Savings Rates | Find the Best Savings Rates Today
The top online savings rates and money market rates were increased again last week because the Fed increased the fed funds rate. These increases bring the best variable deposit rates to 1.30 percent, up from the prior top rate of 1.25 percent. You won’t find these rates from traditional brick and mortar banks, these rates can only be found from Internet banks.
To give you some perspective on how much higher deposit rates are from online banks, we listed the top online rates along with rates from the largest banks. The savings rates offered by the top brick and mortar banks are paltry at best. Even finding rates the brick and mortar banks are offering is difficult – you really have to dig through their websites to find the actual rates they’re offering.
Top Online Savings Rates
Savings Rates at Largest Banks
As you can see, there is no comparison. Don’t bother opening a savings account with any of the big 4 banks. In addition to their extremely low savings rates, there are also many hidden fees and charges. You can quickly get a negative return on your deposit if some of these fees are charged.
You can search for and compare savings rates and money market rates from dozens of banks and credit unions by searching our deposit rate lists for the best savings rates.
The new highest savings account rate on our rate list this month is from Popular Direct savings account rate , currently at 1.25 percent with a yield of 1.26 percent. Popular Direct’s savings rate is two and a half times the national average savings rate as reported by MonitorBankRates.com. Popular Direct is the online banking division of Banco Popular North America (BPNA).
The best savings rates are found with online banks because you will always get a better rate than a brick and mortar bank. Many brick and mortar banks have online banking divisions which offer higher deposit rates than the parent bank. BPNA’s online savings rate is 1.26 percent but their top brick and mortar savings rate is only 0.35 percent.
Getting access to your money with an online account is also very easy these days. You can link both internal and external accounts to transfer money in and out. Mobile banking also gives you the ability to deposit checks just by taking a photo of the front and back of a check to submit for payment.
The minimum account opening account balance for a Popular Direct savings account is $5,000. There are a number of account fees you will be charged if certain criteria aren’t met on a monthly basis.
If you don’t maintain a minimum account balance of $500 you will be charged $4.00 a month. You will be charged an excessive withdrawal fee of $5 if you exceed the legal limit of 6 withdrawals or transfers during any statement cycle.
You have to keep the savings account open for a minimum of 180 days, failure to do so will cost you a fee of $25.00. There is a dormancy fee of $5 if there is no account activity in 12 months. Interest earned on the account is calculated using the daily balance method, which gives the account a higher overall annual percentage yield.
Another Fed meeting has come and gone with no interest rate hike but there is hope for the future for savings rates. Over the past year, we have already seen banks and credit unions increase savings account rates. In fact, this past month we have a new highest savings rate of 1.26 percent on our rate list.
Looking past this month, it’s very likely savings rates and money market account rates will continue to inch higher. Pressure is mounting for the Fed to increase the fed funds rate and it’s looking like that will happen during the Fed’s scheduled December meeting.
When the fed fund rate is increased, it’s likely the best savings rates from online banks will also increase. The current fed funds rate is in a targeted range of 0.25 percent and 0.50 percent. If the range is increased to 0.50 percent to 0.75 percent the top savings account rates could rise to 1.50 percent.
The last time we saw the top variable deposit rates at 1.50 percent was several years ago. You might be able to find a bank offering a promotional rate of 1.50 percent or higher but it’s a limited time promotional rate. You have to go back to right after the financial crisis around 2009/2010 to find deposit rates that high.
Highest Savings Rates
Highest Money Market Rates
Another Federal Open Market Committee (FOMC) meeting has come and gone without a fed funds rate hike. This isn’t good news for savers who have been dealing with low savings rates for almost a decade. The FOMC wrapped up their two day meeting last week and announced they would stand pat on the fed funds rate.
There was a glimmer of good news in the FOMC’s released Economic Projections. The projection for the fed funds rate at 0.60 percent in 2016 will mean one more rate hike this year. Whether or not that actually happens remains to be seen but if there is a rate hike, it would be 0.25 basis points.
A 0.25 percent fed funds rate hike will probably prod some banks and credit unions into increasing deposit rates. I don’t expect the highest savings rate on our rate list to also increase 0.25 percent. We will probably see the top rates increase around 10 basis points.
Right now, the best savings rate on our rate list is at 1.25 percent, so we could see the top rate move towards 1.35 percent. The highest money market account rate right now is at 1.10 percent, so the highest rate would likely increase to around 1.20 percent.
Looking past this year, the FOMC’s projections have the fed funds rate at 1.1 percent at the end of 2017 and at 1.9 percent at the end of 2018. If these projections are correct, deposit rates will move higher in the next two years but don’t expect any miracles.
A fed funds rate just above 1.00 percent would send the highest savings rates towards 2.00 percent. A fed funds rate near 2.00 percent will send the highest savings rates towards 3.00 percent. These projected rates are still low, historically speaking, but better than current rates.
The best online savings account rates are still just above 1.00 percent this week. A few banks made changes to their savings rates but there were no new highs to report. Savings rates are expected to remain near current levels until the Federal Open Market Committee raises the federal funds rate.
Another FOMC meeting came and went without a fed funds rate increase late last month. The next scheduled FOMC meeting is slated for late September. As of today, the CME Group Fed Watch tool puts the probability of a rate increase at a measly 12 percent.
Outside of the September meeting, there is another meeting scheduled for October and one in December. The Fed Watch Tool puts the chance of an increase in October at 13.4 percent and at 34.3 percent in December. The way things have been going in 2016, I’m not holding my breath for another rate increase this year.
Listed below are the top 10 bank and credit union savings rates for August 10, 2016.
Top Ten Bank and Credit Union Savings Rates August 10, 2016
RatesORama.com Average Mortgage Rates