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Average Local Savings and CD Rates Reveal Why You Should Bank Online

Written by Lauren Perez

When looking around for the best deposit rates, you’ve probably noticed that online banks tend to dominate lists with their competitive interest rates. This is especially true when comparing online bank rates with traditional brick-and-mortar banks.

To get a better sense of this competition, DepositAccounts took a deep dive into local bank rates and found that in many states, the rate is no better than the average rate you could find with an online savings account or 1-year CD. The analysis, which was conducted Jan. 1, compared the average rate of online bank savings and CD accounts to the average rate of savings and CDs at more than 6,000 credit unions and banks in all 50 states.

Key findings

Local banks can’t beat online saving rates

  • The average brick-and-mortar savings account APY of every single state didn’t even come close to beating the average online savings account APY of 1.47%.
  • Oklahoma is the state with the highest average savings account rate at 0.39% APY, while Arkansas offered the lowest average rate of 0.13%.

This data is as of January 1, 2019

Local banks may offer better deals on CDs

  • The average rates on 1-year CDs from brick-and-mortar banks in each state fared better, although no state could actually beat the average online 1-year CD average of 2.09% APY.
  • Utah came the closest, with an average rate of 2.00%. West Virginia had the lowest average at 0.74% APY.

This data is as of January 1, 2019

Local vs. online bank rates

It can be hard to leave behind the traditional banking experience. But if you’re really looking to boost your savings, the data from DepositAccounts overwhelmingly supports the switch to an online bank. At 1.47% APY, the average online bank savings account rate beats the highest rates at local banks in all 50 states and D.C. No state had an average rate that even came close to 1%.

DepositAccounts founder Ken Tumin also advocates the switch to online banks. “They tend to have a big rate advantage over brick-and-mortar savings accounts. Opening a savings account at an online bank is often the easiest and best way to take advantage of higher rates,” he said.

The study’s data shows that you may have better luck on local CD rates than with savings accounts, however. While no states could beat the average online bank rate on a 1-year CD (2.09% APY), the discrepancy wasn’t quite as remarkable as with savings account rates. The highest average rate of 2.00% in Utah comes closest. Thirty-four other states posted average rates of 1% or higher.

Why do local CDs have such better rates?

Local banks and credit unions often offer high-yield CD rate specials to stay competitive, which is why they fared better in this analysis. Just be aware that when these CD specials mature, banks often renew the account as a standard CD, typically with a significantly lower rate. Because of this, it's important to plan moving your money once the CD special matures, Tumin said.

If you do want to continue to bank locally, opening accounts with a credit union is a viable option. You’re more likely to find a credit union in your state that beats the online 1-year CD average of 2.09%. Check out the highest 1-year CD rates offered by local credit unions in each state below.

This data is as of January 1, 2019

It’s important to remember that credit unions require membership to open an account. You can qualify for membership based on a number of factors, like your place of residence or through your employer. So while your state’s best local credit union might offer some of the best interest rates, you may not be eligible for membership depending on that credit union’s requirements.

Why online banks often offer better rates

Switching to an online bank for its high rates can come with an obvious trade-off: the lack of physical branches. You can’t pop over to the nearest branch to make a deposit or speak to an associate in person. However, it’s this exact feature that enables online banks to offer such good deals. Online banks don’t have to keep up with the costs of maintaining brick-and-mortar locations, like rent, teller salaries and more. Without those expenses, online banks save more money that they can then pass on to its customers.

Look for online banks that offer to reimburse ATM fees as well, which can ease the sting of banking with an institution that doesn’t have a vast network of proprietary ATMs.


DepositAccounts reviewed locally available rates for personal savings accounts and 1-year certificates of deposit, and compared those rates to the average online rates for those products. In the case of savings accounts, we presume the rate available for a $5,000 deposit. For 1-year CDs, we presume the rate available for a CD purchase of $5,000.

Savings account and CD-rates with caps below $5,000 were ignored. Special accounts, such as IRAs, youth accounts, health savings accounts, new money offers, etc., were also ignored. The data was accessed Jan. 1, 2019.

Related Pages: banking tools and data
Previous Comments
  |     |   Comment #1
I don't want to be critical but you just wrote several thousand words to say that online banks generally have better rates than banks with physical branches. Really?
  |     |   Comment #3
And the highest 1 year yield for a CD in my state is not correct either. A total waste of time.
deplorable 1
  |     |   Comment #9
The best nugget on here is when you do find a good local CD deal get ready to take your money back at maturity before they lock you into a really bad renewal rate. All banks and credit unions should allow CD maturity instructions at inception. This policy of automatic auto renewal is one of the worst things about CDs and it needs to stop.
  |     |   Comment #12
I agree `100 % But that's what there (excuse the pun) Banking on that you'll forget the expiration date .. Check them 2 or 3 times a month and if ya have to do what I do ... Make a big huge sign and post inside my front door when it is close so I can see it and be a BIG REMINDER to get my Cash or Loose it to a small ungodly rate and be locked in for another long term..
  |     |   Comment #13
deplorable 1, I best that rates offered with we lower if CDs didn't auto-renew. I.e., there is an assumption that a certain percentage of funds will be auto-renewed because not every depositor watches the rates as diligently as we do. So possibly we have a rate advantage that we would eliminate without auto-renewal policies.
deplorable 1
  |     |   Comment #16
Good point I never really thought of it that way before. Kind of like credit cards with 2%-5% cashback rewards are funded by those who carry a balance and pay interest and fees. Every cloud has a silver lining.
  |     |   Comment #2
I dunno, I read a few things here I hadn't known before. I mean, who would have guessed that Utah was the hot-spot nationally for 1-year CD average rates? I wonder why...
Border Language Culture
  |     |   Comment #4
I just did a Google search for "Earn interest on money", The search came back with 340,000,000 results. If you're not happy with the content of Depositaccounts.com, check out the 340,000,000 other results and get back to me with your findings. In the meantime quit whining like the bellyachers you appear to be.
  |     |   Comment #5
340,000,000 sounds like the number of different monikers you've used here.
  |     |   Comment #6
You're REALLY hung up on that Huh?
I,d hate to play a game of _informal_Chess with you
I'm a slow player
deplorable 1
  |     |   Comment #8
Always a Few
  |     |   Comment #7
My thoughts too, #4. Plus they are free to start their own web-site and run it to suit themselves if they are so unhappy here.
  |     |   Comment #11
Thank you Lauren Perez. Very nice article. Keep up the good work. Looking forward to more from you. 
  |     |   Comment #14
I guess I'm in the minority because I love the chase of the next rate increase!
  |     |   Comment #17
It's not just rates. While hardly a shill for the financial services industry, there is something to be said for brick-and-mortar banks.

(1) Ancillary services. Ever try to get a medallion guarantee, or a notarial seal, online. Try to transfer stocks without same.

(2) Vision or hearing impaired. It's hard to contemplate, but as folks get older, both hearing and vision may decline. Mental acuity may as well. Personal bankers in brick-and-mortar may be invaluable.

(3) Community lending. I know it's old-fashioned, but when I was growing up, my parents liked to bank locally, as the bank was a prominent source of loans for local businesses and homebuyers. That's archaic today, I guess, but I still like to bank locally, when possible.

(4) Stuff hits the fan. And you know it eventually will. When your account gets ****ed up, as it well might, what to do? With a local bank or credit union, it's simple. You get in the car (or call Uber), motor on down, and talk to the branch manager. By contrast, my account page at StateFarmBank has been ****ed up for years (I can't get access to my IRA CD details), and must rely on snail mail. StateFarmBank eliminated the role of StateFarmBank agents in the process some months back.

(5) Cookies and Milk. Plainly stated, sometimes we do not really understand all our options. Come in to deposit a check, have a warm cookie and a glass of milk, and let's discuss your financial options. This can be worthless cross-marketing, or savvy advice. Just last week, my banker at First Republic (brick-and-mortar in Walnut Creek, CA) helped me avoid a float on a deposit by plopping the check directly into a CD.

I could go on.
  |     |   Comment #18
If people like yourself need all those services from your local brick and mortar bank, stick with it.

Myself, I will not give into our local banks with their pitiful low interest that they all pay on their savings and CD accounts. Although I do keep accounts with one local bank and one CU as hubs.
  |     |   Comment #19
dollarsncents (re comment #18): I might dispute that local institutions offer "pitiful" rates. Sure, some do. But hereabouts, Patelco CU (with a local presence and a branch five minutes' drive away) and First Republic Bank (maybe ten minutes' drive) have competitive rates. Not stellar, but certainly not pitiful. My wife and I just opened an 11-month after-tax CD at First Republic Bank for 2.35% APY.
  |     |   Comment #20
And I am not disputing anything. I'm telling it like it is around my area. All the local Financial institutions do offer only PITIFUL interest rates on savings and CD accounts.

There is no Patelco Cu or First Republic Banks in my state, let alone my local area.
  |     |   Comment #21
If State Farm Bank is giving you so much trouble for so many years, why don't you move your money elsewhere? When your IRA CD comes up for renewal, transfer it out. I'm sure there are plenty of other places which will pay comparable interest rates on your money.
  |     |   Comment #22
Cracker (re comment #21), my frustrations with the StateFarmBank website are minor. I still get periodic paper statements, so it's not as if I'm unsure of my accounts. FWIW, I've been in touch with the SFB IT folks, and they're trying to figure out the problem. In addition, SFB offers partial withdrawals of IRA CDs without penalty, so I'm reluctant to move the money.

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