We are still on track for a December Fed rate hike. However, there remains significant doubt about 2018 due to stubbornly low inflation. Federal Reserve Bank of Philadelphia President Patrick Harker explained his views about rate hikes in 2018 in an interview last week. According to this Bloomberg article, Harker said “he wants to see signs of inflation moving higher before backing tightening next year.” However, he may support rate hikes in 2018 for other reasons:
“I don’t see any signs that inflation is running out of control in any way,’’ Harker said, explaining that he wants to boost rates "for a variety of reasons -- but most notably to give us the leg room, that is, having the fed funds rate high enough so that if and when the next recession comes, we’ll have some room to move.”
Harker won’t be a voting member at the FOMC in 2018, but he and the other regional Fed presidents may have a bigger role in 2018 in setting policy due to the high number of vacancies on the Fed’s Board of Governors and the slowness of both the President and the Senate in filling the vacancies. Another reason mentioned in this MarketWatch article is that the newly appointed Fed Chair, Jerome Powell, may depend more on the regional Fed presidents:
And Jerome Powell, the nominee to be Fed chairman, does not have formal economics training and is likely to lean on some of the regional Fed presidents who are economists.
The odds of a December Fed rate hike as indicated by the Fed funds futures are now at 100% (same as last week). However, the odds of at least two rate hikes by next June fell to 69.7% from 84.9% last week.
All Treasury yields increased from last week. The 6-month, 5-year and 30-year Treasury yields had the largest increase, all three rose by 7 bps from last week.
If you compare current yields to the yields in January, you can see how the yield curve has flattened (the difference between short-dated and long-dated yields have shrunk). This MarketWatch article has a helpful explanation of what’s causing this condition:
[The high expectations of a December Fed rate hike] have lifted short-term interest rates—the most sensitive to shifting interest-rate expectations—to their highest level in nearly a decade. However, sluggish levels of inflation and wage growth have weighed on longer-dated Treasurys, more influenced by the inflation outlook because rising prices can chip away at a bonds fixed value.
- 1-month: 1.06% up from 1.05% last week (0.52% on Jan 3)
- 6-month: 1.40% up from 1.33% last week (0.65% on Jan 3)
- 2--year: 1.68% up from 1.63% last week (1.22% on Jan 3)
- 5--year: 2.06% up from 1.99% last week (1.94% on Jan 3)
- 10-year: 2.38% up from 2.32% last week (2.45% on Jan 3)
- 30-year: 2.84% up from 2.77% last week (3.04% on Jan 3)
Fed funds futures' probabilities of future rate hikes by:
- Dec 2017 - up by at least 25bps: 100% same as last week
- Dec 2017 - up by at least 50bps: 3.3% same as last week
- Jun 2018 - up by at least 25bps: 100% same as last week
- Jun 2018 - up by at least 50bps: 69.7% down from 84.9% last week
- Jun 2018 - up by at least 75bps: 22.5%
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.
Internet banks continue to hike their savings account and money market rates, but the rate hikes have slowed from previous weeks.
The most noteworthy rate hike was at PurePoint Financial which increased its savings account rate by 10 bps to 1.40% APY for balances of at least $10k.
EverBank increased the ongoing rate of its Yield Pledge Money Market Account by 15 bps to 1.01% APY. The 12-month intro rate continues to be 1.31% APY for balances up to $250k.
Other institutions to increase rates include McGraw-Hill Federal Credit Union, Dime Savings Bank and TIAA Direct.
Due to PurePoint Financial’s rate hike, the number of banks in the 1.40% club increased by one to seven. This “club” is the group of banks and credit unions offering nationally-available savings and money market accounts with non-promo rates of at least 1.40% APY. The other six in this group includes Northpointe Bank’s Ultimate Money Market (1.50% APY), Incredible Bank’s savings account (1.41% APY), UFB Direct Money Market Savings (1.41% APY), DollarSavingsDirect Savings (1.50% APY), Live Oak Bank Savings (1.40% APY) and Popular Direct Plus Savings (1.40% APY). I’m excluding the Mega Money Market accounts from All America Bank and Redneck Bank since these have $35k balance caps.
Reward Checking Accounts
We’re back to no changes to my list of nationally available reward checking accounts. Reward checking rates have been slower to respond to the Fed rate hikes as compared to internet savings account rates. Since much of the rates of reward checking accounts are paid for by debit card activity, banks may continue to go slow with rate hikes.
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.
Capital One just increased its 360 CD rates to competitive levels. Its most competitive CD is now its 5-year 360 CD (2.45% APY). Early withdrawal penalty is only 180 days of interest (see blog post).
Mountain America Credit Union continues to offer the highest nationally-available 5-year rate (2.60% APY).
If you live in Central Florida, you can get 3% APY on a 5-year CD at MIDFLORIDA Credit Union (see blog post).
Advancial continues to offer the best nationally-available short-term CD rates including a 1-year Jumbo CD with a 1.87% APY ($50k minimum).
Internet banks are gaining ground on easy-to-join credit unions like Advancial. Virtual Bank is now offering a 1-year CD with a 1.76% APY ($10k minimum).
One of the best deals for mid-term CDs is the 35-month CD special at USALLIANCE Financial (2.38% APY).Rates as of November 14, 2017
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:
|DollarSavingsDirect||1.50% (no min)||Dollar Savings Account - Account review|
|Salem Five Direct||1.50%||eOne Savings, for new customers only Account review|
|Northpointe Bank||1.50% ($25k-$1m, guaranteed for 1 year)||Ultimate Money Market - Account review|
|All America Bank||1.50% (up to $35k), 0.50% ($35k+)||Mega Money Market Account - Account review|
|Redneck Bank||1.50% (up to $35k), 0.50% ($35k+)||Mega Money Market Account|
|UFB Direct||1.41% ($5k min)||Money Market Savings - Account review|
|Incredible Bank||1.41% ($250k+), 1.21% ($2.5k),||IncredibleBank Savings - Account review|
|Live Oak Bank||1.40% ($250k max)||Savings Account - Account review|
|Popular Direct||1.40%||Popular Direct Plus Savings - Account review|
|PurePoint Financial||1.40% ($10k min)||Online Savings - Account review|
|EBSB Direct||1.39% ($50k+), 0.20% ($5k+)||Money Market Direct - Account review|
|Self-Help Federal Credit Union||1.37% ($500k), 1.27% ($500)||Money Market - Account review|
|United Bank (MA)||1.36% ($500k max, guaranteed for 6mo)||Advantage Money Market, Not available in all states, Account review|
|CIT Bank||1.35% (up to $250k), 1.30% ($250k+)||Premier High Yield Savings - Account review|
|Signal Financial Credit Union||1.35% ($25k, enrollment in Premium Bundle)||Premium Money Market - Account review|
|EverBank||1.31% (1yr intro rate) 1.01% ongoing rate||Yield Pledge Money Market - Account review|
|SFGI Direct||1.31%||Savings account - Account review|
|Synchrony Bank (formerly GE Capital Retail Bk)||1.30%||High Yield Savings - Account review|
|Nationwide Bank||1.30%||Online Savings - Account review|
|Barclays||1.30%||Online Savings - Account review|
|GS Bank||1.30%||Online Savings Account - Account review|
|Sallie Mae Bank||1.30%||MMA - Account review|
|BankPurely||1.30% ($1 min)||SavingPurely - Account review|
|ableBanking||1.30% ($250 min)||Money Market Savings - Account review|
|Capital One||1.30% ($10k+), 0.60% (up to $10k)||360 Money Market|
|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|
|Northern Bank Direct||1.26% ($250k max)||Money Market - Account review|
|Ally Bank||1.25%||Online Savings - Account review|
|American Express Bank||1.25%||High Yield Savings - Account review|
|BBVA Compass||1.25% ($10k min)||ClearChoice MMA Promo - Account review|
|EverBank||1.21% (1yr intro rate) 0.71% ongoing rate||Checking - Account review|
|Dime Savings Bank||1.20%||Dime Direct Money Market, new money - Account review|
|Discover Bank||1.20% (no min)||Online Savings - Account review|
|Radius Bank||1.20% ($2.5k min)||Radius High-Yield Savings - Account review|
|Chevron Federal Credit Union||1.20% ($250k+), 1.10% ($2.5k+)||MarketEdge Savings|
|Alliant Credit Union||1.16% ($100 min)||High-Rate Savings - Account review|
|My e-BAnC by BAC Florida Bank||1.15%||Super Saver - Account review|
|FNBO Direct||1.15%||Online Savings|
|MyBankingDirect||1.15% ($5k+), 0.25% (less than $5k)||Earn >More Money Market|
|SmartyPig||1.15% ($10k min), 1.05% (less than $10k)||SmartyPig Savings - Account review|
|Nationwide Bank||1.15% ($10k), 1.00% ($1)||Nationwide Member Checking Account|
|Connexus Credit Union||1.15% ($100k), 1.00% ($50k,) 0.75% ($20k)||MMA - active chk required|
|Northpointe Bank||1.12%||Statement Savings - Account review|
|Northeast Bank||1.10%||Pearl Money Market Promo, new customers - Account review|
|Quorum Federal Credit Union||1.10%||HighQ Savings|
|iGObanking.com||1.10% ($25k min)||MMA, New accounts and new money only, Account review|
|Discover Bank||1.10% ($100k min), 1.05% ($2.5k)||MMA - Account review|
|TIAA Direct||1.10%($100k), 1.01% ($1) Money Market||Internet bank|
|Pacific National Bank||1.06%||Money Market Deposit Account - Account review|
|AloStar Bank of Commerce||1.05%||Savings account - Account review|
|Bank of Internet USA||1.05%||Smart Money Market|
|Bank of Internet USA||1.05%||Smart Savings|
Reward Checking Accounts:
- Noteworthy Accounts Available Nationwide:
|Northpointe Bank||5.00% (up to $10k), 0.10% ($10k+)||UltimateAccount - Account review|
|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 $15k), 0.00% ($15k+)||Vertical Dividend Checking - 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|
|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|
|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|
|MainStreet Bank||2.00% (up to $15k), 0.25% ($15k+)||Kasasa Cash - Account review|
|Blue Federal Credit Union||2.00% (up to $15k), 0.25% ($15k+)||Extreme Checking (up to 4% w/account relationships) - Account review|
|All America Bank||2.00% (up to $10k), 0.50% ($10k+)||Ultimate Rewards Checking|
|Redneck Bank||2.00% (up to $10k), 0.50% ($10k+)||Redneck Rewards Checking|
|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|
|Campus Federal||1.95% (up to $10k), 0.05% ($10k+)||Lagniappe Checking|
|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|
|MemoryBank||1.50% (up to $250k)||EarnMore Interest Checking - Account review|
|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|
|Heritage Bank||1.25% (up to $25k), 0.10% ($25k+)||eCentive Account|
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||1.41% rate for $50K+||Duke Energy PremierNotes review|
|Ally Financial Demand Notes||1.15% rate for $50k+|
|Ford Interest Advantage||1.15% rate for $50k+||Ford Interest Advantage review|
|Vanguard Prime Money Market Fund||1.14% 7-day yield|
|Fidelity Money Market Fund||0.98% 7-day yield|
|Vanguard Tax-Exempt Money Market Fund||0.82% 7-day yield|
|Fidelity Municipal Money Market Fund||0.59% 7-day yield|