America’s Best Rates Q2 2014 – Good Deals for Smart Savers
Interest rates on deposit accounts have fallen over the past year, but there are still some places where consumers can find an edge, according to the MoneyRates America’s Best Rates survey for the second quarter of 2014.
The survey finds that while the average rates on savings accounts and money market accounts have slipped even lower than they were a year ago, online banks and medium-sized banks are still offering consumers a chance to earn higher yields.
Savings account rates: latest trends
The average annual percentage yield (APY) on savings accounts in the second quarter was 0.180 percent, down 0.012 percentage points from a year earlier. However, as the following list of the top savings account rates shows, there are a number of choices that offer consumers the opportunity to earn four or five times that average on their savings accounts. The following is a top 11 list rather than a top 10, simply because there was a tie for 10th place:
| Bank | Savings account rate (APY) |
|
| 1st place | Synchrony Bank (ABR platinum medal winner) | 0.950 percent |
| 2nd place | Doral Bank (ABR gold medal winner) | 0.934 percent |
| 3rd place (tie) | Barclays Bank (ABR silver medal winner) | 0.900 percent |
| 3rd place (tie) | CIT Bank (ABR silver medal winner) | 0.900 percent |
| 3rd place (tie) | GE Capital Bank (ABR silver medal winner) | 0.900 percent |
| 6th place | Ally Bank (ABR bronze medal winner) | 0.870 percent |
| 7th place (tie) | Capital One | 0.850 percent |
| 7th place (tie) | Discover Bank | 0.850 percent |
| 7th place (tie) | FNBO Direct | 0.850 percent |
| 10th place (tie) | American Express National Bank | 0.800 percent |
| 10th place (tie) | Sallie Mae Bank | 0.800 percent |
The data also revealed some general trends on where consumers can find better rates. Online banks continued to offer an advantage over traditional brick-and-mortar banks in the second quarter. Savings accounts at online banks offered an average rate of 0.536 in the second quarter, which was more than five times the average of the savings account rates at traditional banks, at 0.096 percent.
Besides online accounts, another possible sweet spot for higher savings account rates is at mid-sized institutions, defined in this survey as those with between $5 billion and $10 billion on deposit. With an average savings account rate of 0.277 percent, medium-sized banks as a group offer rates more than 10 basis points higher than the average of their larger and smaller counterparts, and have bucked the general trend by raising their rates over the past year.
Money market rates: latest trends
Money market rates also dropped over the past year, falling by 0.013 percentage points to an average of 0.162 percent in the second quarter. Here again though, shopping around is a worthwhile exercise, because as you can see from the list below, some of the top banks offer money market rates five times higher than the average:
| Bank | Money market account rate (APY) |
|
| 1st place | Doral Bank (ABR platinum medal winner) | 0.938 percent |
| 2nd place | Sallie Mae Bank (ABR gold medal winner) | 0.900 percent |
| 3rd place (tie) | Ally Bank (ABR silver medal winner) | 0.850 percent |
| 3rd place (tie) | Mutual of Omaha Bank (ABR silver medal winner) | 0.850 percent |
| 3rd place (tie) | Synchrony Bank (ABR silver medal winner) | 0.850 percent |
| 6th place | Discover Bank (ABR bronze medal winner) | 0.700 percent |
| 7th place | Nationwide Bank | 0.660 percent |
| 8th place | EverBank | 0.610 percent |
| 9th place | OneWest Bank | 0.500 percent |
| 10th place | Santander Bank | 0.480 percent |
As with savings accounts, the money market accounts at online banks can be a good place to look for better rates. Online money market rates averaged 0.560 percent during the second quarter, compared to an average of 0.109 percent for the money market rates at traditional banks.
Here too, medium-sized banks offered a rate advantage over smaller and larger banks, though the difference was not as great with money market accounts as with savings accounts — there was less than two basis points of difference between the average money market rate for medium banks and the average rate at larger banks. However, money market rates at medium-sized banks did defy the general trend by rising slightly over the past year.
Is a change coming soon?
While there are a few places, consumers can look for better savings and money market rates, when will better rates become a broader trend rather than a few exceptions? There are signs that the turning point for bank rates may be near.
Perhaps the most optimistic of these signs is the upturn in employment in 2014. U.S. job creation has topped 200,000 for five consecutive months now, giving a boost to economic activity that could lead to higher interest rates.
Another factor that could lead to higher rates is inflation pressure. In the second quarter, the Consumer Price Index increased at an annual rate of 3.5 percent. Deposit rates may rise in response to heightened inflation, but consumers may lose ground to rising prices in this scenario.
For now, the most certain thing about bank rates is that consumers have much to gain by shopping around. Switching to one of the above banks is one way to get higher rates now without waiting for economic trends to take shape.
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