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Sequester of Federal Spending Cuts Hits the Economy in March as Interest Rates Remain Stable

Interest rates remain stable as the the next potential financial disaster created by Congress will be upon us in just over a month. The sequester of federal spending cuts to both domestic and defense programs is so front-loaded, the economy would certainly fall back into another recession.

If the existing scenario were to happen, savings rates and money market rates would fall as well. Right now, the best savings rates are at 1.00 percent and the best money market rates are just above 1.00 percent. In this week's FDIC national rate survey, average savings rates remain stable at 0.07 percent and average money market rates remain stable at 0.11 percent.

Everyone knows this - the Federal Reserve, the White House, and both houses of Congress realize something has to be done to prevent the sequester from happening. Unfortunately, that doesn't mean a deal will be done in time before uncertainty hits the equity markets and economy. In fact, in some aspects that has already happened - defense contractors and other companies that rely on government contracts have already stopped hiring.

At this point, the markets do believe this latest fiscal cliff will be avoided as the S&P 500 has hit a 5 year high this past week. 10 year bond yields have also rallied recently. Yields which were just above 1.50 percent a little over one month ago are now just under 2.00 percent.

For now, deposit rates haven't followed higher but hopefully will start moving up when all the fiscal cliff negotiations are done and we have a clearer picture of the future. Below is a current list of the best savings rates and money market rates:

Highest Savings Rates

  • CIT Bank Savings Rate 1.00% APY 1.00%

  • Barclays Bank Savings Rate 1.00% APY 1.00%

  • Ally Bank Savings Account Rate 0.90% APY 0.90%

  • Colorado FSB Savings Interest Rate 0.85% APY 0.85%

  • FNBO Direct Bank Savings Rate 0.85% APY 0.85%

  • Bank of Internet Savings Interest Rates 0.80% APY 0.80%

  • Discover Bank Savings Account Interest Rates 0.80% APY 0.80%

Highest Money Market Account Rates

  • Union FSB Money Market Interest Rate 1.04% APY 1.05%

  • EverBank Money Market Interest APY 1.01%

  • Able Banking Money Market Account Rate 0.96% APY 0.96%

  • Ally Bank Money Market Rate 0.90% APY 0.90%

  • GE Captial Retail Bank Money Rates 0.85% APY 0.85%

  • First Internet Bank of Indiana Rates 0.80% APY 0.80%

  • Bank of Internet Money Interest Rates 0.75% APY 0.75%

Author: Lisa Graham
January 28th, 2013