America’s Best Rates 2013 Q4 – Yields Continue Declining (With Some Exceptions)
Last year ended on a familiar note for deposit account customers: Savings and money market rates fell yet again, according to the latest research by MoneyRates. However, there were exceptions to this trend that demonstrated how diverse this market is and how it can reward consumers who actively shop for the best deals.
Each quarter, MoneyRates conducts its America’s Best Rates Survey, which looks at interest rates on savings accounts and money market accounts. The survey tracks rate levels throughout the quarter to gauge which banks consistently offer competitive rates. Though average savings and money market rates fell during the fourth quarter, the survey highlights ways that consumers can buck the trend and find higher rates through smart shopping.
Deposit rates in 2013
While 2013 will be remembered as the year that some interest rates, such as mortgage rates and bond yields, finally broke their falling trends and started to rise, savings and money market accounts remained mired near zero throughout the year. Pushing these rates higher will likely require stronger and more consistent growth than the economy has managed so far.
Moving into 2014, it remains important not just to look at overall national averages but also specific banks and categories. When deposit rates turn around, it will probably happen with a few leaders at the vanguard rather than the entire industry moving as one. The following lists identify banks that appear likely to lead the way upward.
America’s best savings account rates
Below are the 10 highest savings account rates in the America’s Best Rates survey for the fourth quarter of 2013:
|
Bank |
Savings account rate |
|
|
1st place |
Doral Bank (ABR platinum medal winner) |
0.940 percent |
|
2nd place |
Capital One (ABR gold medal winner) |
0.904 percent |
|
3rd place (tie) |
Barclays Bank (ABR silver medal winner) |
0.900 percent |
|
3rd place (tie) |
GE Capital Bank (ABR silver medal winner) |
0.900 percent |
|
5th place (tie) |
American Express National Bank (ABR bronze medal winner) |
0.850 percent |
|
5th place (tie) |
FNBO Direct (ABR bronze medal winner) |
0.850 percent |
|
7th place |
Ally Bank |
0.849 percent |
|
8th place |
CIT Bank |
0.845 percent |
|
9th place |
GE Capital Retail Bank |
0.840 percent |
|
10th place |
Discover Bank |
0.804 percent |
(Ed. note: GE Capital Retail Bank became Synchrony Bank in June 2014.)
The above list is very similar to the top 10 from the third quarter, with the notable exception that Capital One entered the fray in the fourth quarter, surging all the way to second place.
These top rates are four to five times as high as the average savings account rate in the survey, which was 0.179 percent. This average was down a little from the third quarter average of 0.185 percent, marking the second consecutive quarter that savings account rates fell.
Online accounts continue to maintain a significant advantage over the rates on traditional branch-based accounts. The average online savings account rate was 0.539 percent, compared with just 0.138 for traditional savings accounts. Most of all though, the disparity between the top rates and the averages underscores the importance of active rate shopping.
America’s best money market rates
Below are the 10 highest money market account rates in the America’s Best Rates survey for the fourth quarter of 2013:
|
Bank |
Money market account rate |
|
|
1st place |
Doral Bank (ABR platinum medal winner) |
0.940 percent |
|
2nd place |
Sallie Mae Bank (ABR gold medal winner) |
0.900 percent |
|
3rd place |
Mutual of Omaha Bank (ABR silver medal winner) |
0.850 percent |
|
4th place |
Ally Bank (ABR bronze medal winner) |
0.849 percent |
|
5th place |
GE Capital Retail Bank |
0.822 percent |
|
6th place |
Nationwide Bank |
0.735 percent |
|
7th place |
Discover Bank |
0.700 percent |
|
8th place |
EverBank |
0.610 percent |
|
9th place |
OneWest Bank |
0.500 percent |
|
10th place |
Zions Bank |
0.450 percent |
The accounts and ranks listed above are identical to those on the third-quarter list, though some of the rates have changed slightly. This underscores the value of active rate shopping — though money market rates are subject to change at any time, banks that have a strategy of offering higher rates tend to consistently rise to the top of the survey. Chances are that a consumer choosing from this group of banks will continue to receive one of the most competitive rates available in the foreseeable future.
Like savings account rates, money market rates overall declined during the fourth quarter, from an average of 0.161 percent to 0.156 percent. Here, too, there was an advantage on average to choosing an online-based account: The average online money market rate during the fourth quarter was 0.590 percent, compared to an average of 0.130 percent for traditional, branch-based money market accounts.
Methodology and outlook
The MoneyRates survey of America’s Best Rates is based on an index of 100 banks, including the top 50 retail banks by deposit size, plus 50 smaller banks. Rankings are based on an average of rates offered throughout the most recent calendar quarter, a methodology that emphasizes consistency over temporary promotional rates.
What was striking about bank rates in 2013 was that mortgage rates rose significantly while deposit rates were little changed. Conditions are in place for this trend to continue, especially since the Federal Reserve announced in December that it would begin easing up on its program to lower long-term rates while extending its probable timeframe for keeping short-term rates near zero.
It would take substantial economic improvement to push short-term rates higher, and a weak December employment report was yet another setback on the path toward a stronger economy.
