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Best Savings Rates| Search for the Best Savings Rates from Banks and Credit Unions
Use our savings rates list below to search for and compare the best savings rates from banks and credit unions. Our list of savings account rates are the highest savings rates around from both local banks and credit unions. We also list the best savings rates from national banks. There is no need to search for savings rates elsewhere since we maintain the best list of rates.
For several years now, we have all been waiting for higher deposit rates on savings accounts, money market accounts, and certificates of deposit. Two stronger-than-expected economic reports released this morning point to the possibility of higher interest rates sooner than later. Read more
For several years now, we have all been waiting for higher deposit rates on savings accounts, money market accounts, and certificates of deposit. Two stronger-than-expected economic reports released this morning point to the possibility of higher interest rates sooner than later.
The big news was that 3rd quarter GDP growth came in at a robust 3.6 percent, much higher than the 2.8 percent that analysts were expecting. The second strong report was weekly jobless claims, which the Labor Department reported came in at 298,000, much lower than the expected number of 325,000. This is the lowest number of claims since December 2007.
Higher Bond Rates Forcing Mortgage Rates Higher
10 year bond yields are soaring up to 2.86 percent on the news, nearing the highest point for rates in 2013. Clearly the economy is finally recovering and growing more quickly, which will force the Federal Reserve to start tapering their purchases of long term bonds and mortgage-backed securities.
The possibility of this third round of quantitative easing (QE3) ending is the driving factor sending interest rates on bond yields and mortgage rates higher right now. Stronger growth and lower unemployment will cause inflation to move higher, which will also force the Federal Reserve to increase the federal funds rate.
Savings and CD Rates Dependent on a Higher Federal Funds Rate
When the fed funds rate is increased from the current range of zero to one quarter percent, savings rates, money market rates, and CD interest rates will move higher. We have been dealing with ultra low deposit rates for over 5 years now and any uptick in rates will be welcome news for depositors.
When exactly the Fed starts easing doesn’t matter as far as mortgage rates are concerned. Rates will be moving higher from current levels. When deposit rates increase is still tied to when the federal funds rate is increased and that isn’t expected to happen until the unemployment rate falls between 6.5 percent and 5.5 percent or when the expectation that the future inflation rate will move above the Fed’s long-term target of 2 percent.
When Will The Fed End QE3 and Increase the Fed Funds Rate?
Instead of trying to figure out when the Fed will start the process of ending QE3, I believe by the late spring of 2014 QE3 will be history. As for when the fed funds rate will be increased, the Fed has stated they will increase the rate when the unemployment rate falls below 6.5 percent. The current rate is at 7.3 percent, so we may be only 0.8 percent away from a higher fed funds rate.
However, a higher fed funds rate when unemployment falls below 6.5 percent was the Fed’s mantra until the last Federal Open Market Committee (FOMC) meeting. Now we are hearing they might keep the rate at current levels until the unemployment rate falls below 5.5 percent.
With today’s news on growth and jobless claims, the Fed might be more inclined to increase the rate when unemployment falls below 6.5 percent. I believe this is more likely because really strong economic data will give the Fed a clearer picture on future growth and raise concerns regarding inflation.
Deposit Rates Will Move Higher in the Summer of 2014
Based on today’s news, I’m holding firm to the belief that deposit rates will move higher sometime after the Fed’s June 2014 meeting. You should stay invested either in variable rate accounts such as savings account and money market accounts or invested in short term certificates of deposit of 6 months or less.
By the summer of 2014, the best savings rates and money market rates will move towards 2 percent. The best CD rates on 1 year certificates of deposit will also be near 2 percent and possibly higher than that since banks will be keen on locking in deposits before rates move much higher.
Savings rates and all deposit rates were set to move higher in 2014 but now the verdict is out on whether or not interest rates will move higher. Savings rates, CD rates, money market account rates are all tied to the federal funds rate. The current federal funds rate has been in a range of zero percent to one quarter percent since December 2008.
Low Federal Funds Rate Keeps Savings Rates Low
A historically low federal funds rate has kept deposit rates near record lows as well going on 5 years now. For more than a year, the Federal Reserve has stated time and time again that they plan to keep the federal funds rate at the current level of near zero percent until the unemployment rate falls below 6.5 percent.
The current unemployment rate is at 7.3 percent, so it is conceivable that the rate will fall below 6.5 percent in the early summer of 2014. Based on this information, it was reasonable to believe that deposit rates would move higher in the summer of 2014 but that may change.
FOMC October Meeting Minutes Reveals Possible Longer Timeframe for Low Interest Rates
In the Federal Open Market Committee’s October meeting minutes, a couple committee members wanted to lower the 6.5% unemployment rate point. That isn’t the only possible change, a few members wanted to add that the federal funds rate wouldn’t be increased as long as the inflation rate was projected to run below 2.5 percent.
Now we don’t actually know when deposit rates will increase but hopefully rates will move higher sometime in 2014. We still see higher savings rates in the summer of 2014. At this point, there is only a minority view on keeping the fed funds rate low past the 6.5 percent unemployment threshold.
Unemployment Rate and Inflation Rate are the Keys to Higher Savings Account Rates
Whether or not interest rates move higher when the unemployment rate falls below 6.5 percent is up to the FOMC. A higher inflation rate would cause the FOMC to act sooner than later, perhaps even before the unemployment rate falls below 6.5 percent. The current inflation rate is 1.7 percent, exactly where the Fed wants inflation to be – below their long term target of 2.00 percent.
If inflation were to move above 2.00 percent, the Fed could act sooner to increase the fed funds rate. It’s more than likely that savings account rates, money market rates, and all interest rates will move higher next year. Now it could happen past our original forecast of summer 2014.
We might have to wait until the fall or even the winter for higher rates. The FOMC is scheduled to meet 5 times between July of 2014 and December of 2014, and an announcement of a higher fed funds rate would usually come right after a meeting. When an announcement is made, banks quickly follow suit by offering higher deposit rates.
Best Savings Rates Currently at 1.00 Percent
Right now, the best savings rates in our database of rates are at 1.00 percent. The best money market rates are at 0.90 percent and the best CD rates on 1 year certificates of deposit are at 1.04 percent with an APY of 1.05 percent.
You can search for the best interest rates right here: Best Savings Rates
Average savings account rates and money market rates fell from October to November, following bond yields lower. The decline in average rates was small at only 0.02 percent on deposit amounts from $10k or more to $50k or more. While average deposit rates declined, the best savings rates and money market rates available on our rate tables have not declined.
Best Savings Rates November 2013
The best savings rate on our rate table for account balances of at least $10k is at 1.00 percent, more than double the national average rate. The best savings rate for less than a minimum balance of $10k ($0 opening balance) is at 0.90 percent, which is also more than double the national average rate.
The bank offering the highest savings account rate on our list is The Palladian Private Bank at 1.00 percent with an APY of 1.00 percent. The minimum opening balance is $10k and you have to maintain a minimum account balance of $10k to avoid paying a monthly fee. The fee is $10 per month on balances below $10k.
Banks Offering the Highest Savings Rates
Best Money Market Rates November 2013
The best money market account rate on our rate table for all account balances is at 0.90 percent. The bank offering the highest money market rate is Sallie Mae Bank at 0.90 percent. There is no minimum opening balance to open an account or balance to maintain in order to earn the rate. There is also no fee incurred for not maintaining a minimum balance.
Banks Offering the Highest Money Market Account Rates
When Will Savings Rates and Money Market Rates Increase?
Savings rates, money market rates and CD rates will not move higher until the Federal Reserve increases their key benchmark interest rate, the federal funds rate. The current fed funds rate has been in a targeted range of zero percent to one quarter percent since December 2008.
The Federal Reserve has stated that they won’t increase the fed funds rate until the nation’s unemployment rate falls below 6.5 percent. The current rate is only 0.7 percent above 6.5 percent so we will probably see a higher fed funds rate in the first 6 months of 2014. When the fed funds rate is increased, banks will follow suit by increasing deposit rates.
Banks usually increase deposit rates shortly after the federal funds rate increases, which means we will see higher deposit rates in 2014. Rates will probably move higher sometime in the second or third quarter of 2014. The increases will be rather quick, so savings and money market rates will probably be above 2.00 percent before the end of 2014.
Savings rates and money market rates have been stable the past month as there have been no real changes in average rates and the best available rates. This is unlike short term bond rates which have gone through the roof the past month on fears of a debt default by the United States. 1 month U.S. bond rates soared from .001 percent in late September to 0.27 percent last week.
Surprisingly, in the past week, rates have come down somewhat even though a debt deal hasn’t been reached yet. During the past month, the best savings rates available in our rate database remain at 1.00 percent. The best money market account rates also remain unchanged at 0.90 percent this month.
Savings account rates, money market rates, and CD rates will pretty much remain near current levels for now. These rates won’t move higher until the Federal Open Market Committee increases the federal funds rate. We don’t expect an increase in the federal funds rate until sometime in mid 2014. Unfortunately, this means deposit rates won’t move higher anytime in 2013 and probably won’t move higher until the summer or fall of 2014. We are all eagerly awaiting higher interest rates after more than 5 years of low rates.
Average Savings Rates/Money Market Rates
National average savings rates/money market rates for account balances of $10k remain at 0.45 percent. Account balances of at least $25k are also unchanged this month at 0.58 percent. Account balances of at least $50k have seen the average rate move up 1 basis point to 0.64 percent this month.
Best Savings Rates Available This Month
Best Money Market Rates Available This Month
You can find the highest savings account rates, money market account rates, and CD rates by searching our rate tables. Our rate tables are updated daily with the best rates available.
The all-important two day Federal Open Market Committee meeting started as the markets awaits news on whether or not the Fed will start tapering bond and mortgage-backed security (MBS) purchases. Bond rates have soared on the possibility that the Fed will scale back buying $40 billion a month in MBS and $45 billion a month in long term bonds.
The Fed’s purchases have suppressed interest rates on bonds, all types of deposit accounts, and mortgage rates for many years now. As market forces drive interest rates higher, the Fed’s policy becomes more and more obsolete. An improving economy and a lower unemployment rate are also forcing the Fed’s hand at paring back their easing.
U.S. Consumer Confidence Higher This Week
The U.S. consumer is feeling more confident about the economy as well. The Gallup’s U.S. Economic Confidence Index was-15 last week, up from -16 the previous week and up from -18 in the week ending Sept. 1. While consumers are feeling better about the economy for the past couple of weeks, the index is still down from June when the index stood at -3.
Interest Rates Already Higher on Possible FOMC Easing
The big question after the FOMC wraps up their meeting is how much higher interest rates will move if the Fed does announce they will be scaling back their purchases. The possibility of the Fed slowing their third round of quantitative easing (QE3) has sent long term interest rates higher the past several months while short term interest rates haven’t budged at all.
Current savings rates and money market account rates this week are averaging 0.63 percent for account balances of $50k or more. The best savings rates and money market rates in our rate database are higher than the average.
The best savings rate is at 1.00 percent and the best money market rate this week is at 0.90 percent.
Savings Rates and Money Market Rates Depend on a Higher Federal Funds Rate
Everyone has seen the headlines the past several months about mortgage rates and bond rates moving higher. If you searched for a rate on deposit accounts or short term certificates of deposit, you’re probably surprised those rates haven’t move higher. The reason being that rates on these accounts move higher once the federal funds rate is increased.
The Fed has kept the current federal funds rate near zero percent for almost 5 years now to help stimulate the economy. This policy has sent savings interest rates, money market rates, and CD rates down to record lows. During the FOMC meeting they will decide whether or not to increase the fed funds rate.
The possibility that the Fed will increase the federal funds rate is next to zero percent just because the Fed has already announced their intentions on the rate over a year ago. The Fed has stated multiple times the past year that they don’t plan to increase the federal funds rate until the nation’s unemployment rate drops below 6.5 percent.
The current unemployment rate is at 7.3 percent and probably won’t fall to 6.5 percent until sometime early next year. So as far as when deposit rates will move higher, we will have to wait until at least late spring or early summer to see higher rates.
Default on U.S. Debt Would Sent Interest Rates Sharply Lower
There is another possible direction for interest rates if the Federal government defaults on its debt. If the politicians can’t agree to raise the debt limit and technically defaults, bond rates would move sharply lower again. Interest rates would move sharply lower again because the markets would be spooked, selling stocks and commodities and buying U.S. Bonds.
A market move like this would be the initial reaction, called the classic “flight to quality.” You’re probably wondering why anyone would buy bonds of a country that just defaulted on its debt. Initially, that is how the markets would react. We saw this during the financial crisis just a few years ago.
The financial crisis started in the U.S. when the housing market collapsed and several Wall Street firms that dealt primarily in mortgage-backed securities failed. Ultimately, everyone assumes the U.S. will pay its debt, which is why investors would still invest in U.S. Treasuries.
The Consumer Federation of America recently released an interesting report on savings accounts. The report titled, “Savings Accounts: Their Characteristics and Usefulness” has some interesting information.
“Savings account” types include statement, passbook, and club savings accounts, money market accounts, and for credit unions, share savings accounts. 59 percent of American households hold some kind of savings account. The median amount of money held in a savings account (which includes all type of deposit accounts listed above) is $4,200. There are over 14,000 financial institutions that offer some type of deposit account.
Higher Median Deposit Amounts in Money Market Accounts
The median amount held in a traditional savings account is much lower at $2,400 while the median amount in money market accounts is much higher at $10,000. Considering how low savings account rates and money market rates are right now, it’s surprising that people are even bothering to keep money in these accounts.
A better option would be investing in a certificate of deposit account. Average savings account rates/money market account rates right now are at 0.47 percent while average 1 year CD rates are higher at 0.71 percent. Granted, rates on all deposit accounts are low right now. You won’t get rich off of the interest but at least you get the best rate with a CD account.
Largest Percentage Have Traditional Savings Accounts
Breaking down the 59 percent of households that hold some type of savings account, 49 percent hold a traditional savings account while only 17 percent hold a money market account. The smallest percentage of these households (only 0.04 percent) hold some type of savings goal account like a Christmas club account.
The report also breaks down the age distribution of traditional savings account ownership. A higher percentage of those under 65 have a savings account than over 65. Slightly more than half of those age 35 to 55 have a savings account while only 42 percent of those over age 65 have a savings account. A driving factor behind this may be the fact that deposit rates are so low and retirees are investing in other interest-bearing assets to get a better return.
Majority of Banks Require only $100 to Open an Account but $200 to Avoid Monthly Fees
This tidbit of information smacks of greedy bankers taking advantage of the unwary consumer. A large majority of banks (89 percent) allow consumers to open a savings account for $100 or less. However, 59 percent of banks require account holders to maintain a minimum balance of $200 in order to avoid monthly account fees.
Half of the large banks require at least a $300 minimum monthly balance. On the low end, one fifth of the banks require only a $50 minimum deposit. The average monthly account fee isn’t much, on average about $3.30. The largest fee amounts are at the largest banks averaging $3.90 a month and the lowest fees are at the smallest institutions at $2.30.
While fees are low, interest rates are also low. Fewer than half pay a rate of 0.10 percent or higher. With the average savings account balance at $4,200 earning an average rate of 0.10 percent on an annualized basis, most of the interest earned would be eaten up by account fees.
Some Banks Offer Higher Savings Rates by Maintaining a Checking Account
Banks offer incentives such as higher savings account rates by also maintaining a checking account. Setting up automatic transfers from a checking account to a savings account can also earn you a higher rate. Peapack Gladstone Bank and Empire Bank will double the savings account rate, and Regions Bank will double or triple the rate depending on the amount of the monthly deposit.
You can also get a higher account rate on a savings account by having a debit card tied to a checking account or even having direct deposit setup on an account. One of the largest banks, Bank of America, has their “Keep the Change” program that rounds up debit card purchases to the nearest dollar, transfers the rounded up amount to savings, and matches this amount for the first three months.
There is a lot more interesting information in the report including information on credit union savings accounts. You can read more in the Consumer Federation of America’s report here: Savings Accounts: Their Characteristics and Usefulness
Bond yields and mortgage rates have risen over the past several months while savings rates and money market rates remain stuck at low levels. Rates fell to record lows after the financial crisis and recession over 6 years ago and will stay low because the Federal Reserve is suppressing rates to spur growth.
The Federal Reserve’s policy of keeping rates artificially low will stay in place for at least another year and possibly longer. The Fed has stated they plan to keep their key interest rate, the federal funds rate, in a targeted range of zero percent to one quarter percent. The fed funds rate will stay at this level until the nation’s unemployment rate falls below 6.5 percent.
Savings Rates and Money Market Rates Tied to Unemployment Rate
The current unemployment rate is at 7.4 percent and the Fed expects the rate to fall below 6.5 percent sometime in mid 2015. Unless the unemployment rate falls below 6.5 percent before the mid 2015 projection, that means savings and money market rates will remain at current levels for at least another two years.
While the Fed’s policy has helped the nation recover from the worst economic downturn since the Great Depression, the Fed’s policies have hurt holders of interest-bearing assets. Millions of people who supplemented their income with interest earnings from savings accounts and certificates of deposit have earned much less, courtesy of the Fed.
Average and Best Savings Rates August 12, 2013
This week the average savings rates on account balances of $10k or more reported by MonitorBankRates are averaging 0.47 percent. The average savings rate reported by MonitorBankRates is much higher than the FDIC average rate this week which is at 0.06 percent. We also list rates in our database which are higher than the averages reported by us and many times the FDIC average.
The best savings rates right now in our database are more than 15 times the FDIC average. The best savings rate for August 12, 2013, is from The Palladian PrivateBank at 1.00 percent with an APY of 1.00 percent. The second highest savings rate in our database is from Barclays Bank at 0.90 percent with an APY of 0.90 percent.
Current Top Savings Rates
Average and Best Money Market Rates August 12, 2013
Average money market rates on account balances of $50k or more reported by MonitorBankRates.com are currently at 0.65 percent. The average money market rate in the FDIC’s national rate and rates cap survey this week are at a measly 0.09 percent. As with savings rates, the best money market rates in our database are many times the FDIC average.
The highest money market rate this week in our database is from Sallie Mae Bank at 0.90 percent. Sallie Mae Bank’s rate is ten times the FDIC average this week. The second highest money market rate in our database is from EverBank at 0.86 percent APY.
Current Top Money Market Rates