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We are Only Months Away from Higher Bank Rates

We are Only Months Away from Higher Bank Rates

Get ready for higher bank rates sometime this year, which is welcome news after a half dozen years of low rates.  We are only months away from the Federal Open Market Committee increasing the federal funds rate. This is good news because when the fed funds rate is increased, banks will follow suit by increasing deposit rates.

Interest rates will be moving higher in 2015 but don't expect too much. Best  case scenario, by the end of this year the highest savings rates and money market rates will still only not break through 2.00 percent. Currently the best savings rates are at 1.05 percent and the best money market rates are around 1.01 percent.

The last time variable interest rates on deposit accounts were above 2.00 percent was just after the financial crisis and recession. In fact, during this time we have witnessed the lowest average savings rates and money market rates ever recorded.

The current national average savings rate reported by the FDIC is at a paltry 0.06 percent. The national average money market rate is slightly higher at 0.08 percent. With rates that low, your savings are not even keeping up with the pace of inflation. The Consumer Price Index (CPI), which is a measure of inflation, is up 0.8 percent since December 2013.

National average rates are well below the rate of inflation but there are financial institutions offering rates slightly above the inflation rate. Listed below are the highest savings and money market rates this week.

Highest Deposit Rates February 5, 2015

Savings Rates

  1. GE Capital Bank 1.04% APY 1.05%

  2. My Savings Direct 1.04% APY 1.05%

  3. CIT Bank 1.00% APY 1.00%

  4. iGObanking.com 1.00% APY 1.00%

  5. Synchrony Bank 1.00% APY 1.00%

Money Market Rates

  1. EverBank 1.01% APY

  2. ableBanking, a division of Northeast Bank 1.00% APY 1.00%

  3. Sallie Mae Bank 0.90% APY 0.90%

  4. iGObanking.com 0.90% APY 0.90%

  5. Synchrony Bank 0.85% APY 0.85%

Author: Brian McKay
February 5th, 2015