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Online Savings & Money Market Account Rates 2019

Highest Online Bank Rates for Savings And Money Market Accounts - February 19, 2019

Savings Account National Average Rate: 0.20% ?

ONLINE BANKS APY? Vs. Nat'l Av. MIN?
Sponsored Advertiser Disclosure
UFB Direct, a division of Bofi Federal Bank
2.45% 12.01x $25,000
earn.bank
2.41% 11.81x $10,000
My Savings Direct, a division of Emigrant Bank
2.40% 11.76x $1
Transportation Alliance Bank, Inc. d/b/a TAB Bank
2.40% 11.76x $2,500
New account holders only.
Quontic Bank
2.40% 11.76x $100,000
CIBC Bank USA
2.39% 11.72x $0
New money only.
Rate available for new accounts only.
Citizens Access
2.35% 11.52x $5,000
Purepoint MUFG Union
2.35% 11.52x $10,000
Northpointe Bank
2.30% 11.27x $25,000
SFGI Direct, a division of Summit Community Bank
2.27% 11.13x $0
Live Oak Banking Company
2.25% 11.03x $0
Western State Bank
2.25% 11.03x $0
Synchrony Bank
2.25% 11.03x $30
Promotional rate for new account holders only.
Customers Bank
2.25% 11.03x $25,000
Amboy Direct
2.25% 11.03x $30,000
Promotional rate for new depositors only. Prior depositors may receive a lower rate.
Barclays Bank Delaware
2.20% 10.78x $0
Sallie Mae Bank
2.20% 10.78x $0
Ally Bank
2.20% 10.78x $0
Incredible Bank, a division of River Valley Bank
2.20% 10.78x $25,000
FNBO Direct
2.15% 10.54x $1
Peoples Bank
Restrictions
2.15% 10.54x $100
Peoples Bank (Mississippi)
2.15% 10.54x $10,000
American Express Bank, FSB
2.10% 10.29x $0
Alliant
Restrictions
2.10% 10.29x $5
Bank5 Connect
2.05% 10.05x $10
Radius Bank
2.05% 10.05x $25,000
Simple
2.02% 9.90x $2,000
Ridgewood Savings Bank
2.00% 9.80x $0
Discover Bank
2.00% 9.80x $0
Clear Sky Accounts
2.00% 9.80x $1
Capital One 360
2.00% 9.80x $10,000
TIAA Bank / Everbank
2.00% 9.80x $100,000
Pentagon
Restrictions
2.00% 9.80x $100,000
BankPurely, a division of Flushing Bank
1.90% 9.31x $0
Rate not available in all states.
ableBanking, a division of Northeast Bank
1.85% 9.07x $1,000
My Banking Direct, a division of New York Community Bank
1.85% 9.07x $25,000
Cross River Bank
1.82% 8.92x $0
Dollar Savings Direct, a division of Emigrant Bank
1.80% 8.82x $0
Northern Bank Direct
1.51% 7.40x $0
BAC Florida
1.50% 7.35x $5,000
Dime Community Bank
1.35% 6.62x $1,000
Zions Bank
1.26% 6.18x $1,000
Colorado Federal Savings Bank
1.25% 6.13x $1
Axos Bank, a division of Bofi Federal Bank
1.05% 5.15x $0
Mutual of Omaha Bank
1.00% 4.90x $1,000
Charles Schwab Bank
0.50% 2.45x $0
OneWest Bank, a division of CIT Bank
0.40% 1.96x $100,000
New Dominion Direct
0.40% 1.96x $100,000
CNB Bank Direct
0.26% 1.27x $100
AirBanking, A Division of MainStreet Bank
0.25% 1.23x $1,000
Kirkpatrick Bank
0.15% 0.74x $1
All rates listed are Annual Percentage Yield (APY). The APY rate in a savings account or money market account is a variable rate that is subject to change at any point. The Min listed is the minimum deposit account balance required to obtain the rate listed.

If you have cash in a large bank, or any bank with low savings rates, you are making less in interest than you could be and should be making. There are FDIC-insured banks that will pay you more through higher savings rates on your deposits. Take a few minutes to explore the table above that presents an unbiased list based on the best savings rates currently offered by online banks. You may be able to boost your annual interest earned from savings by more than 10X. Banks are always competing for your money. Take advantage of it!

Summary: Highest Savings Accounts

Bank Institution Interest Rate (APY)
UFB Direct, a division of Bofi Federal Bank 2.45% APY with $25,000 minimum
CIT Bank 2.45% APY with $25,000 minimum
earn.bank 2.41% APY with $10,000 minimum
My Savings Direct, a division of Emigrant Bank 2.40% APY with $1 minimum
Transportation Alliance Bank, Inc. d/b/a TAB Bank 2.40% APY with $2,500 minimum
iGobanking.com, a division of Flushing Bank 2.40% APY with $25,000 minimum

What Our Users and Experts Say About The Most Well Known Online Savings Accounts in January 2019


Marcus logo


Marcus Savings by Goldman Sachs - 2.25% APY, $1 minimum

Great for: High Savings and No Penalty CD Rates with no transaction fees ever

Overview: Marcus is the online bank of Goldman Sachs. Throughout 2018, it consistently offered one of the highest online savings rates, earning it recognition as a BestCashCow 2019 Best Bet.

Highlights: Marcus is very highly rated in customer reviews on BestCashCow. Users cite the consistently high savings rates, lightening fast ACH transfers, the ease of web access, strong customer service and the absence of any fees ever.

What to watch for: Marcus does not yet have a mobile app.



Citizens Access logo


Citizens Access Online Savings – 2.35% APY, $5,000 minimum

Great For: High Savings and No Penalty CD Rates with no transaction fees ever

Overview: Citizens Access is a relatively new entrant in the online banking space, but is a subsidiary of Citizens Bank, one the largest, oldest and most well established US banking institutions.

Highlights: Citizens Access never changes any monthly fees. Its user reviews on BestCashCow have been outstanding. Its consistent rate increases at or in anticipation of each Federal Reserve action in 2018 has earned it a spot as one of BestCashCow’s Best Bets for 2019.

What to watch for: All Citizens Access savings and CD products require a $5,000 minimum balance.



Ally logo


Ally Bank Online Savings Account – 2.20% APY, no minimum

Great For: Consistently Competitive savings and No Penalty CD rates with 24/7 Customer Service

Overview: Ally’s strong advertising campaigns and name recognition has made it one of the most recognized online banks. The savings rate is consistently competitive, and the bank also offers competitive CD products (with modest early withdrawal penalties) and no penalty CDs (with no early withdrawal penalties).

Highlights: BestCashCow user reviews cite a strong mobile app, great customer support, and the ease of getting into and out of No Penalty CD products. (BestCashCow highlighted Ally’s No Penalty CD in our December monthly update.) Ally also recently offered new and existing users a 1% cash promotions for bringing new deposits.

What to watch for: Some users have expressed disappointment with long wait times in reaching customer service by phone during peak hours. Others have commented about disappointment in being aggressively cross-sold for auto loan, personal loan, credit card and online banking products.





CIT Bank Savings Builder – 2.45% APY

Great For: Consistently Competitive rate

Overview: CIT Bank is a nationwide direct bank and is a division of CIT Bank, N.A. CIT was an early entrant into the online banking space, and has been offering competitive savings and CD products to US customers through the internet for many years. Due to the competitive positioning of its Savings Builder Account, we have rated CIT Bank as a BestCashCow 2019 Best Bet.

Highlights: User reviews left on BestCashCow’s savings table are consistently strong with users highlighting strong and responsive customer service by phone when necessary.

What to watch for: The Savings Builder account requires a $25,000 balance or a $100 deposit with at least $100 in subsequent monthly deposits.



Synchrony logo


Synchrony Bank High Yield Savings – 2.25% APY, no minimum

Great For: Consistently Competitive rate and 24/7 Access to Customer Support

Overview: Synchrony Bank is the former GE Capital Retail Bank that has now been spun off completely into its own institution, and has offered very competitive online savings and CD rates for some time. As Synchrony is an entirely independent entity now, BestCashCow does not believe that Synchrony has exposure to GE’s problems .

Highlights: User reviews left on BestCashCow cite strong and consistently available customer service.

What to watch for: Synchrony is no longer as aggressive or quick to raise rates as many of its competitors. It has become more aggressive in its special CD offerings (14-month and 15-month) than in its savings rate. Some customers have noted that the early withdrawal penalties for some of its special CDs are onerous.



Barclays logo


Barclays Bank Delaware Savings Account - 2.20% APY, no minimum

Good for: Solid APY with No Minimum Balance

Overview: Barclays Bank Delaware is a division of the often-troubled UK-based Barclays PLC. In the US, its brand recognition emanates from its role as one of the credit card issuers for American Airlines. The US subsidiary does not have a branch network enabling it to pass along competitive savings and CD rates to its customers.

Highlights: Barclays offers no minimum to open, 24/7 access to funds, online transfers to and from other banks, direct deposit and a mobile app.

What to watch for: Barclays Bank Delaware has not been consistently competitive in raising its savings rates as the Federal Reserveincreased rates over the last several years. While it used to be a very strongly reviewed bank by BestCashCow’s users, more recent reviews cite slower ACH transfers than some competitors. With uncertainty around Brexit, BestCashCow strongly recommends that depositors at this U.S. subsidiary maintain deposits within FDIC limits.

PRODUCT INFORMATION FOR HIGH INTEREST ONLINE SAVINGS ACCOUNTS

How Do Online Savings Accounts Work

Over the last two decades, online banks have emerged to offer depositors higher rates on their online savings and money market accounts than are available in the major money center banks and in smaller brick-and-mortar banks. Since these online banks do not have expensive branch networks to maintain, they usually pass some of their savings back to depositors in the form of higher rates. All online banks and local banks listed on BestCashCow are FDIC Insured.

Unlike certificates of deposit (CDs) or time deposits, money in savings and money market accounts accrue interest on a daily rate. The best yielding savings rates can conceivably change from day-to-day with new online banks emerging or existing banks more aggressively seeking to raise the capital accounts. It is important to check back on BestCashCow regularly to be sure that your savings accounts continue to earn the most competitive rates, no matter what the rate environment is.

The table above lists the highest yielding online savings account rates.

Recent Performance of Online Savings And Money Market Accounts

BestCashCow data has shown that the highest yielding online savings account rates have increased over the past year. The Federal Reserve remains committed to raising The Fed Funds Rate over the next year. This should cause leading savings rates to continue to increase through 2018 and into 2019.

The average online savings or money market rate exceeds the national average rate quite dramatically. The graph below shows how the average rates for online savings and money market accounts have trended over the last several years.  Even while online savings rates have improved, the the average rate of all online and locally offered savings accounts in the BestCashCow rate database has remained much lower at 0.14%. (The BestCashCow rate database, the largest in the world, contains rates on over 2,000,000 bank products from all 8,000 banks and 7,700 credit unions in the US.)

Best High Yield Savings or Money Market Accounts

Depending on where you live, there may be banks and credit unions offering rates still higher than the best online savings rates. Check BestCashCow’s list of the highest yielding local bank rates and the highest yielding credit union rates.

Best Online Bank Accounts with High Interest Rates

In the above table, you will find a list of the highest online savings account rates, ranked in descending order by interest rate currently offered. Online bank accounts are slightly different in terms of their features and the services offered. By reading the reviews of each bank, accessible from the rightmost column, you will be able to determine which bank is the best for you. Please also refer to the section below entitled “Best Online Savings Account Rates".

Are Online Savings Accounts Safe?

All bank accounts listed on BestCashCow are insured by the Federal Deposit Insurance Corporation ("FDIC"). The FDIC is a federal government chartered institution that provides insurance to a maximum amount of $250,000 per individual per institution (or $500,000 for joint account holders). All deposits (CDs, Checking, Savings Accounts) held in the same type of ownership at a single financial institution are only insured to $250,000. However, funds held in different types of ownership (Individual, Joint, Trust, Retirement) may fall under separate FDIC insurance provisions. BestCashCow.com strongly recommends that you deposit savings in only FDIC insured institutions and that you do not exceed FDIC coverage limits. Please visit the FDIC's website to determine your coverage limits based on your circumstances.

Advantages of Online Savings Accounts:

  • Higher interest rate.
  • Often top notch online functionality with 24/7 access, 365 days a year. You can check your balance, update your contact info, make transfers, and order deposit slips at any time. For more pressing issues, customer support is also usually accessible 24/7, so you can talk to an actual human instead of your computer screen.
  • Superior online and mobile access. Many traditional banks have been slow to adopt the best web and mobile features to improve the customer experience online. 
  • Easy money transfer capabilities to and from a primary checking account.
  • Liquidity. Depositors can withdraw their money at any time.

Disadvantages of Online Only Banks:

  • A variable interest rate. Most leading online banks have not lowered rates significantly in the past 18 months, there are often new entrants to the market that can disappear as quickly as they arrive on the scene. Any savings rate can conceivably be lowered at any time.
  • Interaction is only via phone or Internet. You cannot walk into a branch and talk to a customer service representative if you have a problem with your savings account. Nonetheless, the leading, high profile online banks provide virtually instant phone access at all hours to a representative. However, interaction with some of the smaller online banks can be more difficult as it is ordinarily limited to business hours in their area of operation.
  • You cannot get money cash or cashier's checks instantly as you can in a branch bank, and matters where you need to rely on the US Postal system can lead to significant delays and obstacles.
  • There is no opportunity to build a relationship with a banker should you need a loan or additional services in the future.

What is the best account for easy access?

Depending on where you live and how accessible the branch is, you may find that the best account for easy access is through a local bank or credit union. However, today many high yielding savings and money market accounts provide such easy accessibility, including through mobile apps, and can enable such easy transfers to a correspondent account at a local bank through ACH transfers, that more and more people are opening accounts for cash and savings that they do not need immediately.

Is a high-yielding online savings account your best option?

High-interest savings accounts are always an ideal place to keep your emergency fund or any money to which still you need ready access. Your money will be safer than if you stuffed it under your mattress, and it will grow a bit, too. Investors will find that keeping large amounts of money in savings and CDs provides them with lower returns but cushions them against market crashes like we experienced in 2000 and 2001 and again in 2008 and 2009.

Compare Online Savings Accounts

Savings Rates at Most Recognized Online Banks

To see how savings and money market accounts compare with CDs or time deposits and bonds, view the BestCashCow income guide here.

FREQUENTLY ASKED QUESTIONS ABOUT ONLINE SAVINGS ACCOUNTS

What is a savings account?

A savings account is one of the simplest types of bank accounts. It allows you to store cash securely and earn interest on your money.

What is a money market account?

The differences between a savings account and a money market account are largely arcane. Some savings accounts are limited by US federal regulations to six outbound transfers per month (the bank may allow additional access for a fee). Money market accounts are technically not bound by those limitations and offer more ways access deposits by issuing checks and debit cards. Prudent consumers will compare the two interchangeably, focusing primarily on rates and service among FDIC-insured banks (or NCUA-insured, for credit unions). Consumers who maximize their use of online savings and money market accounts access these accounts through ACH transfers that are easily set up on the online bank’s website so the additional ways to access deposits that money market accounts offer are rarely valuable.

How to Open a Savings Account?

The process of opening an online savings account or money market account is usually very simple. Banks ordinary ask you a few questions to verify your identify. These questions include seeking information from a state or government issued ID, such as a driver’s license. Due to increased US anti-money laundering rules and Department of Homeland Security requirements, it is very likely that you will also be asked to produce a photocopy of your license and a picture taken from your iPhone or other smartphone and emailed to the bank will ordinarily suffice. The bank may ask for information regarding a correspondent account from which you intend to have them draw the money to provide the initial funding. You therefore will need the ABA number and account number from an existing account that you have. They will verify this account by having you log back in to confirm the amounts of one or two small deposits to your correspondent account before they draw the funds from this account. Finally, many banks do a “soft” credit pull from Experian, Equifax or some other credit rating agency. While your credit rating will ordinarily not be affected, the application process may involve your answering questions about where you have lived, loans you may have had, past employers or cars you may have owned. Many people do not enjoy providing the amount of personal information required over the internet; therefore, some of the larger online banks have 24-7 customer service to guide you through the process. You can see the experiences of others with a given online savings bank that you are considering by reviewing the comments left in BestCashCow’s table above.

Are online savings rates always better than rates at brick-and-mortar banks?

No. Online banks often offer higher savings and CD rates because they have lower expenses from not having to maintain brick-and-mortar locations. You should also check rates at local banks and credit unions. Unlike other websites, BestCashCow.com compiles all of these rates, listing them in an unbiased manner that shows the proximity of each bank or credit union to you. Please access these rates using the tabs above.

Why do savings rates vary so much?

Even though rates are at levels that are historically very low, there is competition for your money. Like any active marketplace, there are buyers and sellers of goods and services at different prices.

How do I choose the right savings or money market account?

Begin your search with the table here on BestCashCow.com. In addition to checking online savings rates, you should also check local bank rates and local credit union rates.

What is the Best Fixed Rate Savings Account?

BestCashCow strongly encourages people to avoid very short-term promotional rates. The very nature of a savings or money market account is that the rate can change from one day to the next. Savings rates may be guaranteed not to change for some very short length of time, but they are not fixed. If you require a fixed rate or greater certainty that the rate that you are making will not change, you should consider CDs, which represent a time deposit, for some or all of your savings.

Should I consider CDs?

If you are unlikely to require access to your cash for some time, you may also consider certificates of deposit (CDs). While CDs have penalties for early withdrawal that may even eat into your principal, the rates on 2, 3, 4 and 5 year CDs are ordinarily significantly higher than savings rates. CDs also offer the certainty of rate stability for the term of the CD. Several sections and articles on BestCashCow can also help you to identify your proper cash allocation between savings and CDs.

With savings rates at such low levels, does earning a higher savings rate or the best savings rate really mean anything to me?

Even a difference of a couple of basis points (hundredths of percentage points) can really add up over time, especially on large sums of money. You may wish to familiarize yourself with the BestCashCow Savings Calculator in order to understand the importance of compounding interest at higher rates on your savings over time.

If you are too lazy to access the BestCashCow Savings Calculator or to bother with the magic of compounded earnings, here is the plain and simple truth:
  • $250,000 deposited at a major money center bank like Chase, Citibank, Bank of America or Wells Fargo is likely earning less than 0.10% APY. That money is therefore making no more than $250 a year in interest.
  • That same $250,000 deposited at a leading online bank is earning over 1% or over $2,500.
  • Even though the increased earnings from high yield savings (in this example, $2,250 annually) is fully taxable at the federal and state and local levels, wouldn’t you like to be earning that extra income from high-yielding savings accounts?

What does APY mean?

“APY” stands for annual percentage yield. Savings rates are displayed in terms of APY to indicate the effective annual-interest return, including the compounding of interest, of the course of a single year. $100,000 deposited in a savings or CD account with a 1.20% APY will earn $1,200 in the course of the year, but monthly interest in the first few months may be less than $100 a month (this also depends on the number of days in the month). Hence, the APY rate is ordinarily a couple of basis points above the real interest rates. Unlike with a CD, your actual APY in a savings account or money market account may vary if the rate changes.

Are you still afraid to open a high interest-earning online savings account?

Here are some common reasons people hold off:
  • You need to make more than six withdrawals a month. Avoid potential problems by either opening a high earning online money market account (some of the best rates available in the table above are actually from online money market accounts), opening a savings account at a bank which does not enforce the 6 transfer limit, tying your account to a correspondent bank’s money market account or checking account at a major money center bank (like Chase, Citibank, Wells Fargo, or Bank of America) where you make one larger transfer each month.
  • You like having access to a physical branch. Find out what the minimum balance required to avoid fees on your account at your physical branch, then transfer the excess balances to a high yielding online savings or money market account. You’ll continue to have access to the physical interaction and services of the bank with which you are used to banking, but you will also be dramatically increasing the interest earned on cash you don’t need over time.
  • You need to deposit large sums of cash or checks in excess of the online bank’s mobile deposit limit. In this case, you need access to a physical branch. See point 2, above.
  • You want one institution to handle all of your financial matters. While most online banks do not offer mortgages, credit cards and brokerage services. But, in 2019, there is no financial advantage to keeping all of your financial transactions in one or even a handful of institutions.

What is a health savings account?

A health savings account (or HSA) is a tax advantaged medical savings account available to taxpayers in the United States who are enrolled in a high-deductible health plan (HDHP). The funds contributed to an account are not subject to federal income tax at the time of deposit. According to IRS Publication 969 (2016), the interest or other earnings on the assets in the account are tax free and distributions may be tax free if you pay qualified medical expenses or other expenses not covered by health insurance such as dental or vision care. Due to the tax advantages of a health savings account, these accounts should be set up separately through banks offering them (such as Chase or Bank of America) and their assets should not be comingled with a high yielding online savings account. We know of no online banks currently offering HSAs.

What is an education savings account?

Education savings accounts, such as Coverdell Education savings accounts and 529 plans are accounts allowed family members to obtain certain tax advantages through setting aside for a child’s future education. 529 programs are administered at the state level and you must invest in programs they administer; Coverdell education savings accounts are move flexible (and generally following the same rules as IRAs), however we know of no online banks currently offering Coverdell Education savings accounts.

What is a child savings account?

A child savings account is a savings account in the name of the child with a parent or guardian named as the custodian on the account until the child reaches the age of 18 or 21 (depending of the child’s state of residency). A child savings account can be a great way to teach your child the importance of saving money from a young age. More information on child savings accounts can be found here. Ally and Capital One 360 are among the few online banks offering child savings accounts.

BEST ONLINE SAVINGS ACCOUNT RATES

Finding the best high interest online savings or money market account is a highly subjective exercise. The best account for your neighbor may not be the best account for you. To help you determine which account is best for you, we have created the following 7 point checklist:
  • A competitive interest rate. BestCashCow maintains the most comprehensive list of deposit account rates. The rates above are the best available rates for online savings accounts. In order to ensure that your money continues to grow over time, you may wish to avoid banks which rely heavily on very short term promotional rates (such as EverBank). If you open an account with a promotional rate or even if you open an account where the rate isn’t promotional in nature, you should check back with BestCashCow regularly to be sure that your bank continues to offer one of the most competitive rates.
  • Full functionality through online and mobile access. Most of the accounts listed above have robust websites and mobile access that enables full functionality. Read the comments from other users before opening an account as they often highlight problems with access.
  • Access how the bank provides customer service. Many of the leading online banks now have customer service representatives who are U.S. based and available 24/7 with low wait times. This is often a distinguishing feature that makes a well-recognized bank significantly more attractive than a smaller bank trying to enter the online banking arena.
  • Absence of fees. Be sure that you are opening an online account with a bank that doesn’t charge fees and has very low minimum balance requirements. American Express, CIT, GS Bank, Barclays and Ally are all well known for low minimum requirements and the absence of any unusual monthly fees.
  • Easy Access to your Cash through Immediate Online Transfers. The reason why you keep money in savings is for access in an emergency or to take advantage of immediate financial opportunities. You need access to your cash. Yet, some banks impose strict limits on the amount of cash that you can access from your account in a single transfer or limit the numbers of transfers you can conduct over a given time period. Other banks can delay your transfers for days while they make money on the float. You should check with the bank where you are considering opening an online account to understand the restrictions before you open an account. You may also read the comments from other users above as they can highlight any which banks enable the best access to your cash.
  • Stay within FDIC limits! See the section above and read this article.
  • Use the BestCashCow Savings Calculator to see how important it is to be maximizing your interest on savings accounts over time.

SAVINGS & CD CALCULATOR

Find out how much extra money you can earn by moving your bank money into an account that pays more.

Use or Change these Amounts And Rates

February 2019 Update – With the Fed on Hold, Here Are Five Attractive Nationally Available Online Savings And CD Rates

Rate information contained on this page may have changed. Please find latest savings rates.

Savings and CD rates continued to firm into the end of 2018.  However, as we predicted back in November, Fed Chairman Jay Powell has now fully equivocated as a result of presidential harassment and the Federal Reserve has now held the Fed Funds rate at 2.25% to 2.50%.   It is possible that rates could be here until later in 2018.  Here are 3 savings accounts that we find attractive at this point:

1.   MySavingsDirect – 2.40% Savings Rate, No Minimum Balance

MySavingsDirect is a division of Emigrant Bank, a large New York-based bank.   Customer reviews are mixed and Emigrant has a history of dropping rates in one division (holding customers who don’t regularly check their rates) while raising rates in other divisions,.   However, MySavingsDirect has been competing for depositors by raising rates for some time and, it is, at least for the moment, the highest yielding account without a minimum balance requirement.   In addition to the need to stay on top of the rate to make sure it isn’t lowered, those considering MySavingsDirect should know that it does have direct ACH connections to all other banks (which is something that is pretty standard among most online banks).

2.    CIBC Bank – 2.39% Savings Rate, No Minimum Balance

A couple of years ago, The Private Bank which operated out of Chicago offered competitive online savings rates.   The bank was purchased by the CIBC, one of Canada’s largest banks, which in late 2018 re-launched the platform under the CIBC Agility brand in order to compete for deposit accounts in the U.S.   CIBC now appears to be a very aggressive market participant.    It has been among the first to raise their rates when the Federal Reserve raised the Fed Funds rate.   To boot, the bank’s online savings account has no minimum balance.   

3.   CIT Bank Savings Builder – 2.45%, Requires $25,000 Balance or $100 plus an additional deposit of $100 a month

CIT Bank’s reviews are ordinarily favorable and their rate is very attractive.   However, unlike the above two savings accounts, this rate does have a minimum balance requirement.   There are two ways to qualify for the savings builder account – either to maintain a $25,000 balance or to open the account with $100 and deposit at least $100 during each monthly measurement period (between the 4th day of each month until the 4th day of the following month).   We think CIT is likely to remain competitive and named it one of our best bets for 2019.

See and compare all of the best online savings rates here. 

While we have been hesitant to recommend CDs with rates rising, the Federal Reserve’s recent decision to slow the pace of rate increases may provide reason to take a look at one-year CDs, particularly those with low early withdrawal fees.   Here are two that are competitive, and will penalize you with only 3 months of interest should you need to break the CD early.  

4.   Live Oak Bank – 2.85% 1-Year CD, $2,500 Minimum

Live Oak Bank is a small North Carolina bank that entered the online banking arena last year.     It has not been a consistent competitive player in the savings space and it can and does frequently adjust CD rates.   At the time of this publication, their 1-year CD rate stands at 2.85%.    Live Oak does not enable an account holder to have over $250,000 in total in their CDs, and you should not be exceeding FDIC limits with a small North Carolina bank anyway.

5.   Sallie Mae Bank - 2.85% 1-Year CD, $2,500 Minimum

Sallie Mae Bank has an old interface and you will see a spinning wheel when you try to open a Certificate of Deposit there.   But, its rate is 2.85% on a 1-year CD and it is likely that they will still be among the most competitive rates when it comes time to renew.

Check out the best 1-year CD rates here and see long-term CD rates here and special rate CDs here.

Have a great month.


Stop Waiting for the Big Money Center Banks to Raise their Rates

It has been many years since I co-founded BestCashCow, and I have heard just about every excuse possible for keeping your cash in low interest earning savings and money market accounts, checking accounts and CDs.

However, there is a new refrain that I am hearing and it is actually really irking me.  It goes something like this.

“Well, I have been meaning to move my cash out of Wells Fargo but I haven’t gotten around to it and I am sure that if rates are going up, they will have to become competitive soon so I am just going to leave it there.”

The only part of this quote that is even remotely correct is that rates are, in fact, going up.   The reality is that the large money center banks are currently flush with cash from other funding operations, and from others taking the same wait-and-see approach.   Today, the big banks are able to raise more money than ever before through capital markets to fund their lending operations, and they now have more money in deposits than they have ever had before.

These banks are counting on being able to successfully sell the pitch that they are delivering a better service and therefore customers should be willing to continue to accept zero interest rates for the service.   My personal view is that this pitch may continue to be compelling for depositors of small amounts.   For those holding $15,000 in a deposit account at Chase you gain access to their ATM network, their branch network, notaries and maybe safe deposit boxes, and even then you really need to require these services to justify forgoing over $400 in interest annually.

But, anyone holding over the bare minimum for the services that they need from a money center bank is not adopting best practices in relation to their finances.

There are banks and credit unions where you live and online banks that compete for your savings.   In fact, there are local bankscredit unions, online banks that are competing for your checking by offering far better rates and often times the same services.   Seek them out now.


Jack Bogle, Index Investing and BestCashCow

Jack Bogle pioneered the investing world and the mutual fund industry.   He taught the world that they should not be paying fees for performance, and that seeking to be average will outperform over the medium-term and the long-term.    He was correct that the extraordinary performance of a single manager is seldom, if ever, sustainable and that their fees will exact major damage for the investor.

I have been amazed that the best business schools in the country – Columbia, Harvard and Stanford – are still full of aspiring analysts and money managers in the post-Vanguard era. all still seeking to open their own funds.   More amazing is that many of these folks are still successful in raising capital (many aren’t).

Ever since I co-founded BestCashCow, I have frequently been asked if it is my view that people should avoid the stock market.   That has never been my view.   Over the long-term, investing in a broad and diversified stock market portfolio, and only just matching the stock market is the single best way to build wealth.   My view is that you should never be 100% in the stock market and that you will never know when you will require liquidity.  I’ve now lived long enough to know that many who were overinvested and forced to sell in October 1987, early 2001 or early 2009 were, without exaggeration,  slaughtered. 

So, while you should never be 100% in the market, you should be in the market in some form.   And, for those who don’t know how to build their own portfolio through an online broker, an extremely low fee fund like the Vanguard S&P 500 Index is a much better way than to pay fees upon fees upon fees to invest with someone who has put together a couple of good years at the track.  And, running parallel with forays into the market, of course, must be the wisdom to keep resources out of the market and in savings and CDs.  It’s that dual strategy that will always be a winning strategy.


Nothing Could Be More Dangerous Than to Buy a Bond Fund Right Now

Occasionally, financial planners reach out to me and want to connect on LinkedIn and social media.  While I do not hold financial planners in very high esteem since, they are always selling their latest product.  I occasionally connect in order to further the reach of BestCashCow.

I do not often engage in debate with these folks, but sometimes I see information shared that is so dangerous to investors and their retirement planning that I need to say something.

That happened this morning with this Wall Street Journal piece: https://blogs.wsj.com/experts/2019/01/06/how-to-play-the-bond-market-during-a-bear-market/

I have written before about the dangers of owning bonds of any nature in an environment where interest rates are rising and spreads are increasing.

As dangerous as individual bonds may be, they are in principle much less dangerous than owning a bond fund, even a high quality bond fund, since you can always just hold a bond until maturity without having your proceeds drained by a manager in a down environment.   At maturity, you get out at par, whereas you may never get out of a bond fund at par.

The 10-year US Treasury went to 3.20% last year.   As interest rates rose, bond prices fell.   Market turmoil over the last 2 months has lead people to seek safe haven in bonds and that has brought US Treasury rates back to 2.60%.   But, this is a blip.   It is a fleeting moment where you should be selling bonds and bond funds.   It isn’t a time to buy.   The Federal Reserve is still normalizing interest rates and in that environment the 10-year is still going up.

These two graphs from the St. Louis Fed are the best warning I can give.   The first, that dates back to 1960, shows how abnormally compressed the 10-year Treasury is by any long-term measure.   The second, dating back only 10 years, shows how quickly 10-year US Treasury rates can reverse and rise (even in an environment where interest rates are low).  

The “buy bond funds” crowd came out of the woodwork in dramatic fashion in mid-2010 as the 10-year fell from 4.00% to 2.50%.   Those who followed this advice saw their funds collapse when interest rates reversed and were in a world of pain in January 2011.   While those folks found some opportunities to get out later, opportunities which buyers today may not get.

Stick with savings accounts and short-term CDs for now.

 

Graph 1

 

Graph 2


Wall Street Analysts Are Writing Their Own Fake Narrative About Inflation

I cannot do it anymore.   I just cannot watch CNBC or Bloomberg.   It isn’t because the market is falling (it is).   And, it isn’t because I cannot bear to hear the usual batch of cheerleaders (so-called “analysts”) extolling the virtues of being long in an uncertain time.

Unlike 99% of the analysts, Joe Lavorgna is about as reasoned of an analyst as CNBC ever has as a guest.   Yet, he too denies inflation and says that the Fed needs to relent and “let the economy run hot.”

The problem with Lavorgna’s reasoning is clear: the Fed has a dual mandate of full employment and price stability.   Price stability is achieved by fighting inflation and ensuring that the real value of the US currency maintains its current level of purchasing power.  If $100 today becomes $102 in a year, but has the purchasing power of $90 today, the economy falters.  People need to earn enough in  their savings accounts and other risk-free investments in order to ensure that they don’t lose the value of their money because that will cause the wealth of the nation (and consumer confidence) to collapse.

Were Chairman Jay Powell to allow the Federal Reserve’s mandate to become the growth in the stock market (as Wall Street would like) and cheap borrowing costs for real estate developers (as the President would like), the Federal Reserve would be risking a diminution in our nation’s wealth in order to get a continued rally in the stock market.  

But, Wall Street’s cheerleaders are pushing for this short-term gain over long-term economic security  when they try to explain that there is no inflation.  

Let’s clear this up:

First, there is inflation.   Annual rates of inflation are calculated based on the Consumer Price Index, issued monthly by the Labor Department’s Bureau of Labor Statistics.   The CPI number issued on December 12, 2018 indicates a move from 246.669 to 252.038 from November 2017 to November 2018 for an inflation rate of 2.20%.    This rate is still historically low, although much higher than the measure for the last several years.

The CPI indicator is controversial for many reasons, but one thing that economists universally agree upon is that it is backward looking.  The Fed, therefore, looks at a variety of other factors many of which are going to try to measure incipient inflation.

Second, there are all sorts of reasons to believe we could have serious inflation in 2019 that will not show up until it is here.

I see at least four significant inflationary pressures in 2019 that weren’t present in 2018.  

  • Continuation or escalation of the trade war with China is inflationary as we have long relied on China for all sorts of low cost items and inputs.   Tariffs placed on those items will cause the cost of goods to increase or purchasers to find alternative - and more expensive – replacements.
  • Brexit and its March 29, 2019 deadline present a range of possible outcomes.   A hard Brexit or anything that might resemble it will be tragic for the British economy, but the disruption that it will cause in global markets will be inflationary.
  • Commodity prices collapsed in the second half of 2018.   If oil does anything other than continues to fall in a straight line, transportation costs will increase.   If other commodities bounce, input costs will rise.
  • Minimum wage has just increased on January 1, 2019 in 20 states (including California and Florida) and a bunch of other cities (including DC).   This affects the wages of 17 million people.   In New York City, the cost of employing someone is now $15 an hour.   If you don’t think that higher wages get passed on in the form of higher costs, come visit New York.

When analysts stop their market cheerleading and look at the same risks that the Federal Reserve and Jerome Powell are looking at, the inevitable conclusion is that the Fed needs to continue to hike rates in 2019.


Our Predictions for 2019

Rate information contained on this page may have changed. Please find latest savings rates.

Because my predictions for 2018 have proven to be largely correct I have been emboldened to release my predictions for the coming year.

I correctly predicted online savings and money market rates going above 2% before October 2018, online one-year CD rates going above 2.50%, and 5-year rates going to 3.50%.  I am now predicting that online savings rates go above 3% in 2019, and that 1-year rates will go above 3.50% and 5-year rates above 4.50% in 2019.  The Fed is guiding that way.  And, even if Trump tries to remove Jay Powell, rates will continue to move up and it is good for the country to normalize interest rates.  If you follow my prediction, you will basically continue to be in savings accounts and you will not lock into CDs longer than one-year.

I also predicted the stock market’s assent and its decline, as well as the decline in bitcoin.  Bitcoin is going below $1,000 and it is never coming back.  The stock market will go much further down over the coming months, but it will ultimately end 2019 a little higher than where it is right now.  Bond yields will climb and real estate will continue to fall.  Cash in the form of savings and CD rates will match the stock market’s performance in 2019, and outperform everything except perhaps oil, gold and some other precious resources (that are all starting the year at such low bases that they have nowhere to go but up). 

My 2018 prediction about the 25th Amendment was premature and based on hopeful speculation.  It didn’t come to pass in 2018, but it will in 2019.  Pence will also become implicated in the Mueller probe, leading to his quick resignation or impeachment.  Pelosi’s elevation to the Presidency will be the impetus that causes the stock market to stop falling.

And, just like 2018, we’ll be happy and surprised at the end of the year that the country is still intact at all.

Happy New Year.