Best Bank Account Interest Rates - Summary For May 26, 2020

Most online banks had been slowly transitioning to lower rates in March and April. The transition speed has picked up since the start of May as major online banks like Capital One and American Express lowered their online savings account rates by 20 to 30 bps.

During the zero bound years from 2008 to 2015, most online savings account rates bottomed out in a range from 0.70% to 1.00%. I’m hoping that we won’t see new bottoms from the major online banks. However, based on how their CD rates are falling, I am a little worried that the bottom may be lower this time.

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:

• Capital One 360 Performance Savings (1.50% → 1.30%)
• American Express High Yield Savings (1.50% → 1.30%)
• Citizens Access Online Savings (1.50% → 1.30%)
• HSBC Direct Savings (1.60% → 1.30%)
• CIT Bank Money Market (1.55% → 1.30%)
• CIT Bank Savings Builder (1.45% → 1.25%)
• PurePoint Financial Online Savings (1.50% → 1.25%)
• Discover Online Savings (1.40% → 1.15%)
• Discover Bank Money Market (1.30% → 1.05%)

Rate changes from the less well-known online banks:

• Nationwide by Axos Bank My Savings (1.70% → 1.61%)
• First Foundation Bank Online Savings (1.75% → 1.60%)
• UFB Direct High Yield Savings (1.61% → 1.51%)
• Vio Bank High Yield Online Savings (1.60% → 1.50%)
• BMO Harris Bank Platinum MM (1.65% → 1.50%)
• Quontic Bank Personal Money Market (1.60% → 1.46%)
• Comenity Direct High-Yield Savings (1.70% → 1.45%)
• Live Oak Bank High Yield Online Savings (1.55% → 1.35%)
• All America/Redneck Bank Mega MMA (1.50% → 1.35%)
• Western State Bank High Yield MM (1.60% → 1.35%)
• Popular Direct Ultimate Savings (1.60% → 1.35%)
• Rising Bank High Yield Savings (1.55% → 1.30%)
• First Internet Bank Money Market Savings (1.51% → 1.26%)
• BrioDirect High-Yield Savings (1.40% → 1.25%)
• ableBanking Money Market Savings (1.40% → 1.25%)
• WebBank Savings (1.51% → 1.11%)
• TAB Bank High Yield Savings (1.50% → 1.10%)
• CFBank Platinum MM Promo (1.30% → 1.05%)
• Investors eAccess Money Market (1.25% → 0.75%)

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.

Two banks now share the second spot with a 1.75% APY. This is down from three after First Foundation Bank lowered its Online Savings Account APY from 1.75% to 1.60%.

FitnessBank Savings account APY remains at 1.75%. This had fallen from 1.90% to 1.75% when May began. I wouldn’t be surprised if we see a similar rate cut when June begins. The Bank appears intent on keeping its top tier a rate leader, however, it doesn’t appear to want to be way out in front. The top tier APY requires that the customer average 12,500 steps per day for the month as measured by a step tracker app. The rate falls to 1.55% APY when the step average is between 10,000 and 12,500, and 1.35% APY when the step average is between 7,500 and 10,000. The rate falls significantly for lower step averages. There are lower step requirements for customers over 64.

The second bank that offers 1.75% APY is Patriot Bank. Its Money Market Account yield has held at 1.75% since March, and new customers will receive a guarantee that this promotional APY will last at least until June 30th.

One noteworthy new account added to the list is the My Savings account at Nationwide by Axos Bank. The APY had been 1.70%, but it fell today to 1.61%.

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 rates have been falling and the guarantee periods have been shortening.

Patriot Bank restarted a new version of its money market promotion in March. The promo rate is now only 1.75% APY. The rate guarantee period did increase slightly, moving from May 31st to June 30th. Earlier this year, the promo offered 2% guaranteed through July.

The second rate guarantee is the Platinum Money Market promotion offered by CFBank which is guaranteeing only 1.05% APY on balances of at least $25k. This had been 1.50% APY last month. There’s a short guarantee period of 90 days. This used to be 120 days. The ongoing interest rates are low (0.50% APY for $25k and above, 0.25% for $5k to under $25k).

Last month TIAA Bank lowered the promo rate of its Yield Pledge Money Market account from 1.75% to 1.40% APY. This applies to balances up to $250k. A version of this offer has long been available at TIAA Bank/EverBank. After the 1-year intro period, a tiered-rate structure takes effect. The current ongoing APYs range from 0.90% for under $10k to 1.35% 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. If their rates are higher than the savings account, these can be good deals in this falling rate environment.

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, five banks cut their no-penalty CD rates. CFG Bank, Goldman Sachs Bank USA, Citizens Access and CIT Bank made large cuts. Only Ally Bank made a small cut that lowered the rate by only 5 bps.

The rates of all others have held steady in the last two weeks.

Below is a list of noteworthy no-penalty CDs.

• 1.35% APY 13-month Penalty Free CD ($500 min) - CFG Bank
• 1.30% APY 7-month No-Penalty CD ($500 min) - Goldman Sachs Bank USA
• 1.20% APY 11-month No-Penalty CD ($500 min) - Goldman Sachs Bank USA
• 1.20% APY 11-month No-Penalty CD ($1k min) - CIT Bank
• 1.25% APY 11-month No Penalty CD (no min) - Ally Bank
• 1.20% APY 11-month Flex Time Deposit ($100k min) - M.Y. eBanc
• 1.15% APY 11-month Liquid CD ($5k min) - Citizens Access
• 1.10% APY 13-month No-Penalty CD ($500 min) - Goldman Sachs Bank USA
• 1.10% APY 11-month Flex Time Deposit ($10k min) - M.Y. eBanc
• 1.01% APY 11-month No-Penalty CD ($10k min) - PurePoint Financial
• 0.95% APY 13-month No-Penalty CD ($10k min) - PurePoint Financial
• 0.90% APY 14-month No-Penalty CD ($10k min) - PurePoint Financial
• 0.70% APY 11-month No Penalty CD ($5k min) - Colorado Federal Savings Bank
• 0.50% 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 might take a few months.

The large yield reductions continue. Vanguard Prime Money Market Fund 7-day yield fell 10 bps to 0.37% in the last two weeks. Fidelity Money Market Fund 7-day yield had a large drop, falling from 0.25% to 0.09%.

Municipal money market funds have been volatile in the last year. The volatility went way up in March due to liquidity issues. The Fed’s actions have helped with these issues, and the result is that the yields have fallen considerably from two months ago when yields were over 3.00%. From two weeks ago, the Vanguard Municipal Money Market Fund 7-day yield fell from 0.36% to 0.31%, and the Fidelity Municipal Money Market Fund 7-day yield fell from 0.14% to 0.04%.

Reward Checking Accounts

In my list of nationally available reward checking accounts, only one bank lowered its rates in the last two weeks.

All America Bank and its online division Redneck Bank lowered its Rewards Checking top-tier rate from 1.75% to 1.60% APY on balances up to $10k.

On a positive note, a new reward checking was added. Quoin Financial Bank is now offering a nationally-available Kasasa Cash checking account with a 3.00% APY on balances up to $25k if monthly requirements are met. Update 5/28: The account is no longer nationally available.

There’s now a 3-way tie for the rate leader for balances of at least $25k. Quoin Financial Bank, The Bank of Denver, and ECCU all offer a top-tier APY of 3.00%. Quoin Financial Bank and The Bank of Denver both have a $25k balance cap. ECCU has a $35k cap.

Overall, reward checking accounts have generally been more resistant to Fed rate cuts than online savings accounts. We’ll see if this continues now that the Fed has moved us back to the zero bound. 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. I’ll just mention a couple of ones here.

Only four institutions now offer CD yields of at least 2.00%. All four are credit unions. Advancial offers the highest 5-year rate with a 2.16% APY for balances of at least $50k. Second place goes to Lafayette Federal Credit Union with a 5-year CD that earns 2.02% APY. The other two have 2.00% APYs. These are the 5-year CD at American 1 Credit Union and the 5-year Jumbo CD at Financial Partners Credit Union.

When June begins, it’s likely that most credit unions will be lowering their rates. We shall see if any of the above will remain in the 2% group.

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)

• Noteworthy Accounts Available Nationwide:

*New To Summary

Reward Checking Accounts:

• Best Reward Checking Account Rates

• Noteworthy Accounts Available Nationwide:

*New To Summary

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

Post Publication Edits

5/27/2020: Added update regarding Neighbors Bank temporarily not accepting new savings accounts.
5/28/2020: Updated Quoin Financial Bank info due to change in availability.