Savings Rates Moving Lower in 2013? Sequestration Will Determine Direction of Rates

I have to be honest, savings rates and money market account rates were so low I didn't believe rates could fall much more in 2013. That was before the sequestration of government spending cuts became more of a reality as many top Republicans believe will happen. In two weeks, automatic federal government spending cuts in defense and social programs will start taking place.

The sequestration, the Budget Control Act of 2011, will cuts spending by $1.2 to 1.5 trillion over the course of ten years. Granted, the long term benefits are substantial but there will be a lot of short term pain and a possible recession in 2013 if the sequestration hits the economy.

Another recession will send already low savings account rates and money market rates even lower and for a longer period of time. The best savings rates on our rate list right now are currently at 1.00 percent. CIT Bank and Barclays Bank are offering savings rates at 1.00 percent.

National average savings rates on account balances of $10,000 are about half that rate at 0.51 percent. The FDIC's national average bank savings rate for the week ending February 11, 2013, is at 0.07 percent. If the sequestration does happen, we expect the highest savings rates and money market rates to fall below 1.00 percent.

Here is a list of the top interest rates this week:

Top Savings Rates/Money Market Rates

1. EverBank MMA APY 1.01%
2. CIT Bank Savings Rates 1.00% APY 1.00%
3. Barclays Bank Savings Rates 1.00% APY 1.00%
4. Union Federal Savings Bank MMA Rates 1.00% APY 1.00%
5. ableBanking MMA Rates 0.92% APY 0.92%
6. Ally Bank Savings Rates 0.90% APY 0.90%
7. Ally Bank MMA Rates 0.90% APY 0.90%
8. FNBO Direct Savings Rates 0.85% APY 0.85%
9. Colorado Federal Savings Bank Savings Rates 0.85% APY 0.85%
10. Discover Bank Savings Rates 0.80% APY 0.80%