Bank Deals Blog: Internet Banks

In the last two weeks, there have been fewer notable CD rate cuts at banks and credit unions compared to previous months. When October begins next week, we’ll see if this trend continues. It has now been over six months since the Fed took the federal funds rate to near zero (the start of the zero-bound period). At some point, we should reach a bottom for CD rates.

The latest two major online banks to take all of their CD rates below 1.00% are Capital One and Synchrony. Capital One was...

Major online banks continue to cut their savings account rates further below 1.00%. The latest of these include Discover Bank Online Savings (0.80% → 0.70%), Marcus by Goldman Sachs Online Savings (0.80% → 0.60%), and Live Oak Bank Online Savings (0.85% → 0.70%). All of these new rates are all-time lows for these accounts.

The number of online savings and money market accounts with rates of at least 1% has been falling. In the last two weeks 3 accounts had rate cuts that took them below 1%.

On a slightly positive note,...

A surge of CD rate cuts occurred again with the start of a new month.

The latest major online bank to slash its CD rates to new all-time lows is American Express. Its 5-year CD rate was slashed from 0.85% to 0.55%. The pre-2020 all-time low was 0.60% in 2013 and early 2014. One interesting thing to note regarding American Express’s CD rate history was that its CD rate increased in 2014 and 2015 even as the Fed held the federal funds rate to near zero. In late January 2014, the...

As we’ve started to experience record low interest rates, bank bonuses are becoming more attractive as an alternative to earning interest. This new checking account bonus from Capital One is much smaller than the savings account bonus Capital One offered earlier this year, but it's an easy bonus in which you can earn $100 without a large funding amount or direct deposit.

Now through October 20, 2020, Capital One is offering a bonus of...

Online banks are still slashing their CD rates. A few of the major players have been cutting rates to new all-time lows.

The latest major online bank to slash its CD rates to new all-time lows is Barclays. The rates of its CDs with terms of 12 to 60 months fell from 0.65% to 0.40%. The pre-2020 all-time lows were 0.80% on the 12-month (2013-16) and 1.65% on the 60-month (2013). It’s hard to believe that the new 60-month CD rate is less than one-fourth the rate of the pre-2020 all-time...

As online savings account rates fall below 1%, high-yield reward checking is becoming a more attractive alternative to online savings accounts. One problem with reward checking is that they typically have small balance caps. The balance cap is the maximum balance that can qualify for the high yield.

One reward checking account that has a balance cap that’s much higher than the average cap is the Rewards Checking Account from Axos Bank. The downside to this account...

The major online banks continue to cut their savings account rates to below 1.00%. The latest ones include American Express National Bank, Discover Bank, and Ally Bank. All three lowered their savings account rate to 0.80%. This is an all-time low for Ally. The previous all-time low was 0.84% back in 2012 and 2013. For Discover, it matches the all-time low that was last seen in 2012 and 2013. It’s not yet an all-time low for American Express. That occurred in 2012 when the American Express savings account rate bottomed...

You may be disappointed by the recent rate cuts at Ally Bank and Discover Bank. Both lowered their online savings account rates to 0.80%. For Ally, the 0.80% APY is an all-time low. The previous all-time low was in 2013 when the savings account rate reached a bottom of 0.84%. For Discover, the new 0.80% rate ties the all-time low that occurred in 2012 and 2013.

A few of the new and smaller online banks have been cutting their rates much more aggressively. WebBank is the latest example. It...

We have seen slightly fewer CD rate cuts for the start of August as compared to the start of June and July. That small positive note is mostly eclipsed by the growing number of online banks that have cut their CD rates below 1%.

One of those banks to cut their CD rates below 1% is Ally Bank. All of its CDs except the 5-year now have rates under 1%. Its 5-year CD yield has fallen to a new all-time low of 1.00%. Before this year, Ally’s lowest 5-year CD yield...

A new month has brought a new round of rate cuts. Unfortunately, we’ve had some large rate cuts at the well-established online banks. Online savings account rates have been slashed by 20 to 30 bps at Capital One, Barclays, Synchrony and Marcus by Goldman Sachs. Synchrony’s new rate is 0.75%, and the new rate of the other three is 0.80%. These rates are all-time lows at Barclays, Synchrony and Marcus by Goldman Sachs.

New online banks will often have rates higher than the well-established banks for at least the first year...