Best Savings Rates

The majority of Americans haven’t saved enough money for retirement and probably never will be able to save enough. Though some generations are better than others, according to The Pew Charitable Trusts. The Washington D.C. based organization released a report showed some generations are doing a better job than others when it comes to socking away for retirement.

The Retirement Security Across Generations report shows those born between born between 1946 and 1955 (early baby boomers) are nearing retirement in the best financial shape compared to prior generations. These early boomers are also doing a better job than those born after 1955 (late boomers) and Generation X, born between 1966 and 1975.

I can understand why the early boomer generation is faring better than previous generations. Prior generations’ ideal scenario was working at one company and relying on their pensions for retirement. Of course, that is no longer a viable option for most people.

I can also understand why early boomers are faring better than late boomers and Gen Xers. They were in a position to enjoy one of the largest bull market runs in the 1990s. They also bought homes long ago, enabling them to take advantage of the housing bubble in the 2000s. In contrast, younger generations most likely bought homes during the housing bubble and watched their 401ks tank when the financial crisis hit.

Interestingly, late boomers are not doing as well as Gen-Xers. Late boomers have lower net worth than Generation X even though both are in the 30s and 40s now. Both late boomers and Generation Xers are way behind in net worth when compared to early boomers. As of 2010, early boomers’ asset levels were 27 times higher than their debts. Late boomers’ assets were about four times higher than their debts, and Gen-Xers’ assets were about double their debts.

Everyone’s net worth declined during the recession but those who took the hardest hit was Generation X. Early boomers lost 29 percent of their median net worth. Late boomers lost 25 percent of their median net worth. Gen-Xers really took it on the chin, losing 45 percent of their median net worth, setting them even farther behind.

The only way the younger generations can make up the lost time is to save and invest as much as they possibly can. The younger generations can align their portfolios in riskier assets to try to earn higher returns. They also have the time to recover from any drastic stock market declines. There isn’t really any alternative when savings rates and bond yields are so low.

You can read an overview of Pew report here: Retirement Security Across Generations

Average savings rates, money market rates on short term bond yields moved little this past week. The same can’t be said for intermediate and long term bond yields as recent economic indicators point to a strengthening economy. Since the start of the month 3, 5, 7, 10, 20 and 30 year bond yields have been on a tear, up between 5 basis points to 18 basis points in just 5 days.

The current national average savings/money market rate on account balances of at least $10k are at 0.50 percent, up from last week’s average rate of 0.49 percent. The average rate on account balances of at least $25k averaged 0.66 percent, unchanged from last week. The average rate on account balances of at least $50k also remained unchanged at 0.68 percent.

The increases and declines in bond yields are market driven while bank savings rates and money market rates are tied to the federal funds rate. When the Fed increases the rate, banks follow suit with higher interest rates on deposit accounts and when the Fed decreases the rate banks follow (usually quicker on the downside) with lower deposit rates.

The current fed funds rate has remained at 0-0.25 percent since December 16, 2008, when the rate was lowered to that level. Since that time savings account rates, money market rates and all interest bearing accounts have declined to current low levels. While average rates remain between 0.50 percent to 0.68 percent this week, you can still find banks offering rates much higher than the averages.

The best money market rates in our rate database are current from EverBank at 1.01 percent APY. The best savings account rates this week are from CIT Bank at 1.00 percent with an APY of 1.00 percent for account balances of $25k or more. Below is a list of banks that are offering the best rates on both types of accounts.

Best Savings Rates May 7, 2013

1. CIT Bank Savings Rate 1.00% APY 1.00%
2. American Express Bank Savings Rate 0.85% APY 0.85%
3. FNBO Direct Savings Rate 0.85% APY 0.85%
4. Colorado FSB 0.85% APY 0.85%
5. Ally Bank Savings Rates 0.84%
6. Discover Bank Savings Rates 0.80% APY 0.80%
7. Heartland Bank Direct Savings Rate 0.70% APY 0.70%
8. Bank of Internet USA Savings Rate 0.61% APY 0.61%
9. First Internet Bank of Indiana Savings Rate 0.60% APY 0.60%
10. AloStar Bank of Commerce Savings Rate 0.50% APY 0.50%

Best Money Market Rates May 7, 2013

1. Ever Bank Money Market Rate 1.01% APY (First Year)
2. ableBanking, a division of Northeast Bank, Money Market Rate 0.85% APY 0.85%
3. Mutual of Omaha Bank Money Market Account Rates 0.85% APY 0.85%
4. GE Capital Retail Bank Money Market Rates 0.85% APY 0.85%
5. Seacoast Commerce Bank Money Market Account Rates 0.85% APY 0.85%
6. Ally Bank Money Market Account Rates 0.84% APY 0.84%
7. Bank of Internet USA Money Market Rates 0.75% APY 0.75%
8. Discover Bank Money Market Rates 0.70% APY 0.70%
9. Virtual Bank Money Market Rate 0.65% APY 0.65%
10. Giantbank.com Money Market Rate 0.60% APY 0.60%

Below is a list of the highest savings rates and money market account rates on 4-24-2013.

Savings Rates

1. CIT Bank Savings Rates 1.00%
2. FNBO Direct Savings Account Rates 0.85%
3. Colorado Federal Savings Bank 0.85%
4. Ally Bank Savings Rates 0.84%
5. Discover Bank Savings Rates 0.80%
6. Capital One 360 Savings Interest Rates 0.75%
7. Heartland Bank Direct Rates 0.70%
8. Bank of Internet Savings Account Rate 0.61%
9. First Internet Bank of Indiana Savings Rate 0.60%
10. AloStar Bank of Commerce Savings Rates 0.50%

Money Market Rates

1. Ever Bank Money Market APY 1.01%
2. ableBanking, a division of Northeast Bank Rates 0.85%
3. Mutual of Omaha Bank Money Market Account Rates 0.85%
4. Seacoast Commerce Bank Money Market Rate 0.85%
5. Ally Bank Money Market Account Rates 0.84%
6. First Internet Bank of Indiana MMA Rates 0.80%
7. Bank of Internet Money Market Account Rate 0.75%
8. Discover Bank Money Market Rate 0.70%
9. Virtual Bank Money Market 0.61%
10. giantbank.com Money Market Rate 0.60%

All the banks listed above and listed on our rate tables have savings accounts and money market accounts insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000 per account. Bank interest rates change constantly, check our rate tables for a list of today’s rates.

The best savings rates and money market rates for April 17, 2013 remain around 1.00 percent as average rates continue to decline. Rates have been low for years now, due to the Federal Reserve Open Market Committee (FOMC). The FOMC’s policy for over five years now has been to keep the federal funds rate just above zero percent.

The highest savings account rates in our deposit database right now are from CIT Bank at 1.00 percent. The highest money market account rates in our database are slightly higher at 1.01 percent APY. The bank offering the best money market rate in our database is Ever Bank. The bank is actually offering a 6 month promo money market rate of 1.25 percent, with an ongoing rate of 0.76%. This gives the account an overall first year APY of 1.01 percent.

The national average savings rate/money market rate for April 17, is considerably lower than the best rates on our list. The current national average rate on account balances of $10,000 or more is at 0.49 percent, less than half the best rates in our database. The FDIC’s national average savings rate is even lower at 0.07 percent. The FDIC national average money market rate is also much lower at 0.10 percent.

The FOMC plans on keeping their key interest rate benchmark near zero percent for at last least a couple of more years. In fact, the Fed has stated the rate will remain that low until the unemployment rate falls below 6.5 percent. The March unemployment rate was reported at 7.7 percent.  A 1.2 percent difference in the unemployment rate may not sound like much but the Fed believes it will take until the end of 2015 for the rate to fall below 6.5 percent. The future direction of deposit rates at this point looks to be more of the same low rates until the beginning of 2016.

Below is a list of the best money market rates and savings rates for April 17, 2013:

1. EverBank Money Market Rate 1.01% APY
2. CIT Bank Savings Rate 1.00% APY 1.00%
3. Mutual Bank of Omaha Money Market Rate 0.85% APY 0.85%
4. FNBO Direct Savings Rate 0.85% APY 0.85%
5. GE Capital Retail Bank Money Market Rate 0.85% APY 0.85%
6. Seacoast Commerce Bank Money Market Account Rate 0.85% APY 0.85%
7. ableBanking Money Market Rate 0.85% APY 0.85%
8. Ally Bank Savings Account Rate 0.84% APY 0.84%
9. Ally Bank Money Market Rate 0.84% APY 0.84%
10. Discover Bank Savings Rate 0.80% APY 0.80%

Every month the U.S. Department of Commerce Bureau of Economic Analysis releases the rate in which Americans are saving money. The savings rate, not to be confused with savings account rates, is calculated by taking personal income minus personal spending. In the most recent report, Americans saved more despite the fact that savings account rates continue to decline.

The U.S. Department of Commerce Bureau of Economic Analysis’ Personal Income and Outlays for February showed the rate in which Americans save increased to 2.6 percent. February’s savings rate increased 2 basis points from January’s average rate of 2.4 percent.

The increase in the savings rate had nothing to do with actual savings account rates increasing in February. In fact, for the month of February the average savings account rate declined to 0.53 percent and has fallen even further today. The current national average savings rate for account balances at a minimum of $10,000 is 0.49 percent.

Think the 0.49 percent savings rate is low? The FDIC national average bank savings rate was reported to be at 0.07 percent for the week ending April 1, 2013. Jumbo savings rates are not doing any better in the FDIC survey as the average jumbo savings rate is also at 0.07 percent. These rates are average rates but you can find banks offering savings rates well above the averages.

The best savings rates in our rate database this week are at 1.00 percent with an APY of 1.00 percent. We have two banks that are currently offering that rate and yield, CIT Bank and Barclays Bank. The best money market rate in our rate database is at 0.85 percent but we also have a bank offering a promotional 6 month money market rate at 1.25 percent APY.

The two banks offering a money market account rate at 0.85 percent is GE Capital Retail Bank and ableBanking. The bank offering the 6 month promo money market is EverBank. The ongoing money market rate after the 6 month period is 0.76 percent. This makes the first year APY 1.01 percent on EverBank’s money market account.

Search for savings rates and money market rates to help you find the best rates available:

The United States economic outlook is looking brighter and brighter, thanks to a stronger housing market, higher retail sales, and a lower unemployment rate. Forecasts for GDP growth in 2012 are moving up to the 3 percent range, which is quite an improvement from earlier forecasts. Unfortunately, all the rosy news won’t translate into higher savings rates any time this year. Right now, the best savings rates remain just above 1.00 percent this week.

The FDIC national average savings rates are many times lower than the best rates available. The current FDIC national average savings rate is a paltry 0.08 percent. Jumbo savings rates are not faring any better, also averaging 0.07 percent. There is one reason why savings account rates and all interest bearing deposit rates are low – the Federal Reserve.

The Federal Reserve has kept their key interest rate, the Fed funds rate, just above zero percent for about five year now. The Fed plans to keep this rate near zero percent until the unemployment rate falls below 6.5 percent or inflation is higher than the Fed’s long-term objective of 2 percent. The Fed believes the unemployment rate will fall below 6.5 percent some time in late 2015 and that the outlook for inflation will be lower than the 2 percent target rate for the next few years.

If the Fed is correct, that means savings rates, money market rates, and CD rates will also remain low until the end of 2015. This is unfortunate news for people who rely on interest income to live on. The thought of dealing with 2 plus more years of low interest rates isn’t great news, especially since we have already been suffering through low rates for about 5 years now.

To help you with your search for finding the highest savings account rates and money market account rates we have compiled a current list of rates below:

Highest Money Market Rates

1. EverBank 1.01% APY
2. Union Federal Savings Bank 0.95%
3. ableBanking 0.85%
4. GE Capital Retail Bank 0.85%
5. Seacoast Commerce Bank 0.85%
6. Ally Bank 0.84%
7. Discover Bank 0.70%
8. Virtual Bank 0.70%
9. GiantBank.com 0.65%
10. AloStar Bank of Commerce 0.60%

Highest Savings Rates

1. Barclays Bank 1.00%
2. CIT Bank 1.00%
3. American Express Bank 0.85%
4. Mutual of Omaha Bank 0.85%
5. FNBO Direct 0.85%
6. Colorado FSB 0.85%
7. Ally Bank 0.84%
8. Discover Bank of 0.80%
9. Heartland Bank Direct 0.70%
10. AloStar Bank of Commerce 0.50%

Long term U.S. Treasury yields have moved higher the past several months as savings rates remain stable. Will savings account rates move higher in the future? The answer to that question is yes but not during 2013. The main reason savings rates will remain where they are for the rest of 2013 is the unemployment rate.

You may be wondering what the unemployment rate has to do with where savings rates are but there is a direct cause – the Federal Reserve. The Fed has a dual mandate of low unemployment and moderate long term inflation. They are able to achieve their mandate by increasing or lowering interest rates.

When unemployment is very low and inflation is a concern, the Fed increases the fed funds rate to slow demand for goods and services, which in turn slows growth and the potential inflation threat. When the unemployment rate is high (currently it’s 7.7 percent) and inflation isn’t a concern, the Fed lowers the fed funds rate to simulate growth.

The Fed’s increasing and lowering of rates happens in cycles known as tightening and easing. Tightening occurs when growth is strong and easing happens when growth is weak. The Fed’s current policy is easing and has been for several years because we’ve suffered the worst recession since the Great Depression of the 1930′s.

Along with other polices designed to drive long term interest rates lower, the Fed has been easing by keeping the fed funds rate near zero percent. The Fed’s actions have driven savings rates and rates on interest-bearing assets down to record lows. Right now, the best savings rates available are just over 1.00 percent – a far cry from a few years ago when most banks were offering savings rates three times to five times that amount.

The Fed plans on keeping interest rates low until the unemployment rate falls below 6.5 percent, which they believe will happen at the end of 2015. We believe the unemployment rate will fall below 6.5 percent before then, which will cause the Fed to act sooner. We believe the Fed will start increasing the fed funds rate sometime in 2014 as unemployment falls, the economy grows stronger, and Treasury yields move higher.

Interest rates moving higher will be welcome news for all since we have lived with the lowest rates in over a generation.