Best Bank Account Interest Rates - Summary for September 23, 2014
There were hopes that the Fed was going to drop the words "considerable time" in its forward guidance language in the FOMC statement last Wednesday. That would suggest a rate hike a little earlier in 2015. That statement change didn’t happen. The Fed continues to say that the federal funds rate will stay near zero for a considerable time after QE3 ends (The end of QE3 will likely be announced in October).
Not all members of the FOMC agreed about keeping the "considerable time" wording. Two members voted against the action primarily due to this wording. Charles Plosser, president of the Federal Reserve Bank of Philadelphia, and Richard Fisher, president of the Federal Reserve Bank of Dallas, were the two members. Both are known to be inflation hawks who tend to prefer higher rates to reduce the chance of high inflation. Unfortunately, both are scheduled to retire from the Fed early next year. Most of the other members, including Chairwoman Janet Yellen, are known to be inflation doves who prefer keeping rates low. These inflation doves will continue to dominate the Fed which isn’t good news for savers.
Treasury yields and the Fed fund futures’ probabilities went down over the last week. Below is a summary of the changes. The following numbers are based on Daily Treasury Yield Curve Rates and the CME Group FedWatch .
- 1-month: 0.01% same as last week
- 6-month: 0.04% down from 0.05% last week
- 2--year: 0.57% down from 0.58% last week
- 5--year: 1.78% down fro 1.80% last week
- 10-year: 2.54% down from 2.60% last week
- 30-year: 3.25% down from 3.34% last week
Fed funds futures' probability of rate hike by:
- Apr 2015: 25% down from 29% last week
- Jul 2015: 71% same as last week
- Sep 2015: 84% down from 94% last week (for Oct 2015)
Savings & Checking Account Rates
There were just a few rate changes over the last two weeks in the savings and money market accounts that I track below.
First the good news, two internet banks raised their savings account rates.
MySavingsDirect has just increased its savings account yield from 1.00% to 1.05%. MySavingsDirect is a division of Emigrant Bank, and it was launched last November with the 1.00% savings account. Emigrant Bank has launched similar internet banks in the past. I review the history of Emigrant Bank’s internet banks and the features of
the MySavingsDirect savings account in this blog post. One important downside with MySavingsDirect is the ACH restrictions.
The other internet bank to increase its savings account rate is iGObanking.com, a division of Flushing Bank in New York. Its savings account yield increased from 0.25% to 1.00%. Those who have followed iGObanking.com know how much their rates can fluctuate. Rates have a long history of alternating between very uncompetitive levels to very competitive levels.
Now the bad news, rates were cut at two internet banks.
One isn’t exactly a rate cut. Palladian Private Bank is no longer offering its savings account with a 1.26% APY to new customers. Those who had already opened this account will continue to earn 1.26% APY, and this will be guaranteed through January 31st. Since this account is no longer available, It has been removed from the table.
The other rate cut was at Union Federal Savings Bank. Its money market account rate fell from 0.80% to 0.75%. The rate had been 0.85% before September. This account had a 1% yield in early 2013. Since that time, the rate has slowly declined. In addition to the rate cut, the bank is not accepting new applications for the account.
The above changes didn’t affect the number of institutions offering a non-promo 1% savings or money market account. The addition of iGObanking.com’s savings account was offset by the removal of Palladian Private Bank savings account. The number of institutions offering a non-promo 1% savings or money market account continues to be seven. Out of these seven, the accounts at Connexus Credit Union and SmartyPig have the longest history of top rates. Note, I exclude EverBank, Citizens State Bank and Salem Five Direct since their high rates are promotional.
Reward Checking Accounts
There were no rate changes or balance cap changes for the nationally available reward checking accounts. However, there was one removal. Lee Bank in Massachusetts has started to limit new applications to local customers. Unfortunately, this has been common for banks that offer reward checking accounts.
To find the highest reward checking rates and balance caps in your state or nationwide, please refer to our reward checking rate table. If you're new to reward checking, please refer to my blog post, 10 Common Traits of High-Yield Reward Checking .
Certificate of Deposit Rates
I’ve gone back to publishing my CD survey as a separate post. Please refer to my survey of the best CD rates. This recap will focus on banking news of the week and liquid accounts.
Rates as of September 23, 2014