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Savings Interest Rates Stuck at Low Levels as Bond Yields Soar

Interest rates on savings accounts, money market accounts, and certificates of deposit haven't increased the past month but long term bond yields are soaring. Bond yields are moving higher because the markets are afraid the Federal Open Market Committee will vote to slow down or possibly end their most recent round of quantitative easing.

The Possibility of QE3 Ending is Sending Bond Yields Soaring

In this round of easing (QE3), the Federal Reserve has been buying $45 billion in long term bonds a month and $40 billion in mortgage-backed securities (MBS). Even the hint of the endto these purchases has sent 10 year bond yields from 1.66 percent in early May up to 2.25 percent yesterday.

Mortgage rates have also increased considerably the past month. 30 year mortgage rates were averaging 3.45 percent in early May are now back above 4.00 percent at 4.05 percent. Unfortunately, during this time average savings rates and money market rates remain low. The average savings account rate is at 0.47 percent for account balances of at least $10,000. The average savings rate is only 0.01 basis point higher than the average rate last month.

Best Interest Rates Decline This Month

Pennies on the Dollar - bill with pennies on white background.The best savings rates available in our rate database are down 10 basis points from last month but still well above the average rate of 0.47 percent.

The bank offering the highest savings rate in our database this month is Barclays Bank at 0.90 percent. There is no minimum opening balance or balance to maintain in order to earn that rate on a Barclays Bank savings account.

The highest money market rate in our database this month has also moved lower from last month's highest rate. The bank offering the best money market rate this month is EverBank at 0.89 percent APY for the first year.  EverBank is actually offering a six month promotional rate of 1.10 percent. The ongoing rate on the account is 0.67 percent, which gives the account a first year APY of 1.01 percent.

Everbank decreased their promotional 6 month and ongoing rate this month. Last month the intro rate on the money market account was 1.25 percent and the ongoing rate was 0.76 percent. This gave the account a first year APY of 1.25 percent. Now the rate has been lowered to 1.10 percent. Below are list of the best savings rates and money market rates this month:

Savings Rates

  • Barclays Bank Savings Account Rate 0.90% APY 0.90%

  • FNBO Direct Savings Account Rate 0.85% APY 0.85%

  • Colorado FSB Savings Account Rate 0.85% APY 0.85%

  • Ally Bank Savings Rate 0.84% APY 0.84% APY 0.84%

  • Discover Bank Savings Account Rate 0.80% APY 0.80%

Money Market Rates

  • EverBank Money Market First Year APY 0.89%

  • Mutual of Omaha Bank Money Market Account Rate 0.85% APY 0.85%

  • GE Capital Retail Bank Money Market Rate 0.85% APY 0.85%

  • Ally Bank Money Market Account Rate 0.84% APY 0.84%

  • Able Banking Money Market Rate 0.80% APY 0.80%

Author: Brian McKay
June 13th, 2013