DepositAccounts.com November 2017 Rate Trends

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DepositAccounts.com November 2017 Rate Trends

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 November press release is below.

December Rate Hike - What Does It Mean for Savers?

A December Fed rate hike appears to be almost a sure thing. If the Fed does decide to raise the federal funds rate at its December meeting, that would be the fifth rate hike since the Fed started normalizing rates in December 2015 and the third rate hike this year. Based on the Fed’s forecast, 2018 may be a repeat of 2017 for Fed rate hikes.

How has this impacted deposit rates? And what can we expect for next year?

  • Average savings account yields have only inched up in 2017, rising from 0.180% in January to 0.193% to November, an increase of 7%. However, rates have risen much more sharply at internet banks. The average internet savings account yield increased from 0.723% in January to 0.933% in November, an increase of 29%.
  • Larger increases have been seen on CD rates, especially short-term CD rates. The average 1-year CD yield increased from 0.496% in January to 0.625% in November, an increase of 26%. The average 5-year CD yield increased from 1.411% in January to 1.555% in November, an increase of 10%.
  • The largest rate increases in 2017 have been seen on internet savings accounts and 1-year CDs. With gradual Fed rate hikes expected to continue into 2018, these trends are likely to continue. If savers want to see the benefit of the Fed rate hikes, they would be wise to move their money from brick-and-mortar savings accounts to internet savings accounts. If savers prefer to stay with brick-and-mortar banks, they will likely see the most rate increases on shorter term CDs.

DepositAccounts.com Monthly Rate Survey and Commentary

Average yields on all five categories of consumer savings products increased from October to November. 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 2.2% from 0.611% in October to 0.625% in November.

The average APYs are based on a nationwide survey of more than 275,000 rates at 7,500 banks and credit unions.

Savings

The average savings account APY increased less than 1% from 0.191% in October to 0.193% in November. The average rate among the top 10% of the most competitive nationwide banks held steady at 0.390% in November. Delaware has the best average rate in the nation at 0.291% while Arizona has the worst at 0.082%. The average rate among Internet banks was 0.933%.

Checking

The average checking account APY increased less than 1% from 0.137% in October to 0.138% in November. The average rate among the top 10% of the most competitive nationwide banks held steady at 0.270% in November. Vermont has the best average rate in the nation at 0.247% while Alaska has the worst at 0.046%. The average rate among Internet banks was 0.404%.

1-year CD

The average 1-year CD APY increased by 2.2% from 0.611% in October to 0.625% in November. The average rate among the top 10% of the most competitive nationwide banks increased by 2.7% from 1.130% to 1.160%. Utah has the best average rate in the nation at 0.920% while Oregon has the worst at 0.346%. The average rate among Internet banks was 1.229%.

5-year CD

The average 5-year CD APY increased less than 1% from 1.543% in October to 1.555% in November. The average rate among the top 10% of the most competitive nationwide banks increased less than 1% from 2.110% to 2.130%. Utah has the best average rate in the nation at 2.139% while South Carolina has the worst at 1.224%. The average rate among Internet banks was 1.856%.

Reward Checking

The average reward checking account APY increased less than 1% from 1.853% in October to 1.862% in November. The average rate among the top 10% of the most competitive nationwide banks increased less than 1% from 2.930% to 2.950%. The average balance cap for reward checking accounts has increased from $17,039 to $17,121. 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 Hawaii has the worst at 0.493%.

October Bank Failures

One bank and two credit unions were closed in October 2017. As a comparison, no banks or credit unions were closed in October 2016. The bank that failed was The Farmers and Merchants State Bank of Argonia in Kansas with $34.2 million in assets (rated F at DepositAccounts.com, indicating “high risk”; view health ratings for any bank or credit union and list of troubled banks by Texas ratios).


Comments
John Birch
John Birch   |     |   Comment #1
Well, at least it's better than last year.

There's 2 year CD's out there at 2.0%.

That matches the latest 12 month trailing inflation rate.

Good enough for me.
Dee
Dee   |     |   Comment #2
Thank You I have used your site for a decade or more. It is a great and useful website site. I hope the interest rates go up.
gregk
gregk   |     |   Comment #3
The Federal Funds rate has gone up almost a full percentage point in 2017 or almost doubling what it was at YE 2016 (quintupling from before Dec. 2015) if I'm not mistaken. Where are the even close to comparable hikes in deposit rates? Talking about 10% or even 20% increases from a minuscule base may sound significant but in fact is barely material in my evaluation. I don't believe deposit rate prospects look at all promising even with three further hikes from the Fed in 2017. Yes there's been a few tenths of a percent increase in some savings accounts and various length CD's from some FI's, and higher is always better than lower. But is this really cause for much optimism? I think not, but rather the reverse. Relative to positive changes in the larger economic environment (if they continue) deposit rate stinginess is likely to persist across the whole spectrum of product offers. FI's have largely discovered throughout the entire recovery they can get away with that and still thrive. What's the incentive to change beyond a handful or two of additional crumbs?
Bozo
Bozo   |     |   Comment #4
Gregk, as my local banker explained to me, her bank's CD rates had basically zero to do with the FED. It was all about supply and demand. Her bank was awash in cash.
gregk
gregk   |     |   Comment #7
Where did all the cash come from?
Bogie
Bogie   |     |   Comment #8
Depositors like ourselves and many retirees looking for a safe, insured, place to make a few bucks on our savings.
Rickny
Rickny   |     |   Comment #9
Many people put their money in the big banks and accept the low rates. My mother keeps her money at Chase and will not put money in a CU or internet bank account to earn more Intrest.
deplorable 1
deplorable 1   |     |   Comment #14
@Rickney: No offense I know many people just like this but these are the folks that are killing us. Why should banks raise interest rates if there are not enough people voting with their feet forcing them to do so. People are really afraid to move their money though. I remember back when all banks were paying 5% and would tell people where they could earn 7% on liquid cash. They would say things like "but that is out of state!" Who cares what state it is in when you have a checkbook, ACH or ATM? One thing I have learned over the years is that when it comes to money people can be very illogical, irrational, fearful and down right strange. Folks that are like this won't ever change either. I knew a old guy when I was a kid that had his money buried in jars around his yard like a dog would bury a bone. I was maybe 7 years old and I asked him why he didn't put his money in the bank. He said he didn't trust banks. Yet for some reason he trusted that a 7 year old kid wouldn't come over and dig up those jars! lol
Bozo
Bozo   |     |   Comment #19
Bogie (re comment # 8), don't forget a safe and insured place to sock away gains from this year's market melt-up.
Bozo
Bozo   |     |   Comment #17
Gregk (re comment # 7) see Bogie's reply in comment #8. As early Boomers hit retirement, the "common wisdom" was that SWRs and RMDs would deplete all asset classes. Hint: it didn't happen. Poster "Conservative" might be a good example. Reading between the lines of his comment #5, he is not only banking his CD ladder interest, he's adding $40K/year new money to his ladder.
Bozo
Bozo   |     |   Comment #18
Further to comment #17, while I have merely my own anecdotal experience to back me up, I wonder if early boomers have been cashing in on the latest market rally (I know I have) and socking the gains away in fixed-income (I know I have). Early boomers have been burned twice, and maybe even three times (if you count 1987), and might be a tad more conservative with unrealized gains. An unrealized gain is but pixels on a screen. The trick is to push "sell".
deplorable 1
deplorable 1   |     |   Comment #10
The problem is that banks are allowed to keep rates this low because there are very few people that have any savings. There is no real pushback against these low rates as we are a minority. Us savers don't have any lobbyists in congress looking out for us. Banks will keep rates low as long as possible(on saving only) in order to make higher profits. Eventually though with enough interest rate hikes and the sheeple waking up from their slumber and moving money into higher yielding accounts the banks will finally be forced into raising rates. This process has been slower than usual because of the 0% interest rates for 8 years straight. This is why I was so angry during the Obama years for letting this nonsense continue for so long. The pain we are all feeling is a direct result of 8 years of Obama. Wait until tax reform passes as this will boost the economy, GDP and interest rates along with it both short and long term. The Socialist Democrats are holding us back because if the economy booms after tax cuts then it would call into question their whole philosophy of failed Keynesian economics.
#11 - This comment has been removed for violating our comment policy.
Att
Att   |     |   Comment #12
I agree with some of what you said you said. Banks don't control all interest rates. As an individual investor you can buy bonds both taxable and tax free from the government or private companies. Plenty of companies taking on debt because rates are low. I believe too many people are buying junk bonds and other debt that may be risky. For me I keep tabs on the muni market and once in awhile you can get a decent bond. For me they work great and I get muni bonds that are not subject to AMT. The bonds also help me keep out of paying AMT which I had to do one time.

I have a mortgage and got the benefits of low rates. My mortgage interest rate after refinancing has gone form 6.5% down to 3.25%. My prior residence had a 8.5% rate which was low for the 90's.
deplorable 1
deplorable 1   |     |   Comment #13
@Att: Yeah I know getting low mortgage rates seems like you are making out but at the expense of earnings on savings. Maybe I'm the odd man out but I always had more savings then what I owed on a mortgage. In fact the only reason I took out a mortgage in the first place was because with the mortgage tax deduction I was actually able to beat the mortgage rate in savings. At one point I was paying 5% on my mortgage(after refinancing) and earning 7% in a 5 year CD then taking the mortgage interest deduction. When I stopped being able to earn 5% in the bank I just paid it off as it made no sense to keep it any longer. Now if you have a million dollar house @3% and little to no savings you probably think this is great. All depends on your situation I guess.
Rickny
Rickny   |     |   Comment #15
I'm getting more than that rate on my muni bonds tax free and have some 3% and even a 5% CD. I also on a yearly basis making more on my stock and other investments. I do have some CDs paying in the mid 2% range that are below my mortgage payment.. The tax deduction helps keep me from the dreaded AMT. I live in N.Y. so my property taxes and insurance are almost equal to my mortgage payment (or will soon be). I could pay off my house mortgag then would have to cash out many of my investments which I don't want to do. Don't want all that much equity in my house which is not s liquid asset.. Only have 13 years on my mortgage. I'm also saving for 2 kids collage education and have some large sums in their 529s. Want to keep funding those. Earnings are tax free on 529s. In N.Y. you can deduct up to 10K per year in funds put towards 529s. Also , the dollars I'm paying for the mortgage are subject to inflation So my decision for my circumstances is to keep the mortgage. My mortgage is also the only debt I have.
Conservative
Conservative   |     |   Comment #5
FWIW, after evaluating several investment options we recently went with a $50,000, 10yr, 2.65% CD. This is a no-worry option that allows us to enjoy more of our retirement free of market fluctuations, computer screens and endless debate. Our CD ladder is currently over $1M producing 2.95% annually. We are fortunate in that we do not need the cash (principal or interest) and we are able to add at least another 40K/year from excess income.
Bozo
Bozo   |     |   Comment #16
Conservative (re comment # 5), my last "tasty" CD (a 10-year IRA CD at KeyDirect, 5.65%) matures January 10, 2018. Sure was nice while it lasted. The effective yield on your ladder is admirable, might I say.
VILNIUS
VILNIUS   |     |   Comment #6
the gov't inflation data is useful to other govt agencies in rationalizing cola benefit programs and govt employee increases and any firm that needs snow some consumer chump out of their due....AS A CONSUMER,,,THE INFLATION DATA HAS BEEN A FARCE SINCE the fed's ARTHUR BURNS IN THE EARLY 70'S BEGAN TO STRIP OUT FACTORS THAT WOULD MAKE THE WHITE HOUSE LOOK BAD,,,,,,,ad infinitum to present.
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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.

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Please note that I will continue to post my weekly rate surveys without any changes.

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Please note that I will continue to post my weekly rate surveys without any changes.

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