America’s Best Rates 2011 Q4 – Getting More From Your Savings

Written by Richard Barrington

Financial Expert

Edited by Kristin Marino

Managing Editor

Read the current America’s Best Rates feature

While bank customers everywhere are unhappy about today’s low interest rates, some have it much worse than others — in some cases, even 100 times worse.

The fourth-quarter MoneyRates survey of America’s best deposit rates reveals, once again, that the interest you earn on your deposits depends very much on where you bank. The data showed that the top banks offered interest rates about four times the survey’s national average.

But even more shocking, the survey’s range in interest rates revealed that, depending on where you bank, you could be earning 100 times more — or less — interest than other depositors in comparable accounts at other institutions.

For this quarter, the survey also took into account the size and type of each bank surveyed. This data exposed some noteworthy trends, including the fact that the savings account interest rates at online banks roughly quadrupled the rates offered at their brick-and-mortar counterparts.

A key feature of the America’s Best Rates survey is that it is not just a one-time snapshot of a single day’s rates. Instead, it is based on the average rates offered over a calendar quarter, so it captures which banks consistently offered the best rates.

America’s Best Rates is based on the MoneyRates Index, a representative sample of 100 banks, including the nation’s 50 largest banks and 50 banks of varying sizes.

America’s Best Rates: Savings account rates

The average savings account rate in the survey was 0.217 percent, but several banks offered considerably better rates. These were the 10 highest average savings account rates over the course of the fourth quarter of 2011:

This was the third consecutive quarter that Discover Bank topped the list of savings account rates, though this time it shared the top spot with Sallie Mae Bank. In all, nine of the fourth quarter’s top 10 also made the third quarter list, reinforcing the notion that these are banks that offer consistently high rates.

America’s Best Rates: Money market rates

The average money market rate was 0.253 percent, but as with savings accounts, several banks presented opportunities to do considerably better. Here are the top 10 money market rates for the fourth quarter of 2011.

Sallie Mae Bank completed a couple of impressive feats by topping this list: It led the rankings for both savings account and money market rates, and this was the second consecutive quarter in which it had the top money market rate. Just as with the savings account list, nine out of the 10 banks on this list of top money market rates also appeared on the third-quarter list.

Differences by type and size of bank

Though rates varied widely from one bank to the next, a couple of trends emerged in how the type and size of banks correlated with the level of savings and money market rates they offered.

The clearest trend was the marked difference in average rates between online banks and traditional brick-and-mortar banks. Online banks offered an average savings account rate of 0.671 percent, compared to just 0.158 for traditional banks. This advantage held for money market accounts as well, as online banks offered an average rate of 0.663 percent, compared with 0.213 percent for traditional banks.

In terms of size, medium-sized banks seemed to be the sweet spot for higher rates, though the rate differences by size were not huge. Medium-sized banks (those between $5 billion and $25 billion in deposits) offered average savings account rates of 0.279 percent, compared to 0.201 percent for large banks (deposits above $25 billion) and 0.194 for small banks (deposits below $5 billion). On the money market side, medium banks offered average rates of 0.313 percent, compared with 0.237 percent for large banks and 0.233 percent for small banks.

As in previous quarters, the survey confirmed the value of shopping for savings and money market rates. General trends suggest that online banks may be a good place to start searching for the best interest rates, though the specific banks on the lists above might be the surest bets of all.