Higher Savings Rates Expected Sometime in 2015

Savings account rates, money market rates, and CD rates have been low for over 5 years now. You have to go back over six years ago to just prior to the financial crisis to see decent deposit rates. Before the financial crisis hit, you could find some banks like Washington Mutual Bank offering a 5 percent CD rate for a 1 year certificate of deposit. It's worth noting that WaMU failed soon after which shows why they were offering such high CD rates - they were desperate to attract deposits to shore up their deposit reserves.

Six years ago, banks were offering savings rates and 1 year CD rates around 3.00 percent, which is still considerably better then the highest savings rates and 1 year CD rates which remain just above 1.00 percent.

The big question is when savings rates, money market rates, and CD rates will move higher again. The answer lies with the Federal Open Market Committee (FOMC). Deposit rates are directly tied to the federal funds rate which is set by the FOMC. When the fed funds rate is lowered, banks and credit unions lower deposit rates. When the federal funds rate is increased, financial institutions increase deposit rates.

The FOMC has set the current fed funds rate in a targeted range of zero percent to one quarter percent. The rate has been in this targeted range since December 2009 and will likely remain near zero percent to the summer of 2015. As a result, deposit rates will also remain near current levels until next summer. Listed below are the highest savings account rates and money market rates currently available.

Highest Savings Account Rates

  • CIT Bank 0.95% APY

  • GE Capital Retail Bank's Optimizer Plus Savings Account 0.95% APY

  • Barclays Bank 0.90% APY

  • GE Capital Retail Bank 0.90% APY

  • The Palladian PrivateBank 0.90% APY

Highest Money Market Account Rates

  • Sallie Mae 0.90% APY

  • Union Federal Savings Bank 0.90% APY

  • EverBank 0.86% APY

  • Mutual of Omaha Bank 0.85% APY

  • ableBanking, a division of Northeast Bank 0.80% APY

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Author: Brian McKay
April 15th, 2014