Latest Liquid Bank Account Rates

Two weeks ago I noted the slowdown of online savings account rate increases. I had hoped it was just due to the holidays. I’m sorry to report that rate hikes haven’t picked up. There were no major online savings accounts that had rate hikes in the last two weeks. Five of the major online banks have kept their online savings account rates at 3.30% APY since before Christmas. These include Ally, American Express, Capital One, Discover and Marcus.

With the Target Federal Funds Rate (TFFR) rising to 4.25%-4.50% more than a month ago, and with the odds being high that the TFFR will be 4.50%-4.75% by next week, you would think we would see more rate hikes at these major online banks. In 2019 when the TFFR was 2.25%-2.50%, these major online savings accounts had APYs that ranged from 2.10% to 2.25%. Based on this history, you would expect these online savings account APYs to be at least 4%.

There are a few major online banks that have been a little more aggressive with their online savings account rates. CIT Bank has been the most aggressive. Its Savings Connect account rate increased from 3.85% to 4.05% APY on January 6th. Synchrony Bank increased its online savings account rate from 3.50% to 3.75% APY on December 22nd. Live Oak Bank increased its online savings account rate from 3.10% to 3.50% APY on January 2nd, and Barclays increased its online savings account rate from 3.00% to 3.40% APY on December 16th. Even these rate increases are disappointing when you consider that the TFFR has been at 4.25%-4.50% for more than a month.

The small/new online banks have been more aggressive with rate hikes. Many of these have increased their savings or money market yields to 4.00% and above. Four of the latest rate hikes occurred at Republic Bank (4.37% APY), Brilliant Bank (4.30% APY), CFG Bank (4.25% APY) and UFB Direct (4.21% APY).

One note regarding these small online banks that are raising their rates to 4%+ is that some of them are playing games. The new rates aren’t automatically being applied to existing accounts. The latest to do this is Brilliant Bank. It just increased its money market yield from 4.01% to 4.30%. However, existing customers need to call if they want this higher rate. Even though the account has the same name and there’s no apparent small print, existing customers won’t automatically receive this higher rate. According to the CSR, this higher rate is for new accounts or existing customers who deposit new money into their money market.

Most banks that play this game will at least change the name of the account. The account with the new name gets the higher rate while the existing account with the old name continues to have the old rate. Only the new account gets promoted to new customers. UFB Direct has done this many times in the last year. However, its latest rate hike to 4.21% APY applied to its existing UFB Best Savings and Money Market accounts.

The average online savings account yield as of January 1st was 3.31%. In December, that average increased about 30 bps from 3.01% to 3.31%. However, this was a large slowdown from November when the average increased about 60 bps. Based on current rates, we will likely see another large slowdown in January. The monthly rate gain for January may be the smallest gain since last March. The online savings account average is based on the Online Savings Account Index. This index tracks the average rate of ten well-established online savings accounts.

I’ve listed the most noteworthy rate changes that have occurred in the last two weeks. There are two lists. The first list includes rate changes from the major online banks or online banks that have a long history. The second includes rate changes from online banks which are generally not well-known names.

All percentages are APYs.

Rate changes from the major online banks:

• None

Rate changes from the less well-known CUs & online banks:

• Republic Bank Digital MM (4.28% → 4.37%)
• Brilliant Bank MM (4.01% → 4.30%)
• CFG Bank HY MM (4.15% → 4.25%)
• UFB Direct Best Savings & MM (4.11% → 4.21%)
• Great Lakes CU MMDA via SaveBetter (4.10% → 4.20%)
• The Atlantic FCU MMDA via SaveBetter (4.10% → 4.20%)
• Vio Bank Cornerstone MM (4.01% → 4.17%)
• LendingClub Bank HY Savings (3.60% → 4.00%)
• FitnessBank Savings (12.5k+ steps 3.75% → 4.00%)
• CIBC Bank USA Agility Savings (3.62% → 3.77%)
• SFGI Direct Savings (3.26% → 3.51%)
• EmigrantDirect Savings (2.50% → 3.50%)
• USALLIANCE Financial CU High Dividend Savings (3.25% → 3.50%)
• American Heritage CU HY Savings ($10k+ 3.05% → 3.20%)
• Stopped at 3.00%

Current rate leaders

A new rate leader emerged today. Republic Bank of Chicago’s Digital Money Market (DMM) account had another rate hike. The rate increased from 4.28% to 4.37% APY, which just surpassed MySavingsDirect’s savings account rate (4.35% APY). MySavingsDirect had been the rate leader since it increased its rate from 3.90% to 4.35% APY on December 16th.

Republic Bank’s DMM was launched last year. The minimum initial deposit is $2.5k, and a $2.5k balance must be maintained to earn 4.37% APY and to avoid a $25 monthly maintenance fee. Check writing is available. Outgoing ACH transfers initiated by Republic Bank are limited to a low $2.5k per day and $10k per 30 day rolling cycle. Republic Bank places no limits on ACH transfers initiated by an external financial institution. For more details, please refer to my recent Republic Bank Digital Money Market review.

The MySavingsDirect savings account is now in second place, but it remains on top for a no minimum savings account.

Brilliant Bank’s Money Market Account (4.30% APY) is now in third place after last week’s rate hike.

Technically, Republic Bank is not the rate leader. The rate leader position goes to First Internet Bank’s Money Market Savings account. However, probably not too many people will be able to qualify for this top rate. The Money Market Savings is a tiered-rate account that earns 4.39% APY for a minimum balance of $1 million. Balances under $1 million only earn 3.30% APY.

Rate guarantees without withdrawal penalties

No-penalty CDs have less value during rising rates, but if they have a higher rate than your online savings account, you can use the no-penalty CD to boost your overall yield without losing any significant liquidity. You just have to make sure you monitor rates so that you can close the no-penalty CD and move the funds into a higher-rate savings account or new no-penalty CD.

Some banks like CIT Bank and Ally Bank 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

We have a new no-penalty CD rate leader. Ponce Bank launched a 4-month No Penalty CD on the SaveBetter.com platform with a 4.41% APY. This just surpasses Sallie Mae Bank’s 14-month No Penalty CD on SaveBetter (4.40% APY). Even though this 4-month No Penalty CD has a higher rate, Sallie Mae Bank’s No Penalty CD is still a much better deal. Longer terms are always an advantage for no-penalty CDs. Ponce Bank’s No Penalty CD also has the same withdrawal limitation as the Sallie Mae Bank’s No Penalty CDs. Early withdrawals can only be done 30 days after opening. Other no-penalty CDs only require a wait of 7 days before you can execute an early withdrawal.

Two other significant no-penalty CD rate increases occurred at Marcus and Ally. The rates of Marcus’s 13-month No Penalty CD and Ally’s 11-month No Penalty CD both increased to 3.85% APY. If you have savings accounts at these banks, you can get an easy boost in yield by moving savings that you don’t immediately need into one of these no-penalty CDs.

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. Their rates tend to be close to zero when the Fed sets the target federal funds rate to 0%, and they tend to follow the target federal funds rate during a rate-hiking cycle.

Before last March, the four money market funds that I have followed have maintained a 7-day yield of only 0.01%. Now that the Fed has been hiking rates, money market fund yields are rising, and their yields are generally rising faster than online savings account yields from the major online banks.

Vanguard is back with a rate lead over Fidelity. The Vanguard Federal Money Market Fund 7-day yield was 4.29%, up from 4.23% two weeks ago. The Fidelity Money Market Fund 7-day yield was 4.15%, same as two weeks ago.

Municipal money market fund yields have been up and down even as the Fed keeps hiking. After a month of rising yields, the municipal money market fund yields had large declines in the last four weeks. The Vanguard Municipal Money Market Fund 7-day yield is now 1.77%, down from 2.99% two weeks ago and down from 3.63% four weeks ago. The 7-day yield of the Fidelity Municipal Money Market Fund is now 1.70%, down from 2.85% two weeks ago and down from 3.40% four weeks ago.

Reward Checking Accounts

For the nationally-available reward checking accounts, there was just one noteworthy rate increase in the last two weeks. Market USA Federal Credit Union increased the top-tier rate of its High-Rate VIP Free Checking (Platinum Tier) from 3.40% to 4.00% APY. This applies to qualifying balances up to $15k.

Reward checking accounts have a history of being slow to respond to rising rates, especially when compared to online savings accounts.

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 Deals

I publish my CD survey as a separate post. Please refer to my survey of the best CD rates. This recap focuses on liquid accounts, but I’ll include a few of the best CD deals.

CD Deals: For direct CDs that are nationally available (without any membership limitations), there are still 5% CDs available. The term lengths range from six months to 27 months. If you’re waiting for a long-term CD with a 5%+ yield, be aware that it may never come. We are still seeing some banks cutting their long-term CD rates. Today, Capital One lowered its 5-year 360 CD rate from 4.40% to 4.10% APY, and American Express National Bank lowered its 5-year CD rate from 4.25% to 3.75% APY.

Long-dated Treasury yields remain under 4%. At today’s market close, the 3-, 5-, 7- and 10-year yields were 3.84%, 3.54%, 3.51% and 3.46%, respectively (yields are based on Daily Treasury Par Yield Curve Rates..) If these yields remain under 4%, the odds of widespread 5% long-term CDs diminish. It is possible that high loan demand at certain banks and credit unions may spur them into offering 5% long-term CDs. We have been seeing a few 5% CDs (several are not nationally available), but most have been short- or mid-term CDs.

Navy Federal Credit Union began offering a 5% APY 15-month Certificate Special last week. I think many were hoping for a longer-term 5% CD. One very nice feature is that it allows unlimited add-on deposits up to a maximum balance of $250k. The minimum deposit is only $50. So there’s no downside in opening this CD with at least a $50 deposit. That’s especially the case if you’re keeping a lot in savings accounts. If rates do start to fall later this year, you can always move that money into this 5% CD.

The only bank with a nationally available 5% CD continues to be Sallie Mae Bank. It’s still offering a 27-month CD with a 5.00% APY via the SaveBetter.com platform. Unlike most of the CDs on SaveBetter, this one has a more mild early withdrawal penalty (only 180 days of interest).

One important attribute to note regarding SaveBetter CDs is that there is no option to withdraw interest. Interest can only be added back into the CD. To access any of the CD balance requires a closure of the CD with an early withdrawal penalty. SaveBetter’s product term sheets for the CDs don't clearly describe this. Under “transaction limitations”, it only states that “One-time full withdrawal of the Certificate.”

If you see 5%+ CDs at a credit union, they may not last long. On Saturday, I reported on the 18-month CD Special at XCEL Federal Credit Union (5.12% APY). People in any state can join this credit union through an association membership. I just checked XCEL’s website, and it appears that this CD Special has already ended.

The highest-rate CD that I’ve found in this rate cycle is 6.25% APY. It’s an 18-month CD Special from Democracy Federal Credit Union, and it appears to still be available. Unfortunately, it’s not nationally available. The Credit Union’s field of membership is primarily limited to residents in the Washington D.C. metro area. I have more details in this CD review.

A good alternative to short-term CDs continues to be Treasury bills. At today’s market close, the 3-, 6- and 12-month Treasury yields were 4.72%, 4.79% and 4.67%, respectively. If you live in a state with state income tax, these can be a better deal than 5% CDs for many tax brackets. Thanks to DA reader RichardW for explaining the details in this DA Forum thread.

For long-term, nationally available CDs, the top two CD yields are 4.78% APY (5-year Jumbo CD at Lafayette FCU) and 4.75% APY (49-month Certificate Special at NASA FCU). One of the long-term top rates for banks is 4.50% APY (5-year CD at CFG Bank), which is down from 4.60% APY two weeks ago.

Please keep discussions of the Fed and the economy to a minimum in the comments of this post. The focus of the comments should be deposit accounts and rates. If you want to express your opinions on the Fed and the economy, please comment in my Fed meeting preview post.

Rates as of January 25, 2023

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)

No-Penalty CDs

*New to Summary

Reverse Tier Savings/Money Market Accounts/Checking:

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 after November 1, 2022

Accounts No Longer Available

Post Publication Edits

1/25/2022: Citi 12-month No Penalty CD rate has been increased.