America’s Best Rates 2013 Q3 – Deposit Rates Suffer A Relapse

Written by Richard Barrington

Financial Expert

Edited by Kristin Marino

Managing Editor

Savings account rates had a brief shining moment — but it didn’t last.

After defying a long-term trend by rising slightly in the second quarter of 2013, deposit rates again lost ground in the third quarter, according to the latest MoneyRates America’s Best Rates survey. Savings account rates were not alone, as money market rates also declined during the third quarter, reaching their lowest point in the history of the survey.

The one hope for consumers is that there remains a wide gulf between the best savings and money market rates and the average rates for those accounts. This gives consumers who are willing to shop around — and especially those who are willing to consider an online bank — a chance to earn higher interest rates.

Here are some of those top savings and money market rates, as well as a discussion of the broader trends impacting bank yields today.

America’s Best Rates: savings accounts

Below are the top savings account rates from the third quarter America’s Best Rates survey, but 11 accounts appear rather than the usual 10 because of a three-way tie for ninth place:

*Doral Bank was closed in Puerto Rico February 2015. 

**Synchrony Bank is now known by this current name as of June 2014. It was previously referred to by its original name in an older version of this post.

The top savings account rates are in sharp contrast to the third quarter’s average, which was just 0.185 percent, down from 0.192 percent the previous quarter. Most of the top-performing banks have shown a consistent commitment to offering high rates. Besides representing the best average rates from the third quarter, nine of the 11 banks listed above also made last quarter’s list of top savings account rates.

By offering rates four or five times the average savings account rate, the top-performing banks show that customers can benefit by shopping around. In particular, customers may do well by looking at online banks since eight of the eleven banks above are primarily online institutions. On average, online banks offered a savings account rate of 0.569 percent, compared to just 0.123 percent for traditional banks.

America’s Best Rates: money market accounts

Here are the top 10 money market rates in the third-quarter survey:

While the very highest money market rates were fairly similar to the best savings account rates, there was less consistency in the top 10 in the money market category. This scarcity of top-level rates was also reflected in the average money market rate of 0.161 percent, which was 2.4 basis points lower than the average savings account rate. As recently as the second quarter of this year, the average money market rate was higher than the average savings account rate, but now savings accounts have held the edge for two consecutive quarters.

All of the banks from last quarter’s top 10 made this quarter’s list of the best money market rates, with the only change being that Discover Bank and EverBank swapped positions. Unlike the savings account category, in which online banks dominated the list of the top rates, banks that operate at least some branches actually outnumbered online banks six to four on the list of top money market rates. However, for the money market category as a whole, the average online rate of 0.549 percent easily outdistanced the average traditional bank rate of 0.129 percent.

Methodology and outlook

The quarterly survey of America’s Best Rates is based on the MoneyRates Index, a sampling of 100 banks that includes the top 50 retail banks according to total deposits and 50 smaller banks. The survey’s methodology emphasizes the consistency with which banks offer high rates because the results are based on an average of rates measured throughout the quarter rather than any one-time snapshot of rates.

As the banking industry enters the fourth quarter, it seems unlikely that 2013 will be the year when bank rates make a meaningful recovery from their multi-year decline. However, there is still some time for disruptive events or signs of progress to set the stage for 2014.