Last Wednesday’s release of the Consumer Price Index (CPI) for January showed that inflation had risen more than economists had expected. The core CPI that excludes food and energy increased 0.3% from the previous month. The consensus was 0.2%. This inflation news makes it very likely that the Fed will go forward with a rate hike at its March 20-21 meeting. The question about whether it’s enough to move the Fed to speed up its pace of rate hikes is not so clear. Economist Tim Duy had this to say in his Fed Watch Blog:
At this point, the inflation numbers justify maintenance of their existing forecast. They do not, however, justify raising the forecast. Assuming the Fed behaves like last year, they will not over-react to higher than expected inflation if they think it is transitory within the context of their forecast.
The next monthly CPI release will be March 13, about a week before the next Fed meeting. So if inflation continues to surprise on the upside, we may see signs from the Fed after its March meeting that four rate hikes in 2018 (instead of three) may be justified.
We may get a little more insight into what the Fed and the new Fed Chair, Jerome Powell, are thinking about inflation when the minutes of the Fed’s January meeting are released on Wednesday afternoon. Also, we may learn more about Fed Chair Powell’s views next week when he testifies before the House Financial Services and the Senate Banking committees.
The rise in inflation did impact the Fed funds futures. The odds of a rate hike at the March 20-21 meeting as indicated by the Fed funds futures are now 83.1% which are up from 77.5% from last week. The stock market turmoil may have added some uncertainty. Last November, a month before the December Fed meeting, the Fed funds futures were showing odds of 100% for a December rate hike. The odds that the federal funds rate will be at least 50 bps higher in June also increased. They’re up to 62.8% (from 56.7% last week.)
Inflation news also impacted Treasury yields. All Treasury yields were up from last week. Most notably, the yield of the 2-year note increased 15 bps to 2.25%. According to this CNBC article, this is “its highest level since Sept. 22, 2008, when it yielded as high as 2.263 percent.” I also added the 1-year note to the list of yields below since there was another noteworthy milestone. The 1-year yield topped 2% this week. Today’s closing value was 2.01%, up from 1.95% last week and up from 0.82% one year ago.
In addition to providing insights on future interest rates, Treasuries can be an alternative to CDs. During the zero interest rate environment years, CDs from internet banks and credit union had a large yield advantage over Treasuries even when the tax advantages of Treasuries were considered. Today, Treasuries are much more competitive. For more discussion on the pros and cons of Treasuries Notes compared to CDs, please refer to this DA Forum thread.
- 1-month: 1.39% up from 1.34% last week (0.50% a year ago)
- 6-month: 1.87% up from 1.80% last week (0.66% a year ago)
- 1-year: 2.01% up from 1.95% last week (0.82% a year ago)
- 2--year: 2.25% up from 2.10% last week (1.21% a year ago)
- 5--year: 2.65% up from 2.54% last week (1.92% a year ago)
- 10-year: 2.88% up from 2.83% last week (2.42% a year ago)
- 30-year: 3.15% up from 3.11% last week (3.03% a year ago)
Fed funds futures' probabilities of future rate hikes by:
- Mar 2018 - up by at least 25bps: 83.1% up from 77.5% last week
- Jun 2018 - up by at least 25bps: 95.6% up from 93.7% last week
- Jun 2018 - up by at least 50bps: 62.8% up from 56.7% 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, average savings account rates are rising slowly. They are still below the average from five years ago.
In the last month, rate hikes at internet banks have slowed. That makes sense since you would expect January to be an active month after the Fed’s December rate hike. Below are the noteworthy savings and money market account rate hikes that have occurred in the last two weeks:
- All America Bank/Redneck Bank Mega MMA (+25 bps to 1.75% APY for up to $50k)
- Sallie Mae Bank MMA (+5 bps to 1.50% APY)
- Capital One 360 MMA (+10 bps to 1.50% APY)
- Ally Bank SA (+10 bps to 1.45% APY)
The rate hikes at All America Bank and its sister division, Redneck Bank, are scheduled to take effect on Wednesday, February 21. Their Mega Money Market Account will earn 1.75% APY for balances up to $50k. That’s up from 1.50% APY for balances up to $35k.
The 1.50% APY is growing in popularity. The latest to reach this yield is Capital One’s 360 Money Market and Sallie Mae Bank’s Money Market Account.
Without a balance cap, ableBanking’s Money Market Savings account continues to be the rate leader with a 1.70% APY on all balances. There’s a $250 minimum opening balance.
Colorado Federal Savings Bank continues to be in second with its Premier Savings Account that offers 1.65% APY for balances of at least $50k.
Reward Checking Accounts
There continues to be little change to my list of nationally available reward checking accounts. The only change will be rate changes at All America Bank and Redneck Bank. The same day that the Mega Money Market rates are scheduled to change (Feb 21), their Rewards Checking Account rates are scheduled to increase 25 bps to 2.25% APY. Unlike the Mega Money Market accounts, no changes in the balance cap were announced. They currently have $10k balance caps. The portion of the balance above $10k will earn a much lower rate.
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.
NASA Federal Credit Union recently came out with a very competitive 11-month CD special that earns 2.25% APY with a minimum deposit of $20k. This is currently the highest rate for terms equal to or close to one year. Please refer to this blog post and the comments in the post for more details.
For 18-month CDs, two internet banks are tied for the highest rate. Popular Direct just recently increased their 18-month CD rate to 2.30% APY. This matches Live Oak Bank’s 18-month CD rate that has been available since January 31st. Please refer to this Live Oak Bank 18-month CD review and this Popular Direct 18-month CD review for more details.
Navy Federal Credit Union continues to offer a special 32-month IRA CD with a 2.75% APY and a $250k maximum balance. There’s also a special 15-month CD with a 2.25% APY and a $50k maximum balance. As is typical with recent Navy Fed special CDs, these allow add-on deposits. Please refer to this blog post for more details.
We now have two institutions offering 3% 5-year CDs that are available nationwide. Connexus Credit Union was the first with a 5-year CD that earns 3% APY. Please refer to this blog post for more details. Mountain America Credit Union was the second with its 3% APY 5-year CD (please see blog post.) We actually have three institutions in this “club” if you count Idaho Central Credit Union. It came out with a promotional 60-month CD that earns 3.00% APY. If you don’t live in Idaho, there’s an indirect way to qualify for membership as I described in this blog post.
UPDATE 2/21/18: Freedom Credit Union is offering a special 36-month CD and IRA CD with a 3.04% APY. Readers have reported that Freedom Credit Union is accepting ACC membership without PA residency. This allows people in any state to qualify for credit union membership. Please refer to this this blog post for more details.Rates as of February 20, 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:
|All America Bank||1.75% (up to $50k), 0.50% ($50k+)||Mega Money Market Account - Account review|
|Redneck Bank||1.75% (up to $50k), 0.50% ($50k+)||Mega Money Market Account|
|ableBanking||1.70% ($250 min)||Money Market Savings - Account review|
|Colorado Federal Savings Bank||1.65% ($50k+)||Premier Savings (New customers) - Account review|
|United Bank (MA)||1.61% ($500k max, guaranteed for 6mo)||Advantage Money Market, Not available in all states, Account review|
|MutualOne Bank||1.61% ($250k max)||Online Statement Savings - Account review|
|DollarSavingsDirect||1.60% (no min)||Dollar Savings Account - Account review|
|Live Oak Bank||1.60% ($5 million max)||Savings Account - Account review|
|UFB Direct||1.60% ($5k min)||High Yield Money Market - Account review|
|PurePoint Financial||1.60% ($10k min)||Online Savings - Account review|
|Synchrony Bank (formerly GE Capital Retail Bk)||1.55%||High Yield Savings - Account review|
|CIT Bank||1.55%||Premier High Yield Savings - Account review|
|Incredible Bank||1.55% ($25k+), 1.21% ($2.5k),||IncredibleBank Savings - Account review|
|SFGI Direct||1.51%||Savings account - Account review|
|Northern Bank Direct||1.51% ($250k max)||Money Market - Account review|
|Sallie Mae Bank||1.50%||MMA - Account review|
|Marcus by Goldman Sachs||1.50%||High-Yield Online Savings Account - Account review|
|My eBanc||1.50%||Super Saver - Account review|
|Barclays||1.50%||Online Savings - Account review|
|Salem Five Direct||1.50%||eOne Savings, for new customers only Account review|
|Popular Direct||1.50% ($5k min)||Popular Direct Exclusive Savings - Account review|
|Nationwide Bank||1.50% ($10k+), 1.15% APY (up to $10k)||Money Market - Account review|
|Capital One||1.50% ($10k+), 0.85% (up to $10k)||360 Money Market - Account review|
|MyBankingDirect||1.50% ($25k+), 1.35% ($5k+), 0.25% (less than $5k)||Money Market|
|iGObanking.com||1.50% ($25k min)||MMA, New accounts and new money only, Account review|
|Northpointe Bank||1.50% ($25k-$1m, guaranteed for 1 year)||Ultimate Money Market - Account review|
|INOVA Federal Credit Union||1.50% ($100k min)||Platinum Money Market Savings|
|American Express Bank||1.45%||High Yield Savings - Account review|
|Ally Bank||1.45%||Online Savings - Account review|
|Alliant Credit Union||1.45% ($100 min)||High-Rate Savings - Account review|
|Self-Help Federal Credit Union||1.43% ($500k), 1.33% ($500)||Money Market - Account review|
|EverBank||1.41% (1yr intro rate) 1.21% ongoing rate||Yield Pledge Money Market - Account review|
|FNBO Direct||1.40%||Online Savings|
|Discover Bank||1.40% (no min)||Online Savings - Account review|
|EBSB Direct||1.39% ($25k+), 0.20% ($5k+)||Money Market Direct - Account review|
|Dime Savings Bank||1.35%||Dime Direct Money Market, new money - Account review|
|Sallie Mae Bank||1.35%||High Yield Savings - Account review|
|Signal Financial Credit Union||1.35% ($25k+, enrollment in Premium Bundle)||Premium Money Market - Account review|
|Community Bank of Pleasant Hill||1.32%||Premier Money Management Account|
|Community Bank of Raymore||1.32%||Premier Money Management Account|
|Nationwide Bank||1.30%||Online Savings - Account review|
|Pacific National Bank||1.30%||Money Market Deposit Account - Account review|
|Bank of Internet USA (BofI)||1.30%||Smart Savings|
|BankPurely||1.30% ($1 min)||SavingPurely - Account review|
|Radius Bank||1.30% ($2.5k min)||Radius High-Yield Savings - Account review|
|UFB Direct||1.30% ($25k+), 0.20% ($100)||Premium Savings - Account review|
|CIBC USA (formerly The Palladin PrivateBank)||1.30% (6mo intro rate) 1.10% blended APY||Savings Account - 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|
|Discover Bank||1.30% ($100k min), 1.25% ($2.5k)||MMA - Account review|
|Franklin Synergy Bank||1.29% ($500k+)||Synergy Money Market|
|Quorum Federal Credit Union||1.25%||HighQ Savings|
|Bethpage Federal Credit Union||1.25% ($500 min)||Money Market|
|Chevron Federal Credit Union||1.25% ($2.5k+), 0.25% ($1+)||MarketEdge Savings|
|BBVA Compass||1.25% ($10k min)||ClearChoice MMA Promo - Account review|
|Hanscom Federal Credit Union||1.25% ($25k min)||Higher Yield Savings|
|INOVA Federal Credit Union||1.25% ($50k min)||Gold Money Market Savings|
Reward Checking Accounts:
- Noteworthy Accounts Available Nationwide:
|Consumers Credit Union||4.59% (up to $20k)||Rewards Checking - debit card and $1k credit card requirements|
|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|
|Consumers Credit Union||3.09% (up to $10k)||Rewards Checking - debit card with NO credit card requirements|
|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|
|Signature Federal Credit Union||3.00% (up to $15k), 0.10% ($15k+)||Choice Checking|
|Great Lakes Credit Union||3.00% (up to $10k), 0.10% ($10k+)||Ultimate Checking|
|Partner Colorado Credit Union||3.00% (up to $10k), 0.50% ($10k+)||High Interest Checking|
|American Bank & Trust||2.51% (up to $10k), 0.25% ($10k+)||Kasasa Cash|
|Industrial Bank||2.50% (up to $15k), 0.25% ($25k+)||Kasasa Cash|
|Capital Educators Federal Credit Union||2.50% (up to $10k), 0.20% ($10k+)||High Yield 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|
|All America Bank||2.25% (up to $10k), 0.50% ($10k+)||Ultimate Rewards Checking|
|Redneck Bank||2.25% (up to $10k), 0.50% ($10k+)||Redneck Rewards 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|
|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|
|MemoryBank||1.60% (up to $250k)||EarnMore Interest Checking - Account review|
|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|
|Heritage Bank||1.41% (up to $25k), 0.15% ($25k+)||eCentive Account|
|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
|Duke Energy PremierNotes||1.65% ($50k+), 1.50% ($10k+), 1.45% (less than $10k)||Duke Energy PremierNotes review|
|Vanguard Prime Money Market Fund||1.47% 7-day yield|
|Ford Interest Advantage||1.34% ($50k+), 1.29% ($15k+), $1.24% (less than $15k)||Ford Interest Advantage review|
|Fidelity Money Market Fund||1.28% 7-day yield|
|Ally Financial Demand Notes||1.25% rate for $50k+|
|Vanguard Municipal Money Market Fund||0.92% 7-day yield|
|Fidelity Municipal Money Market Fund||0.86% 7-day yield|
Removed, Rate Too Low
|California First National Bank||1.16%||Money Market Checking|
Post Publication Edits
2/21/2018: Synchrony Bank High Yield Savings rate raised.
2/23/2018: MyBankingDirect Money Market Account rates raised.