Best Savings Rates| Search for the Best Savings Rates from Banks and Credit Unions
Discover bank rates were just increased on the bank’s savings accounts and money market accounts. The bank’s savings rates were already very competitive. With the recent increase, the bank’s rates are now in the top 5 online savings rates available.
Discover Bank, which has a motto of “Everything you want from a bank, without ever setting foot in one,” offers many variable deposit products with tiered interest rates. Some banks offer tiered rates when you make a larger deposit.
Most banks offer regular account rates and jumbo account rates. Usually to earn the “jumbo” rate, you need to deposit more than $100,000 into an account. Discover Bank offers regular and jumbo rates but also offers an addition three tiered rates. The savings account and money market account required deposit amounts for the three tiered rates are $10,000, $25,000 and $50,000.
Discover Bank Rates
Right now, Discover Bank’s rates are the same regardless of the deposit amount. The only interest rate that is different is the bank’s jumbo money market account rate. The jumbo MMA rate is 5 basis points higher than all the other MMA rates.
Another point to make, deposit rates are moving higher in 2018 and probably in 2019. Therefore, it makes sense to invest in variable rate deposit accounts instead of investing in a certificate of deposit account. CD accounts have fixed rates for the entire CD term, the opposite is true for savings accounts and money market accounts which have rates that can fluctuate. In conclusion, it makes sense not to lock into a fixed rate right now, ride the interest wave higher as rates move higher.
Online savings account rates increased again this month and have hit a milestone. The best online savings rates hit 1.49 percent with an APY of 1.50 percent, a new high for 2017. Savings rates moved higher in December because the Federal Reserve increased the fed funds rate.
The fed funds rate was increased by 25 basis points during the Fed’s December meeting. The new targeted range for the fed funds rate is 1.25 percent to 1.50 percent. You can see a history of fed funds rate increases and decreases since 2003 at Fed Funds Rate History.
The online savings account rates listed below are higher than traditional brick and mortar bank savings rates. In fact, the difference between online rates and brick and mortar banks is dramatic. For example, Third Federal Savings and Loan is currently offering savings rates at 0.15 percent, one tenth of the 1.50 percent rate.
The largest banks are offering savings rates even less than 0.15 percent. Chase Bank’s Chase Savings rate is at a paltry 0.01 percent. They clearly have no interest in attracting deposits by offering a rate of 0.01 percent.
There are currently three online banks in the rate database offering a savings rate of 1.50 percent. Live Oak Bank, DollarSavingsDirect, and Salem Five Direct are all offering online savings rates at 1.50 percent. The minimum deposit varies for all three banks but are not large sums.
Online Savings Account Rates Moving Higher in 2018
Online savings rates started 2017 lower than the current level. Back in January the top rate was at 1.05 percent. Rates moved higher as the Fed increased the fed funds rate. The Fed increased the rate 25 basis points in March and by April the top savings rate was at 1.15 percent.
In April, we published an article predicting online savings rates would move up to 1.50 percent by the end of 2017. In that same article we predicted 1 year CD rates would move to 1.75 percent.
The top 1 year rate is even higher, currently at 2.00 percent. You can read the April 2017 post at Savings Rates Continue to Increase, Courtesy of the FOMC.
Where deposit rates head in 2018 will be dependent on inflation and what the Fed does. The Fed released their own projection materials after their December meeting showing the fed funds rate increasing. The Fed projected the rate to hit 2.10 percent by the end of 2018.
A fed funds rate at 2.10 percent would put the top online savings rates around 2.25 percent. The top 1 year CD rates would move towards 2.75 percent and possibly hit 3.00 percent.
Most noteworthy rates could move even higher if inflation picks up steam. This is very possible because of the tax cut just passed.
There are new highs for money market rates and savings rates this week. The best variable deposit rate this week is from UFB Direct at 1.40 percent with an annual percentage yield of 1.41 percent. UFB Direct’s variable account is actually called a money market savings account. The minimum opening deposit is $5k.
Money market rates have been moving higher for about a year now as a result of the Federal Reserve increasing the federal funds rate. The Fed is expected to continue increasing rates, therefore, deposit rates will also move higher in the coming years.
Rates moved much higher just over the summer. Back in June, the top MMA rate was at 1.15 percent, 26 basis points less than the current rate. Read the post at Rates Move Higher in 2017.
Savings rates also moved higher since June and will increase in the coming years. In early summer, the top savings rate was at 1.30 percent. Due to the Fed’s June rate increase, deposit rates moved even higher. The current best savings rate is at 1.40 percent from Dollar Savings Direct and Popular Direct. The minimum opening balance at Dollar Savings is $1.00 while the minimum at Popular is $5,000.
A stronger economy, lower unemployment, and the Federal Reserve increasing interest rates are all driving deposit rates higher. A post we did in June forecast MMA rates to be around 1.25 percent by the end of 2017, looks like the top rate will be around 1.50 percent or higher by the end of the year.
Top Money Market Rates This Week
We are looking for rates to march higher beyond 2017, especially if the Fed continues rate increases. As a result of future rate increases, by the end of 2018, variable deposit rates will probably be around 2.50 percent. By 2019, variable deposit rates will be around 3.00 percent. If Republicans are able to lower taxes, perhaps rates will be even higher as a result of higher inflation.
Money market account rates are slowly moving higher in 2017, primarily as a result of the fed funds rate increases. Starting out the year, the highest money market rates offered by online banks were around 1.00 percent. Right now, the best online money market rate is 1.15 percent from My Banking Direct.
Interest rates are moving higher this year because the Federal Reserve increased their key benchmark interest rate, the fed funds rate, three times in 2017. The Fed has been very forthcoming and said they expect to increase the rate four times this year, so that leaves us one more rate hike.
You will only find money market rates at or above 1.00 percent with online banks. Local and regional banks are the second best place to go for rates but most of those banks don’t offer rates as high.
The last place you want to go is the big national banks. For example, Bank of America’s very best money market rates is a paltry 0.06 percent. Think 0.06 percent is bad? Wells Fargo’s Way2Save account has a current internet rate of 0.01 percent.
The good news is that looking forward, money market rates are moving higher in 2017 and in future years. With at least one more fed funds rate increase this year, money market rates will probably move towards 1.25 percent.
Fed Funds Rate and Money Market Rates in 2018 and 2019
Of course, the one thing that would derail any forecast for higher interest rates is a recession.
Quick tip: If it looks like a recession is eminent, money market rates will decline because they are variable rate accounts. So be sure to lock in a higher rate with a certificate of deposit. You can find a list of CD rates at MonitorBankRates.com.
The best savings account rates available in the rate database moved higher again this week and are now at 1.30 percent. There are two banks offering savings rates at this level – UFB Direct and BankPurely. A yield of 1.30 percent is much higher than the current national average savings rate of 0.58 percent.
Savings rates and other deposit rates have been slowly inching higher for about 18 months now. Rates started moving up just before the Fed increased the fed funds rate in December 2015. Before the rate increases, the highest savings rates in the database were around 0.90 percent, 40 basis points less than now.
Since December 2015, the Fed has increased the rate two more times and is anticipated to increase the rate two more times this year. Two more rate increases would put the top end of the federal funds rate at 1.50 percent. If those hikes do take place in 2017, the top savings rates will be around 2.00 percent.
2.00 percent rates are nothing to write home about but are better than the current rate and more than double the 0.90 percent rate we saw in 2015. At least interest rates are headed higher.
The Fed met last week and didn’t increase interest rates. Standing pat on interest rates was expected for the May meeting. The Fed meets again next month and is expected to increase the fed funds rate by 25 basis points. An increase of 0.25 percent would put the fed funds rate in a range of 1.00 percent to 1.25 percent. The last time the rate was at 1.00 percent was in December 2008.
If we do see a rate hike next month, banks and credit unions will likely increase their rates. We could see the top savings rates and money market rates head towards 1.50 percent or above. The top CD rates are already at 1.50 percent and would likely be increased to 1.75 percent.
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