The odds that the Fed will hike rates two more times this year appear to have gone up slightly from last week. The June jobs report that was released last Friday improved the odds. In June, 213,000 jobs were added which was above economist expectations. However, wage growth was a bit below expectations, and the unemployment rate increased slightly as more people returned to the job market. Overall, the jobs report should be considered good news for savers hoping for two more Fed rate hikes in 2018. According to this MarketWatch article:
The June employment report gives the Federal Reserve a green light to continue to raise interest rates at what’s been shown to be its preferred once-every-three-months pace, economists said Friday.
The minutes from the Fed’s June meeting were released last Thursday. The minutes showed that there was discussion about risks that increasing tariffs could hurt the economy. There was also discussion about the flattening of the yield curve and the risk that an inverted yield curve could lead to a recession. Anything that weakens the economy will give the Fed reason to pause its rate hikes.
The 10-2 spread (the difference between the yields of the 10-year and 2-year Treasury notes) has fallen a bit in the last week. The difference between the 2-year yield (2.59%) and 10-year yield (2.87%) is now only 28 bps (down from 30 bps last week). The drop is due to the long-term yields rising less than the short-term yields.
Treasuries continue to be a competitive alternative to CDs. They become even more competitive when the tax advantages of Treasuries are considered. For more discussion on the pros and cons of Treasuries Notes compared to CDs, please refer to this DA Forum thread and this DA blog article.
The odds of additional Fed rate hikes in 2018 went up some in the last week according to the Fed funds futures. The chance of at least one more rate hike this year still looks solid. Those odds are 94.9%. The odds of at least two rate hikes have risen above 50-50. The odds are now 58.1% (up from 48.5% last week).
- 1-month: 1.88% down from 1.91% last week (0.95% a year ago)
- 6-month: 2.15% up from 2.12% last week (1.13% a year ago)
- 1-year: 2.36% up from 2.33% last week (1.23% a year ago)
- 2--year: 2.59% up from 2.53% last week (1.40% a year ago)
- 5--year: 2.77% up from 2.72% last week (1.93% a year ago)
- 10-year: 2.87% up from 2.83% last week (2.38% a year ago)
- 30-year: 2.97% up from 2.96% last week (2.93% a year ago)
Fed funds futures' probabilities of future rate hikes by:
- Sep 2018 - up by at least 25 bps: 86.8% up from 77.4% last week
- Dec 2018 - up by at least 50 bps: 58.1% up from 48.5% 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 has finally reached a 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:
- Salem Five Direct eOne Savings (+20 bps to 2.05% APY up to $1m)
- Customers Bank Ascent MM Savings (new, 2.03% APY for $25k+)
- Citizens Access Online Savings (new, 2.00% APY for $5k+)
- Northpointe Bank Ultimate Savings (-10 bps to 1.95% APY for $25k+)
- Sallie Mae Bank Money Market (+15 bps to 1.90% APY)
- Capital One 360 Money Market (+15 bps to 1.75% APY for $10k+)
- Ally Bank Online Savings (+10 bps to 1.75% APY)
- Discover Bank Online Savings (+10 bps to 1.75% APY)
- Barclays Online Savings Account (+10 bps to 1.75% APY)
- Quorum FCU HighQ Savings (+50 bps to 1.75% APY)
- Alliant Credit Union Savings (+10 bps to 1.70% APY)
- HSBC Direct Savings (new, 1.70% APY)
We have a new internet bank. Citizens Access was launched on Monday, and it looks promising that Citizens Access will be a strong competitor for the long term. This is the internet bank of the $122-billion Citizens Bank, N.A., and it appears they have put the resources into the internet bank to maintain competitive savings account and CD rates and to maintain an online platform and customer service that allow customers to easily manage their accounts. The current Online Savings Account rate of 2.00% APY for balances of $5k+ tops our lists for a non-promotional-rate savings account. The bank is emphasizing that it intends to “offer market-leading rates, with no promotions or teasers.” Only time will tell if they are able to accomplish this over the long term. Please see my Citizens Access review for more details.
Another new internet savings account was launched recently. The Pennsylvania-based Customers Bank (which has over $10+ billion in assets) launched the Ascent Money Market Savings Account with a 2.03% APY on balances of $25k+. Instead of creating a new website, Customers Bank just added a special landing page for this online account. Please see my Ascent Money Market Savings review for more details.
We’ve seen several past banks start internet banks that became disappointments. One old example was HSBC and its HSBC Direct. Way back in 2007, HSBC Direct was offering a promotional 6% APY on its Online Savings Account. The Online Savings Account rate remained competitive for a while after 2007, but the rate eventually sunk to very low levels.
HSBC is trying again. They brought back their HSBC Direct with an online savings account. The current rate of 1.70% APY lags the savings account rates of the big internet banks (most are now at 1.75% APY). So there’s little reason to move money into HSBC Direct. However, if they’re serious, perhaps they’ll bring back a competitive promotion that's similar in competitiveness to what they offered in 2007.
The number of savings and money market accounts with yields of 2%+ is growing. Salem Five Direct is the latest existing internet bank to reach this milestone. Its eOne Savings account now earns 2.05% APY for balances up to $1 million. However, this is a promotional rate that’s only intended for new eOne Savings customers. Existing customers have reported success when requesting rate upgrades. Please see my eOne Savings review for more details.
In addition to the standard type of savings and money market accounts, I’m including semi-liquid accounts to the list that offer higher rates. They have more liquidity than most CDs, but they don’t have the liquidity of the standard savings account which allows unlimited deposits and up to six withdrawals (most types) per month. The intent is to provide options for higher rates than standard savings accounts, but with fewer deposit and withdrawal limitations than standard CDs.
I was going to include AgFed Credit Union’s No Penalty CD (2.40% APY). However, this CD special has just ended.
The other special savings account is still available. It’s the High Rate Quarterly Account from the easy-membership CommunityWide Federal Credit Union. This account has a 2.10% APY for balances of $500 and above. The special nature of this account is that penalty-free withdrawals are only allowed for the first five days of each calendar quarter. Any other withdrawals have a penalty of 30 days of interest on the amount withdrawn. Deposits can be made at anytime. Being able to add deposits at any time is an advantage of this compared to no-penalty CDs. However, unlike no-penalty CDs, there’s no guarantee of the rate remaining competitive. The High Rate Quarterly account has a long history of low rates before the recent rate hike. The odds of this account rate remaining ahead of the top internet savings account rates over the long run is questionable. Please see my High Rate Quarterly review for more details.
Not all banks raised their savings account rates. Northpointe Bank ended its offer of 2.05% APY guaranteed for one year. The rate dropped to 1.95% APY.
With savings and money market accounts, you never know how long a top rate will last. Even if it’s not a promotional rate, the bank is always free to lower the rate to a non-competitive level. The only exception is if there’s a rate guarantee period, but those guarantee periods eventually end. One thing to look at is the account rate history. This certainly doesn’t guarantee long-term competitiveness, but it can show if the bank has been serious about being competitive for the long term.
Sallie Mae Bank’s Money Market account has remained competitive since January 2017 when it first broke 1% APY. In the last year, the rate has steadily increased and has remained in the high end for internet banks. Last week’s rate hike kept the account near the top. The account rate increased 15 bps to 1.90% APY for all balances.
Most savings account rates of the large internet banks have reached 1.75% APY. The latest ones to reach this rate include Capital One 360 Money Market, and the online savings accounts of Ally, Barclays and Discover.
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’s now at 2.04%. Fidelity Money Market Fund isn’t far behind with a 7-day yield of 1.85%.
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.
Reward Checking Accounts
There continues to be little change to my list of nationally available reward checking accounts. In the last two weeks, none of the nationally-available reward checking accounts had any changes.
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.
As I mentioned above, the AgFed Credit Union 30-month No Penalty CD offer just ended. With a 2.40% APY, this no-penalty CD was an exceptional deal which is why the deal lasted only nine days.
The list of CDs with terms around 3 years with 3%+ APY has been growing. We now have eight CDs with 3% APY. The latest one is the 41-month CD special at Veridian Credit Union. This has a 3.00% APY for a $1k minimum deposit and a 3.10% APY for a $100k minimum.
For 5-year CDs, we now have five easy-membership credit unions offering APYs in the range of 3.25% to 3.30%, and just recently, KS StateBank has raised its 5-year internet CD rate to 3.25% APY.Rates as of July 10, 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:
|CommunityWide Federal Credit Union||2.10% (penalty-free withdrawals first 5 days of each calendar quarter)||High Rate Quarterly Funds Account Account review|
|Salem Five Direct||2.05%||eOne Savings, for new customers only Account review|
|Customers Bank||2.03% ($25k)||Ascent Money Market Savings Account review|
|Virtual Bank||2.01% (1 year rate guarantee)||eMoney Market - Account review|
|Citizens Access||2.00%||Online Savings Account - Account review|
|All America Bank||2.00% (up to $50k), 0.50% ($50k+)||Mega Money Market Account - Account review|
|Redneck Bank||2.00% (up to $50k), 0.50% ($50k+)||Mega Money Market Account|
|Sallie Mae Bank||1.90%||Money Market Account - Account review|
|CIBC USA (formerly The Palladin PrivateBank)||1.90%||Agility Savings Account - Account review|
|PurePoint Financial||1.90% ($10k min)||Online Savings - Account review|
|Northpointe Bank||1.95% ($25k), 1.12% (below $25k and $1m+)||Ultimate Savings Account review|
|Incredible Bank||1.88% ($25k+), 1.21% ($2.5k),||IncredibleBank Savings - Account review|
|Radius Bank||1.86% ($2.5k min)||Radius High-Yield Savings - Account review|
|CIT Bank||1.85%||Money Market ($100 min) - Account review|
|Popular Direct||1.85% ($5k min)||Popular Direct Plus Savings - Account review|
|MutualOne Bank||1.81% ($250k max)||Online Statement Savings - Account review|
|SFGI Direct||1.81%||SGFI Direct Savings Account - Account review|
|DollarSavingsDirect||1.80% (no min)||Dollar Savings Account - Account review|
|Marcus by Goldman Sachs||1.80%||High-Yield Online Savings Account - Account review|
|EBSB Direct||1.80% ($10k+), 0.80% ($2m+), 0.50% ($10+)||Money Market Special 3 - Account review|
|NASB||1.77% ($50k+), 1.66% ($25k+), 1.56% ($0.01+)||MMA Special Online Only - Account review|
|Ally Bank||1.75%||Online Savings - Account review|
|Synchrony Bank||1.75%||High Yield Savings - Account review|
|Barclays||1.75%||Online Savings - Account review|
|Discover Bank||1.75% (no min)||Online Savings - Account review|
|American Express Bank||1.75%||High Yield Savings - Account review|
|West End Bank||1.75%||Online Savings|
|FNBO Direct||1.75%||Online Savings|
|Salem Five||1.75% ($1m max)||Gold Star Money Market - Account review|
|Sallie Mae Bank||1.75%||High Yield Savings - Account review|
|Quorum Federal Credit Union||1.75%||HighQ Savings|
|Capital One||1.75% ($10k+), 0.85% (up to $10k)||360 Money Market - Account review|
|MyBankingDirect||1.75% ($25k+), 1.50% ($5k+), 0.25% (less than $5k)||Money Market|
|HSBC Direct||1.70%||HSBC Direct Savings|
|Alliant Credit Union||1.70% ($100 min)||High-Rate Savings - Account review|
|ableBanking||1.70% ($250 min)||Money Market Savings - Account review|
|Live Oak Bank||1.70% ($5 million max)||Savings Account - Account review|
|BBVA Compass||1.70% ($10k min, 12mo rate guarantee)||ClearChoice MMA Promo - Account review|
|BankPurely||1.70% ($25k min)||PurelyMoneyMarket - Account review|
|iGObanking.com||1.70% ($25k min)||MMA, New accounts and new money only, Account review|
|Community Bank of Pleasant Hill||1.66%||Premier Money Management Account|
|Community Bank of Raymore||1.66%||Premier Money Management Account|
|First Internet Bank||1.66% ($250k+) 1.36% (up to $250k)||Money Market Savings|
|Colorado Federal Savings Bank||1.65% ($50k+)||Premier Savings (New customers) - Account review|
|Discover Bank||1.65% ($100k min), 1.60% ($2.5k)||MMA - Account review|
|Franklin Synergy Bank||1.63% ($500k), 1.50% ($250k), 1.38% ($100k)||Synergy Money Market|
|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|
|TIAA Bank||1.60% (1yr intro rate) 1.50% ($100k+) ongoing rate||Yield Pledge Money Market - Account review|
|Self-Help Federal Credit Union||1.58% ($500)||Money Market - Account review|
|CIT Bank||1.55%||Premier High Yield Savings - Account review|
|SmartyPig||1.55%||SmartyPig 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|
|Bethpage Federal Credit Union||1.50% ($500 min)||Money Market|
|Spectrum Credit Union||1.50% ($2.5k+), 0.45% ($1+)||MarketEdge Money Market|
|Northpointe Bank||1.50% ($25k-$1m, guaranteed for 1 year)||Ultimate Money Market - Account review|
|UmbrellaBank||1.50% ($25k min), 1.40% ($1k)||Money Market|
|INOVA Federal Credit Union||1.50% ($100k min)||Platinum Money Market Savings|
|Pacific National Bank||1.45%||Money Market Deposit Account - Account review|
|McGraw-Hill Federal Credit Union||1.45% ($100)||S3 Prime Savings - Account review|
|Dime Savings Bank||1.35%||Dime Direct Money Market, new money - Account review|
|United Bank (MA)||1.35%||Prime Money Market Special (in-branch only), Not available in all states, Account review|
|Signal Financial Credit Union||1.35% ($25k+, enrollment in Premium Bundle)||Premium Money Market - Account review|
|Nationwide Bank||1.30%||Online Savings - Account review|
|Bank of Internet USA (BofI)||1.30%||Smart Savings|
|BankPurely||1.30% ($1 min)||SavingPurely - Account review|
|UFB Direct||1.30% ($25k+), 0.20% ($100)||Premium Savings - 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|
Reward Checking Accounts:
- Noteworthy Accounts Available Nationwide:
|Consumers Credit Union||4.59% (up to $20k)||Rewards Checking - debit card and $1k credit card requirements|
|La Capitol Federal Credit Union||4.25% (up to $3k), 2.00% ($3k-10k), 0.10% ($10k+)||Choice Checking|
|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|
|Heritage Bank||3.33% (up to $25k), 0.15% ($25k+)||eCentive Account|
|Consumers Credit Union||3.09% (up to $10k)||Rewards Checking - debit card with NO credit card requirements|
|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|
|USE Federal Credit Union||3.00% (up to $10k), 0.25% ($10k+)||Kasasa Cash|
|Great Lakes Credit Union||3.00% (up to $10k), 0.20% ($10k+)||Ultimate Checking|
|Partner Colorado Credit Union||3.00% (up to $10k), 0.50% ($10k+)||High Interest Checking|
|Hanscom Federal Credit Union||2.50% ($15k min), 0.30% ($15k+)||Kasasa Cash Checking - Account review|
|Industrial Bank||2.50% (up to $15k), 0.25% ($25k+)||Kasasa Cash|
|All America Bank||2.50% (up to $10k), 0.50% ($10k+)||Ultimate Rewards Checking|
|Redneck Bank||2.50% (up to $10k), 0.50% ($10k+)||Redneck Rewards 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|
|Campus Federal||2.01% (up to $10k), 0.05% ($10k+)||Lagniappe Checking|
|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|
|Blue Federal Credit Union||2.00% (up to $15k), 0.25% ($15k+)||Extreme Checking (up to 4% w/account relationships) - Account review|
|Northwest Federal Credit Union||2.00% ($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|
|First Tech Federal Credit Union||1.58% (up to $10k), 0.16% ($10k+)||Dividend Rewards 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|
|Bank of Internet USA||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||2.25% ($50k+), 2.10% ($15k+), 2.00% ($500+)|
|Duke Energy PremierNotes||2.15% ($50k+), 2.00% ($10k+), 1.95% (less than $10k)||Duke Energy PremierNotes review|
|Ford Interest Advantage||2.15% ($50k+), 2.00% ($15k+), $1.95 (less than $15k)||Ford Interest Advantage review|
|Vanguard Prime Money Market Fund||2.04% 7-day yield|
|Fidelity Money Market Fund||1.85% 7-day yield|
|Ally Financial Demand Notes||1.75% ($50k+), 1.60% ($15k+), 1.40% (less than $15k) (|
|Vanguard Municipal Money Market Fund||1.20% 7-day yield|
|Fidelity Municipal Money Market Fund||1.15% 7-day yield|
Removed, Rates Too Low
|M.Y. Safra Bank||1.26%||Direct Online Money Market|
|Hanscom Federal Credit Union||1.25% ($25k min)||Higher Yield Savings|
|INOVA Federal Credit Union||1.25% ($50k min)||Gold Money Market Savings|