Best Savings Rates

The best online savings rates continue to move higher for May 2018 and heading into June 2018. For about a decade now, we have been talking about online savings rates and money market rates moving lower. Then finally, about 18 months ago, we started writing about interest rates moving higher.

Online savings rates moved higher the past 18 months because the Federal Reserve increased the federal funds rate six times. Those six rate increases totaled 1.50 percent, which brought the rate up to a targeted range of 1.50 percent to 1.75 percent. If you’re wondering how the rate could only be at 1.50 percent when the total increases were 1.50 percent, that’s because the rate was near zero percent!

You also might be wondering what the fed funds rate and what does it have to do with online savings rates. The fed funds rate is the rate that banks and credit unions lend reserve balances to other institutions overnight. Banks and credit unions also set consumer rates for deposits and loans using the fed funds rate.

When the rate moves higher these rates also move higher. I have to warn you banks and credit unions are quicker to increase loan rates then they are to increase deposit rates. The opposite happens when interest rates are moving lower, financial institutions are quicker to lower deposit rates than loan rates.

During this cycle of rising interest rates, the fed funds rate was increased 1.50 percent but online savings rates and money market rate increases have been slightly less.

About 18 months ago the best online savings rates were around 0.85 percent, the best savings rate in May is at 1.85 percent, only a 1.00 percent increase. The highest money market rate has done slightly better over the past 18 months, going from 0.90 percent to 2.01 percent, a 1.11 percent increase. Listed below are the best online savings rates as of today.

1: Best Online Savings Rates: Radius Bank High-Yield Savings 1.86% APY ($100 Minimum Opening Balance)

Radius Bank, headquartered in Boston, MA, is currently offering the best online savings rate at 1.86% APY. The savings account rate is tiered so in order to earn the top rate of 1.86% APY you have to have a minimum balance of at least $25,000. Savings account balances of $2,500 and above still earn a respectable rate of 1.49 percent. Account balances below $2,500 earn a rate of 0.05 percent, a rate that isn’t much higher than rates offered by the big banks. There is also a monthly fee of $2.50 percent if your daily account balance falls below $250.

2: High Online Savings Rate: Salem Five Direct eOne Savings 1.85% – APY ( $100 Minimum Opening Balance)

Salem Five Direct’s eOne Savings Account has a small opening deposit of only $100. You can earn 1.85 percent on balances up to $1,000,000. Make sure to keep your balance under a million to earn the 1.85 percent rate. Otherwise Salem Five reserves the right to transfer balances over $1,000,000 to a Statement Savings Account. The current rate on that account is only 0.05 percent. There are no minimum balances and no monthly fees. Opening an account is done online quickly and easily. eOne Savings eligibility is limited to consumers who apply online. You’re not eligible if you already have an account. There is an exception for consumers with an existing eOne Checking Account are eligible for the eOne Savings Account.

3: Best Online Money Market Rates: VirtualBank eMoney Market 2.01% APY ( $100 Minimum Opening Balance)

VirtualBank currently has the best money market account rate on our list with 2.01% APY. Money market accounts and savings accounts are variable rate accounts, meaning the interest rate can change at anytime. VirtualBank guaranteeing a rate for 1 year is good news, I wonder if the bank will increase the rate if rates move higher. The 1 year introductory APY is available to customers opening a new eMoney Market account. Also the money you use can’t be currently held in any of your accounts that are at VirtualBank.

Online savings rates, money market rates, and certificate of deposit rates from online banks continue to move higher in 2017. A few months ago we reported that the highest savings rate was at 1.30 percent. Now the top rate is 10 basis points higher, at 1.40 percent.

10 basis points might not sound like much of an increase over the summer, but rates have moved even higher since the beginning of the year. Back in January 2017, the best savings rate was at 1.15 percent, 25 basis points lower than the best rate now.

Again, the rates we are talking about are rates from online banks. Don’t expect to see the same rates from their brick-and-mortar counterparts. For example, DollarSavingsDirect is currently offering a savings rate of 1.40 percent while Chase Bank’s current savings rate is a measly 0.01 percent.

What does the future hold for online savings rates?

Even with the increase in rates in 2017, it’s no secret that deposit rates are still low historically speaking and probably should be higher. The good news is online savings rates are expected to continue to move higher. A lot depends upon the Federal Reserve increasing the fed funds rate in the coming years.

The Fed’s own projections are for a higher fed funds rate over the next three years. The Fed is expected to increase the rate once more in 2017. As a result, the rate will be in a targeted range of 1.25 percent to 1.50 percent. If this increase happens, we expect online savings rates to move above 1.50 percent, possibly as high as 1.65 percent.

Online Savings Rates 2018

Looking forward to 2018, the Fed has projected a fed funds rate between 1.90 percent and 2.60 percent. As a result, online savings rates would increase to a range of 2.00 percent to 2.75 percent, depending on where the fed funds rate actually ends up.

Online Savings Rates 2019

The fed funds rate is forecasted to be in a range of 2.60 percent to 3.10 percent and online savings rates will be in a range of 2.75 percent to 3.25 percent.

These forecasts are based on the Fed’s June projections for the fed funds rate and will change. The next time the fed is expected to release new projection materials will be in March 2018. In conclusion, savings rates are moving higher due to a higher fed funds rate in the coming years.

Savings rates, money market rates, and CD rates continue to march slowly higher as we head into the second quarter of 2017. The best savings account rate available this week is from PurePoint Financial at 1.24 percent with an APY of 1.25 percent. PurePoint’s current savings rate is more than double the current national average of 0.56 percent.

Last month, prior to the Federal Open Market Committee’s fed funds rate increase, the top savings rate was at 1.14 percent with an APY of 1.15 percent. The FOMC increased the fed funds rate 0.25 percent during the middle of March to a range of 0.75 percent to 1.00 percent.

The FOMC’s next meeting is scheduled for May 2nd and May 3rd. All though the FOMC has said they are looking to have two more rate increases in 2017, it’s unlikely a fed funds rate increase will come during the May meeting. The CME Group’s FedWatch Tool puts the chance of a rate increase at only 6.4 percent as of April 2nd.

The next fed funds rate increase is likely to come during the Fed’s June Meeting on June 14th and 15th. There is a 58.7 percent change the rate will be increased during the June meeting, according to the CME Group’s FedWatch Tool.

A fed funds rate in a range of 1.00 percent to 1.25 percent will likely push the highest savings rates towards 1.50 percent. The highest 1 year CD rates available right now are already at 1.50 percent. The next rate increase will likely put the top 1 year CD rates closer to 1.75 percent.

The good news is that deposit rates are finally headed higher and will continue to move higher in the coming years. As long as economic growth moves higher and the economy doesn’t fall into a recession, rates will move higher.

Variable deposit rates continue to inch slowly higher this week. The best savings rate available is at 1.25 percent with a yield of 1.26 percent. The best money market account rate available is slightly lower at 1.24 percent with a yield of 1.25 percent.

Listed below are the best savings rates and money market rates available in our database for November 27, 2016.

Best Savings Rates

1. Popular Direct 1.25% Yield 1.26%
2. Synchrony Bank 1.04% Yield 1.05% (tied for 2nd place)
3. AloStar Bank of Commerce 1.04% Yield 1.05% (tied for 2nd place)
4. Goldman Sachs Bank USA 1.04% Yield 1.05% (tied for 2nd place)
5. Barclays Bank 1.00% Yield 1.00% (tied for 3rd place)
6. Ally Bank 1.00% Yield 1.00% (tied for 3rd place)
7. Radius Bank 1.00% Yield 1.00% (tied for 3rd place)
8. iGObanking.com 1.00% Yield 1.00% (tied for 3rd place)
9. FNBO Direct 0.95% Yield 0.95% (tied for 4th place)
10. CIT Bank 0.95% Yield 0.95% (tied for 4th place)
11. Discover Bank 0.95% Yield 0.95% (tied for 4th place)
12. Colorado Federal Savings Bank 0.85% Yield 0.85% (tied for 5th place)
13. My Savings Direct 0.85% Yield 0.85% (tied for 5th place)

Best Money Market Account Rates

1. EBSBDirect 1.24% Yield 1.25%
2. EverBank 1.11% Yield (promo rate)
3. Dime 1.09% Yield 1.10%
4. firstcentral.direct 1.04% Yield 1.05%
5. Capital One 1.00% Yield 1.00% (tied for 5th place)
6. California First National Bank 1.00% Yield 1.00% (tied for 5th place)
7. Pacific National Bank 1.00% Yield 1.00% (tied for 5th place)
8. ableBanking, a division of Northeast Bank 1.00% Yield 1.00% (tied for 5th place)
9. Sallie Mae 0.90% Yield 0.90%
10. Synchrony Bank 0.85% Yield 0.85% (tied for 7th place)
11. Ally Bank 0.85% Yield 0.85% (tied for 7th place)

Variable deposit rates have been slowly creeping up for the past several months. The interest rate increases have been small; in increments of less than 10 basis points for the most part. Even with the small increases, the best variable deposit rates are almost comparable to best the 1 year CD rates.

The best savings rate on our rate database is at 1.25 percent with an APY of 1.26 percent from Popular Direct. This savings rate is only 4 basis points lower than the top 1 year CD rate in our database at 1.29 percent with a yield of 1.30 percent. The highest money market yield on our list is 5 basis point lower at 1.24 percent with a yield of 1.25 percent.

Listed below are today’s current highest savings rates and money market rates

Highest Savings Rates

1. Popular Direct 1.25% Yield 1.26%
2. Synchrony Bank 1.04% Yield 1.05% (tied for 2nd place)
3. AloStar Bank of Commerce 1.04% Yield 1.05% (tied for 2nd place)
4. Goldman Sachs Bank USA 1.04% Yield 1.05% (tied for 2nd place)
5. Barclays Bank 1.00% Yield 1.00% (tied for 3rd place)
6. Ally Bank 1.00% Yield 1.00% (tied for 3rd place)
7. Radius Bank 1.00% Yield 1.00% (tied for 3rd place)
8. iGObanking.com 1.00% Yield 1.00% (tied for 3rd place)
9. FNBO Direct 0.95% Yield 0.95% (tied for 4th place)
10. CIT Bank 0.95% Yield 0.95% (tied for 4th place)
11. Discover Bank 0.95% Yield 0.95% (tied for 4th place)
12. American Express Bank 0.90% Yield 0.90% (tied for 5th place)
13. Pacific National Bank 0.90% Yield 0.90% (tied for 5th place)

Highest Money Market Rates

1. East Boston Savings Bank Direct 1.24% Yield 1.25%
2. EverBank 1.11% Yield (promotional rate)
3. Dime 1.09% Yield 1.10% (tied for 2nd place)
4. iGObanking.com 1.09% Yield 1.10% (tied for 2nd place)
5. Capital One 1.00% Yield 1.00% (tied for 3rd place)
6. California First National Bank 1.00% Yield 1.00% (tied for 3rd place)
7. Pacific National Bank 1.00% Yield 1.00% (tied for 3rd place)
8. ableBanking, a division of Northeast Bank 1.00% Yield 1.00% (tied for 3rd place)
9. Sallie Mae 0.90% Yield 0.90%
10. Synchrony Bank 0.85% Yield 0.85% (tied for 4th place)
11. Ally Bank 0.85% Yield 0.85% (tied for 4th place)
12. EH National Bank 0.81% Yield 0.81%

To view a current list of savings account rates and money market account rates search our database at SavingsAccount.MonitorBankRates.com.