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Online Savings & Money Market Account Rates 2020

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Ray Dalio’s Advice is Not For You

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Ray Dalio is a Greenwich-based hedge fund manager.   I don’t know Ray, but by all accounts he is a very successful operator with excellent performance and a smart guy.

Dalio has recently been playing his hand at making far out comments in order to gain attention.  Dalio is generally very discrete and responsible (for example, he did not go on CNBC when Bitcoin hit 19,000 and say it was going to 40,000 like other frequent CNBC guests).    Nonetheless, his latest piece of advice is not for you.

You see, Dalio stated to CNBC that saving money in cash is “the worst thing you can do.” 

Dalio correctly stated that cash is tax disadvantaged and that you are taxed on interest at ordinary income rates, making cash a less advantaged asset class from a tax perspective than many of other alternatives where income generated has favored treatment (dividends from equities, for example) and where capital gains can be achieved.

But, Dalio overlooks the fact that cash is always going to be there from day to day.   You won’t loose 2/3rds of it as you did in 2000 – 2002 or as you did in 2008 – 2009, or as many of his Greenwich-based hedge fund brethren have done in a rising stock market over the last several years.    And, if you aren’t old enough to remember those periods or familiar with these types of losses, you can read about the losses people have recently had on bitcoin or look at the market’s fall in just the week after Dalio’s comments.

For those people who aren’t billionaires and who are dependent on maintaining their current asset levels in order to secure the education of their children, cash is a necessary and appropriate place to be and it can be an appropriate place to be with a substantial part of your portfolio for long periods.

To boot, cash doesn’t earn the 0.09% that Dalio assumes that it earns when he says that it doesn’t keep up with inflation.  The leading online savings accounts are paying upwards of 2.25% at the moment, and 1-year online CDs can be found at 2.70%.   Dalio needs to familiarize himself with the rates on BestCashCow (or our competitor’s sites) before he makes incorrect statements such as that.

Note to Ray Dalio, as of the date of this article, cash, even if it were only earning 0.09%, has outperformed the stock market, the bond market, EM, bitcoin and real estate in 2018.   It is certainly looking like it might outperform these asset classes in 2019 as well.


A Lesson for your Kids about Math and Money

It’s very hard to figure out when and how to discuss money with your children.  It’s almost as difficult, surprisingly, as talking with them about sex.  But there is an easy way, one that also gives them at the same time an unusual introduction to math, especially fractions and multiples.

Today, banks (and there are an unusually large number of both online banks and brick-and-mortar banks) compete with one another to offer the best interest on both short and long-term money accounts and CDs.  In fact, there is a dizzying array of offers out there of constantly changing rates.

For parents and children the new environment and competing banks offer a perfect opportunity for introducing easy to grasp but highly important skills in money management concepts and division and fractions.  Equally, bank interest rate competition also provides an environment of very low risk, making things both fun and safe.   Many online banks – including Ally and CIT – make it particularly easy to open a savings account for minors.   Such a savings account is a far safer place to put allowance, presents or earnings than trying to teach your kids to experiment with small stock purchases as a way to introduce concepts of income generation and the like.

What makes it all even better for introducing math and money matters to children is that there are a number of sites, including BestCashCow, where the primary focus is on tracking and making easily available changes and fluctuations of interest and CD rates over short periods of time and across the spectrum of the nation’s banks. 

In particular, this site and RatesAndInfo.com have great calculators that offer a real resource to demonstrate to your kids the value of compounding money throughout their lifetimes, and the importance of incremental improvements in a savings rate when compounded over time.


BestCashCow's Best Bets in Online Savings and Money Market Accounts for 2019

The Federal Reserve moved in September 2018 to a 2 – 2.25% Fed Funds rate, and savings and money market rates are now firmly above 2%.    

Interest rates are poised to go up again in December 2018.  Unless Trump fires Jay Powell, the Federal Reserve will likely continue to raise rates in 2019 until it reach its stated 3% + neutral rate by end of the year.

Not everyone checks BestCashCow.com or competing sites every day in order to get the best savings rates.   In fact, there are people who don’t even check monthly or quarterly.   And, most people just don’t like the hassle of moving around large amounts of cash in order to continue to get a competitive rate as rates rise.

For these people, BestCashCow has developed our Best Bets in Online Savings and Money Market Accounts for 2019.   On this list, you will find the five online bank accounts that have correlated the strongest with each Federal Reserve move (the highest beta).   For each of these accounts, we have recorded a savings or money market rate increase either just before or within days of each Fed Funds rate increase over the course of 2018.  

If interest rates continue on their current trajectory, we believe that with these 5 online savings and money market accounts, you are most likely to wake up on December 31, 2019 and learn that your savings rate has increased with each Fed move over the course of the year.

Excluded from this list are those banks that have maintained rate competitiveness over the course of 2018 but have exhibited a tendency towards requiring existing depositors to move their money between accounts (from savings to money market or vis-a-versa) or from one brand to another in order to get the best rate.   It isn’t that we don’t like these banks and these rates, but this list is designed for those depositors who want to go to sleep for 2019 and do not want to worry about whether they are earning a very competitive savings or money market rate.

Here is BestCashCow's list:

Citizens Access

CIT Bank

Sallie Mae Money Market

Marcus Savings

Purepoint

See the best online savings and money market rates today

Advertiser Disclosure: This list contains advertisers and non-advertisers.   No bank, advertiser or non-advertiser, has provided any consideration for inclusion in this list.   Please read our advertiser policy here.