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 May press release is below.
Please note that I will continue to post my weekly rate surveys without any changes.
Higher Savings Account Rates: Sneaky Ways Banks Aren’t Making It Easy For Consumers
Instead of raising rates on existing savings accounts, many banks are creating new savings accounts with top rates. Banks hope that the new higher-rate accounts will attract new customers while many of their existing customers won't notice these new accounts or won't take the time to move their money. Two banks with top savings account rates are examples of this practice.
The first example is BankPurely, a new internet bank from Flushing Bank of Uniondale, New York. BankPurely introduced the SavingPurely savings account that earns 1.30% APY on all balances. This is 30 basis points higher than the savings account rate at Flushing Bank’s other internet bank, iGObanking.com, which has been in operation for more than ten years.
The second example is UFB Direct, an internet bank from Bofi Federal Bank of San Diego, California. UFB Direct recently launched the UFB Premium Savings Account that earns 1.30% APY on balances of $50,000 and above. Another savings account that UFB Direct offers is called UFB Savings, and that earns 1.00% APY on balances of $25,000 and above. The UFB Savings account has been offered by UFB Direct since 2011.
In addition to these two rate leaders, other internet banks have decided to offer higher rates on new savings accounts instead of on their existing savings accounts. Here are five tips for consumers to ensure they don't get left behind by their banks:
- Don't assume your savings account will remain a rate leader.
- Regularly compare the interest rate of your account to other accounts at your same bank and at other banks and credit unions that offer top rates
- If you do find a higher-rate account at either your bank or at another bank, ask your bank to match that rate on your existing account.
- If your bank won't match the rate and you have to apply for a new account to receive the higher rate, make sure you understand the account requirements before applying. Existing customers may not be eligible or it may require new money.
- If a higher-rate account is found at your bank or at another bank or credit union, take the time to open the account and move your money.
DepositAccounts.com Monthly Rate Survey and Commentary
The effects of the recent Fed rate hikes on deposit rates were more apparent in the last month than in any previous month since the first Fed rate hike on December 2015. Across a nationwide survey of more than 275,000 rates at 7,500 banks and credit unions, average yields on five categories of consumer savings products increased. The 1-year CD rates had the largest increase out of the five categories, with the average annual percentage yield (APY) increasing by 2.6% from 0.529% in April to 0.543% in May.
The average savings account APY increased by 1.0% from 0.181% in April to 0.183% in May. The average rate among the top 10% of the most competitive nationwide banks increased by 2.7% from 0.370% to 0.380%. Alabama has the best average rate in the nation at 0.246% while Arizona has the worst at 0.081%. The average rate among Internet banks was 0.779%.
The average checking account APY increased by 1.7% from 0.128% in April to 0.130% in May. The average rate among the top 10% of the most competitive nationwide banks held steady at 0.260% in May. Vermont has the best average rate in the nation at 0.233% while Alaska has the worst at 0.052%. The average rate among Internet banks was 0.459%.
The average 1-year CD APY increased by 2.6% from 0.529% in April to 0.543% in May. The average rate among the top 10% of the most competitive nationwide banks increased by 2.1% from 0.970% to 0.990%. Utah has the best average rate in the nation at 0.782% while Oregon has the worst at 0.320%. The average rate among Internet banks was 1.051%.
The average 5-year CD APY increased by 1.4% from 1.460% in April to 1.480% in May. The average rate among the top 10% of the most competitive nationwide banks increased less than 1% from 2.030% to 2.040%. Utah has the best average rate in the nation at 2.044% while Georgia has the worst at 1.125%. The average rate among Internet banks was 1.679%.
The average reward checking account APY increased by 1.1% from 1.797% in April to 1.817% in May. The average rate among the top 10% of the most competitive nationwide banks increased by 1.1% from 2.850% to 2.880%. The average balance cap for reward checking accounts has decreased from $17,736 to $17,339. The balance cap is the maximum balance that qualifies for the reward checking account's top rate. Wyoming has the best average rate in the nation at 1.820% while North Carolina has the worst at 0.496%.
April Bank Failures
One bank and zero credit unions were closed in April 2017. As a comparison, one bank and six credit unions were closed in April 2016. The one bank that failed was First NBC Bank in Louisiana with $4.74 billion in assets (view health ratings for any bank or credit union and list of troubled banks by Texas ratios).