Over the last several years we have been issuing monthly press releases. These are intended to provide a summary of average deposit account rates and how they have changed in the last month. We thought these press releases would be of interest to readers now that we are finally seeing some upward movement on rates.The July press release is below.
Please note that I will continue to post my weekly rate surveys without any changes.
CD Rates Reach 5-Year High
As the Fed has increased interest rates, deposit rates have been slow to respond. Banks have been in no hurry to pay out more interest on their deposits. Now that we've seen four Fed rate hikes, with the last three occurring in the last seven months, deposit rates have finally been moving up. Average yields on CDs have been the first to rise, and now the average yields on CDs are the highest that they've been in five years.
1-Year CD rates reached a bottom on August 2014. At that time the average 1-year CD yield was 0.423%. The average yield slowly increased for two years, reaching 0.482% in April 2016 and remaining at that level through September 2016. In the last nine months, the average yield has surged to 0.567%, which exceeds the average of 0.539% that occurred five years ago on July 2012.
5-Year CD rates reached a bottom on July 2013. At that time the average 5-year CD yield was 1.231%. Similar to 1-year CDs, the average 5-year CD yield slowly increased, reaching 1.411% in April 2016. The economic uncertainty in 2016 affected long-term rates and contributed to a small drop in the average 5-year CD yield. The 2016 low was in September when the average yield fell to 1.392%. The average yield then started to climb. In the last nine months, the average yield has surged to 1.504%, which exceeds the average of 1.497% that occurred five years ago on July 2012.
Savings and checking account rates are climbing more slowly than CD rates. The current average yield of checking accounts has just reached 0.132%. This is the highest rate seen in the last four years. The current average yield of savings accounts has just reached 0.185% which is just under the 3-year high of 0.187%.
By raising CD rates before checking and savings account rates, banks may be hoping to lock customers into low-rate CDs as interest rates rise. In a rising rate environment, it's even more important for consumers to review the CD early withdrawal penalty before opening a CD.
DepositAccounts.com Monthly Rate Survey and Commentary
Average yields on four of five categories of consumer savings products increased from June to July. The one average that did not increase (checking account rates) held steady. The 1-year CD rates continued to have the largest increase out of the five categories, with the average annual percentage yield (APY) increasing by 2.3% from 0.543% in June to 0.567% in July. The largest rate increases are occurring at internet banks. In the last month, increases in the average yields at internet banks ranged from a 3.3% increase on savings accounts to a 10% increase on checking accounts.
The average APYs are based on a nationwide survey of more than 275,000 rates at 7,500 banks and credit unions.
The average savings account APY increased less than 1% from 0.184% in June to 0.185% in July. The average rate among the top 10% of the most competitive nationwide banks held steady at 0.380% in July. Alabama has the best average rate in the nation at 0.243% while Arizona has the worst at 0.082%. The average rate among Internet banks was 0.806%, an increase of 3.3% from June.
The average checking account APY held steady at 0.132% in July. The average rate among the top 10% of the most competitive nationwide banks increased by 3.8% from 0.260% to 0.270%. Vermont has the best average rate in the nation at 0.240% while Alaska has the worst at 0.049%. The average rate among Internet banks was 0.495%, an increase of 10% from June.
The average 1-year CD APY increased by 2.3% from 0.554% in June to 0.567% in July. The average rate among the top 10% of the most competitive nationwide banks increased by 2.9% from 1.020% to 1.050%. Utah has the best average rate in the nation at 0.825% while Oregon has the worst at 0.327%. The average rate among Internet banks was 1.141%, an increase of 3.8% from June.
The average 5-year CD APY increased less than 1% from 1.490% in June to 1.504% in July. The average rate among the top 10% of the most competitive nationwide banks increased less than 1% from 2.050% to 2.060%. Utah has the best average rate in the nation at 2.100% while Georgia has the worst at 1.195%. The average rate among Internet banks was 1.796%, an increase of 3.6% from June.
The average reward checking account APY increased less than 1% from 1.821% in June to 1.829% in July. The average rate among the top 10% of the most competitive nationwide banks increased by 1.0% from 2.870% to 2.900%. The average balance cap for reward checking accounts has decreased from $17,464 to $17,316. The balance cap is the maximum balance that qualifies for the reward checking account's top rate. Alaska has the best average rate in the nation at 1.854% while North Carolina has the worst at 0.496%.
June Bank Failures
No banks or credit unions were closed in June 2017. As a comparison, no banks or credit unions were closed in June 2016. View health ratings for any bank or credit union and list of troubled banks by Texas ratios.