.53% up from 2.52% last week (1.37% a year ago)
- 1-year: 2.72% same as last week (1.55% a year ago)
- 2--year: 2.89% down from 2.93% last week (1.70% a year ago)
- 5--year: 2.99% down from 3.05% last week (2.08% a year ago)
- 10-year: 3.14% down from 3.22% last week (2.40% a year ago)
- 30-year: 3.36% down from 3.43% last week (2.87% a year ago)
Fed funds futures' probabilities of future rate hikes by:
- Dec 2018 - up by at least 25 bps: 75.8% down from 79.3% last week
- Mar 2019 - up by at least 50 bps: 49.8% down from 57.2% last week
- Jun 2019 - up by at least 75 bps: 30.3% down from 38.8% 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, the average savings account rate is well above the five-year high. The average is dominated by brick-and-mortar banks and credit unions. Thus, the average is still low compared to internet savings account rates.
Below are the noteworthy savings and money market account rate changes that have occurred in the last two weeks:
- PNC High Yield Savings Savings (+15 bps to 2.35% APY)
- United Bank (CT) Advantage Money Market (+20 bps to 2.30% APY)
- Vio Bank Online High Yield Savings (+12 bps to 2.27% APY)
- Pacific National Bank Money Market (+35 bps to 2.25% APY, $5k min)
- Ally Bank No Penalty CD (+10 bps to 2.20% APY, $25k min)
- TIAA Bank Yield Pledge Money Market (+35 bps to 2.15% APY, intro)
- Marcus by Goldman Sachs No Penalty CD (new, 2.15% APY, $500 min)
- SFGI Direct Savings Account (+16 bps to 2.07% APY)
- Synchrony Bank High Yield Savings (+15 bps to 2.05% APY)
- Capital One 360 Money Market (+15 bps to 2.00% APY, $10k min)
- Alliant Credit Union High-Rate Savings (+5 bps to 1.95% APY)
- PenFed Premium Online Savings (+20 bps to 1.85% APY, up to $100k)
We now have seven accounts with APYs above 2.25% and 11 accounts with APYs of 2.25%.
The new rate leader is the Personal Money Market Account at the New York-based Quontic Bank. The Bank just recently increased the top-tier rate of this account from 1.25% to 2.40% APY. This requires a $100k minimum balance. Balances between $5k and $100k earn 2.27% APY, and balances under $5k earn 2.00% APY. This is a small bank without much history of offering nationally-available accounts. So it’s questionable if they’ll be able to maintain a competitive money market account over the long run. I’ll have more on this account soon.
Surprisingly, PNC Bank is near the top with its High Yield Savings Account that now earns 2.35% APY on all balances. As the sixth largest bank in the nation by assets and the fifth largest bank by number of branches, it’s surprising to see PNC on top. One important thing to note about this online savings account is that it’s only available in areas where PNC doesn’t have branches (see blog post). This rate increase is promising, but we’ll have to wait and see if PNC is really dedicated to maintain a competitive online savings account over the long run.
Another new rate leader is also limited to certain states. That’s the Advantage Money Market Account at United Bank in Connecticut. United Bank recently increased the promotional rate to 2.30% APY that’s guaranteed for the first 180 days. Residents in about half the states in the nation are eligible to open this account online (see blog post).
Vio Bank moved near the top when it raised its High Yield Online Savings Account rate to 2.27% APY. This applies to all balances. There is no monthly fee, and it requires only a $100 minimum deposit to open. And unlike the above two accounts, this is nationally available. I have more details in this blog post.
We now have three of the large and well-established internet banks offering 2.05% APY on their savings account. Synchrony Bank recently joined Barclays and Goldman Sachs Bank USA. That should put pressure on the others (like Ally, Discover and American Express) to increase their rates to at least 2%.
Due to its latest promotion, Ally Bank may decide to delay its next savings account rate hike. However, it did increase the rates of its 11-month No Penalty CD. The rate for the $25k tier increased to 2.20% APY. The No Penalty CD isn’t as liquid as a savings account, but it does give customers with large balances a way to earn more without giving up much liquidity. Ally does make it easy to close a CD and transfer funds to an Ally account without delay.
Goldman Sachs Bank USA is the latest bank to offer a no-penalty CD. It recently came out with three no-penalty CDs with terms of 7-, 11- and 13-months. The 13-month has the highest rate (2.15% APY). Minimum deposit is only $500. Since the CDs can be closed at anytime after six days of opening without penalty, there’s no reason to consider the lower-rate, shorter-term CDs.
These no-penalty CDs can be nice in that they allow you to earn a higher rate without having to open an account at another bank. However, if you don’t monitor rates, these no-penalty CDs may not be a good deal when rates are rising. A couple of months from now, their savings account rates will likely have higher interest rates than the current no-penalty CD rates. If those no-penalty CDs aren’t closed and the money moved to the savings account or another higher-rate account, customers will be losing out.
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, money market funds had yields of around 0.01%. Keeping your cash at internet banks made a lot more sense back then. Now, it’s not so clear. Money market fund yields have been steadily rising as the Fed has been hiking rates.
Vanguard Prime Money Market Fund SEC yield continues to be over 2%. It had a slight increase in the last two weeks, rising from 2.21% to 2.24%. Fidelity Money Market Fund’s 7-day yield finally topped 2%. Its yield increased from 1.99% to 2.04%.
Allan Roth has a review at AARP of using money market funds to replace savings accounts. He suggests using funds such as Vanguard Federal Money Market and Vanguard Treasury Money Market yield instead of the Vanguard Prime Money Market Fund. The yields are slightly lower, but they are a little safer due to recent regulation changes. Treasury money market funds have an additional advantage of being exempt from state income taxes.
Municipal money market funds have the advantage of being exempt from federal income tax, but their yields continue to be quite a bit lower than the other money market funds. Vanguard Municipal Money Market Fund now has an SEC yield of 1.54%.
Reward Checking Accounts
There was just one small change to the list of nationally available reward checking accounts. First Tech Federal Credit Union increased the rate of its Dividends Rewards Checking from 1.58% to 2.00% APY. It also increased the balance cap from $10k to $15k.
With savings and money market account rates up to 2.40% APY, it’s hard to get excited about reward checking accounts that earn under 3%, especially when there are small balance caps. Unfortunately, most reward checking accounts have been slow in responding to the rising interest rate environment. As interest rates rise, their appeal as an online savings account alternative has been waning.
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.
We now have two nationally-available 12-month CDs with yields of at least 3.00%. Both are available at easy-membership credit unions. The first is Greenwood Credit Union which is offering a 3.00% APY 12-month CD with a $1k minimum deposit. The second is Advancial Credit Union which is offering a 3.01% APY 12-month Jumbo CD with a $50k minimum deposit.
Advancial also has a top rate on its 18-month Jumbo CD (3.15% APY). This matches the rate of United Bank’s 19-month Flex Up CD, but United Bank's minimum deposit is only $500. This also offers limited add-on deposits. Just like United Bank’s money market account, not all states are eligible.
Longer terms don’t offer much higher rates. However, we are starting to see 4%. A recent 4% CD didn’t last long. Garden Savings Federal Credit Union was offering 4.08% APY on a 4-year CD, but that ended last Friday.
The one 4% CD that’s still available is at the easy-membership Connexus Credit Union. It’s offering a 4.00% APY 5-year CD with a $5k minimum deposit. It also has good deals on shorter-term CDs including a 3.35% APY 3-year CD and a 3.20% APY 2-year CD.
For those who prefer terms under one year, the two best deals are the 9-month CD (2.75% APY) at the easy-membership Andrews Federal Credit Union and the 6-month Jumbo CD (2.78% APY) at Advancial Credit Union.Rates as of November 13, 2018
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:
|Quontic Bank||2.40% ($100k), 2.27% ($5k), 2.00% APY (up to $5k)||Personal Money Market - Account review|
|MySavingsDirect||2.35%||MySavings Account - Account review|
|PNC Bank||2.35%||Online High Yield Savings (not available in all states) - Account review|
|Northpointe Bank||2.30% ($25k-$1m, guaranteed for 2 years)||Ultimate Money Market - Account review|
|United Bank (CT)||2.30% (6mo rate guarantee)||Advantage Money Market, not available in all states - Account review|
|Vio Bank||2.27%||Online High Yield Savings|
|Popular Direct||2.26% ($5k min) Popular Direct Plus Savings (60-day freeze on new accounts, see details)||Popular Direct Plus Savings - Account review|
|Zions Bank||2.26% ($25k min)||Online Money Market (not available in all states) - Account review|
|MemoryBank||2.25% ($1 million max)||Online Money Market - Account review|
|Citizens Access||2.25% ($5k min)||Online Savings Account - Account review|
|Pacific National Bank||2.25% ($5k min)||Money Market Deposit Account - Account review|
|Customers Bank||2.25% ($25k min)||Ascent Money Market Savings (rate guarantee through 6/30/2019 - Account review|
|BankPurely||2.25% ($25k min)||PurelyMoneyMarket - Account review|
|iGObanking.com||2.25% ($25k min)||MMA, New accounts and new money only - Account review|
|Northfield Bank||2.25% ($100k max)||Online Platinum Savings - Account review|
|All America Bank||2.25% (up to $50k), 0.50% ($50k+)||Mega Money Market Account - Account review|
|Redneck Bank||2.25% (up to $50k), 0.50% ($50k+)||Mega Money Market Account|
|CommunityWide Federal Credit Union||2.25% (penalty-free withdrawals first 5 days of each calendar quarter)||High Rate Quarterly Funds Account - Account review|
|Ally Bank||2.20% ($25k)||No-Penalty 11-month CD - Account review|
|CIBC USA (formerly The Palladin PrivateBank)||2.16%||Agility Savings Account - Account review|
|TIAA Bank||2.15% (1yr intro rate) 1.90% ($100k+) ongoing rate||Yield Pledge Money Market - Account review|
|PurePoint Financial||2.15% ($10k min)||Online Savings - Account review|
|CIT Bank||2.15% ($25k min)||Savings Builder - Account review|
|Marcus by Goldman Sachs||2.15%||13-month No Penalty CD ($500) - Account review|
|Sallie Mae Bank||2.12%||Money Market Account - Account review|
|MutualOne Bank||2.12% ($1m max)||Online Statement Savings - Account review|
|SFGI Direct||2.07%||SGFI Direct Savings Account - Account review|
|Barclays||2.05%||Online Savings - Account review|
|Marcus by Goldman Sachs||2.05%||High-Yield Online Savings Account - Account review|
|Bank 7||2.05% ($100 min)||High Rate Online Savings Account|
|Bank5 Connect||2.05% ($100 min)||High Interest Savings - Account review|
|Salem Five Direct||2.05%||eOne Savings, for new customers only - Account review|
|Synchrony Bank||2.05%||High Yield Savings - Account review|
|CIT Bank||2.05% ($1k min)||11-month No-Penalty CD - Account review|
|Bank 7||2.05% ($5k min)||High Rate Online Money Market|
|Sallie Mae Bank||2.02%||High Yield Savings - Account review|
|earn.bank||2.02%||Money Market Account|
|NASB||2.02% ($25k+), 1.77% (up to $25k), 0.10% ($1.5m+)||MMA Special Online Only - Account review|
|Incredible Bank||2.02% ($25k+), 1.21% ($2.5k),||IncredibleBank Savings - Account review|
|First Internet Bank||2.02% ($250k+) 1.81% (up to $250k)||Money Market Savings|
|Virtual Bank||2.01% (1 year rate guarantee)||eMoney Market - Account review|
|M.Y. Safra Bank||2.01% ($500k max)||MYSB Direct Online Money Market - Account review|
|BankUnitedDirect||2.01%||Online Money Market - Account review|
|HSBC Direct||2.01%||HSBC Direct Savings|
|Live Oak Bank||2.00% ($5 million max)||Savings Account - Account review|
|Discover Bank||2.00%||Online Savings - Account review|
|American Express National Bank||2.00%||High Yield Savings - Account review|
|Chartway Federal Credit Union||2.00% ($500)||12-month No Penalty CD - Account review|
|FNBO Direct||2.00%||Online Savings|
|Capital One||2.00% ($10k+), 0.85% (up to $10k)||360 Money Market - Account review|
|American Heritage Credit Union||2.00% ($10k min)||High Yield Savings (guaranteed through 12/31/2019)|
|Presidential Bank||2.00% ($100k+), 1.00% ($250k+), 0.25% (less than $100k)||Money Market Plus Checking|
|Radius Bank||1.96% ($25k+), 1.50% ($2.5k+)||Radius High-Yield Savings - Account review|
|Alliant Credit Union||1.95% ($100 min)||High-Rate Savings - Account review|
|Northpointe Bank||1.95% ($25k+), 1.12% (below $25k and $1m+)||Ultimate Savings - Account review|
|Ally Bank||1.90%||Online Savings - Account review|
|American Express National Bank||2.00%||High Yield Savings - Account review|
|iGObanking.com||1.90%||iGOsavings - Account review|
|BankPurely||1.90% ($1 min)||SavingPurely - Account review|
|Discover Bank||1.90% ($100k min), 1.85% ($2.5k)||MMA - Account review|
|Franklin Synergy Bank||1.88% ($500k), 1.75% ($250k), 1.63% ($100k), 1.50% ($50k)||Synergy Money Market|
|PenFed Credit Union||1.85%||Premium Online Savings|
|CIT Bank||1.85% ($100 min)||Money Market - Account review|
|McGraw-Hill Federal Credit Union||1.85% ($100) (guaranteed through 3/31/19)||S3 Prime Money Market - Account review|
|ableBanking||1.85% ($250 min)||Money Market Savings - Account review|
|UmbrellaBank||1.85% ($25k min), 1.00% ($1k)||Money Market|
|DollarSavingsDirect||1.80%||Dollar Savings Account - Account review|
|BBVA Compass||1.80% ($10k min, 12mo rate guarantee)||ClearChoice MMA Promo - Account review|
|EBSB Direct||1.80% ($10k+), 0.80% ($2m+), 0.50% ($10+)||Money Market Special 3 - Account review|
|West End Bank||1.75%||Online Savings|
|Salem Five||1.75% ($1m max)||Gold Star Money Market - Account review|
|SmartyPig||1.75%||SmartyPig Savings - Account review|
|Quorum Federal Credit Union||1.75%||HighQ Savings|
|Bethpage Federal Credit Union||1.75% ($500 min)||Money Market|
|Spectrum Credit Union||1.75% ($2.5k+), 0.50% ($1+)||MarketEdge Money Market|
|MyBankingDirect||1.75% ($25k+), 1.50% ($5k+), 0.25% (less than $5k)||Money Market|
|Self-Help Federal Credit Union||1.74% ($500)||Money Market - Account review|
|United Bank (CT)||1.70%||Prime Money Market Special (in-branch only), Not available in all states -Account review|
|Colorado Federal Savings Bank||1.65% ($50k+)||Premier Savings (New customers) - Account review|
|Amalgamated Bank||1.60%||Online Savings - Account review|
|MemoryBank||1.60% (up to $250k)||EarnMore Interest Checking - Account review|
|UFB Direct||1.60% ($5k min)||High Yield Money Market - Account review|
|CIT Bank||1.55%||Premier High Yield Savings - Account review|
|Blue Federal Credit Union||1.55%||Sky High Savings - Account review|
|Nationwide Bank||1.55% ($10k+), 1.15% APY (up to $10k)||Money Market - Account review|
|nbkc Bank||1.51% ($1m max)||Personal Money Market Savings|
|Northern Bank Direct||1.51% ($250k max)||Money Market - Account review|
|My eBanc||1.50%||Super Saver - Account review|
|INOVA Federal Credit Union||1.50% ($100k min)||Platinum Money Market Savings|
Reward Checking Accounts:
- Noteworthy Accounts Available Nationwide:
|Consumers Credit Union||5.09% (up to $10k), 0.20% ($10k-$25k), 0.10% ($25k+)||Rewards Checking Tier A- debit card and $1k credit card requirements (Changes effective 10/1/18)|
|La Capitol Federal Credit Union||4.25% (up to $3k), 2.00% ($3k-10k), 0.10% ($10k+)||Choice Checking|
|Consumers Credit Union||4.09% (up to $10k), 0.20% ($10k-$25k), 0.10% ($25k+)||Rewards Checking Tier B- debit card and $500 credit card requirements (Changes effective 10/1/18)|
|One American Bank||3.50% (up to $10k), 0.25% ($10k+)||Kasasa Cash - Account review|
|Heritage Bank||3.33% (up to $25k), 0.15% ($25k+)||eCentive Account|
|Consumers Credit Union||3.09% (up to $10k), 0.20% ($10k-$25k), 0.10% ($25k+)||Rewards Checking Tier C - debit card with NO credit card requirements (Changes effective 10/1/18)|
|Market USA Federal Credit Union||3.01% (up to $15k), 0.05% ($15k+)||VIP Checking Platinum Tier - Account review|
|Evansville Teachers Federal Credit Union||3.00% (up to $20k), 0.00% ($20k+)||Vertical Dividend Checking - Account review|
|MainStreet Bank||3.00% (up to $15k), 0.25% ($15k+)||Kasasa Cash - Account review|
|Lake Michigan Credit Union||3.00% (up to $15k), 0.00% ($15k+)||Max Checking|
|INOVA Federal Credit Union||3.00% (up to $15k), 0.07% ($15k+)||Shield Checking - Account review|
|Signature Federal Credit Union||3.00% (up to $15k), 0.10% ($15k+)||Choice Checking|
|Great Lakes Credit Union||3.00% (up to $10k), 0.20% ($10k+)||Free Checking|
|Partner Colorado Credit Union||3.00% (up to $10k), 0.10% ($10k+)||High Interest Checking|
|Georgia Banking Company||2.95% (up to $25k), 1.00% ($25k+)||Kasasa Cash - Account review|
|All America Bank||2.75% (up to $10k), 0.50% ($10k+)||Ultimate Rewards Checking|
|Redneck Bank||2.75% (up to $10k), 0.50% ($10k+)||Redneck Rewards Checking|
|Campus Federal||2.51% (up to $10k), 0.05% ($10k+)||Lagniappe Checking|
|Hanscom Federal Credit Union||2.50% ($15k min), 0.40% ($15k+)||Kasasa Cash Checking - Account review|
|Industrial Bank||2.50% (up to $15k), 0.25% ($25k+)||Kasasa Cash|
|Altra Federal Credit Union||2.50% (up to $15k), 0.40% ($15k+)||A+ 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|
|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|
|Hawaii Pacific Federal Credit Union||2.00% (up to $25k), 0.25% ($25k+)||Kasasa Cash Checking|
|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|
|First Tech Federal Credit Union||2.00% (up to $15k), 0.20% ($15k+)||Dividend Rewards Checking|
|Blue Federal Credit Union||2.00% (up to $15k), 0.10% ($15k+)||Extreme Checking (up to 4% w/account relationships) - Account review|
|Northwest Federal Credit Union||2.00% (up to $15k min)||Kasasa Cash - Account review|
|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|
|Connexus Credit Union||1.75% (up to $25k), 0.25% ($25k+)||Xtraordinary Checking|
|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|
|Axos Bank||1.25% (up to $150k), 0.00% ($150k+)||Rewards Checking|
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
|GM Financial Right Notes||2.50% ($50k+), 2.35% ($15k+), 2.25% ($500+)|
|Duke Energy PremierNotes||2.40% ($50k+), 2.25% ($10k+), 2.20% (less than $10k)||Duke Energy PremierNotes review|
|Ford Interest Advantage||2.40% ($50k+), 2.25% ($15k+), 2.20% (less than $15k)||Ford Interest Advantage review|
|Vanguard Prime Money Market Fund||2.24% 7-day yield|
|Fidelity Money Market Fund||2.04% 7-day yield|
|Ally Financial Demand Notes||1.95% ($50k+), 1.80% ($15k+), 1.60% (less than $15k) (|
|Vanguard Municipal Money Market Fund||1.54% 7-day yield|
|Fidelity Municipal Money Market Fund||1.31% 7-day yield|
Post Publication Edits
11/14/2018: MySavings Direct Savings rate raised.
11/14/2018: Discover Bank Money Market and Online Savings rates raised.
11/15/2018: American Express National Bank High Yield Savings rate raised.