Savings and CD Rates Move Higher In April – 5 Interesting Nationally Available Rates

Savings and CD Rates Move Higher In April – 5 Interesting Nationally Available Rates

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

Following the Fed’s raising of the Fed funds rate in March, we have seen savings and CD rates begin to tick higher as we move towards the Fed’s second meeting with Jay Powell as Fed Chairman.  

Powell’s testimony following his first meeting in March continues to indicate that the Fed will be raised by 25 basis points at least 2 more times before the end of 2018 and as many as 7 more times between now and the end of 2019.   That continues to cause us to be very reluctant to recommend CDs.  However, our president has opted to engage China in a trade war, and against an increasingly uncertain economic environment that creates, small CD exposure can provide some protection within your investment portfolio.

Here are 5 products that have caught our attention as we begin April.

1. Popular Direct – 2.00% Savings rate

Popular Direct is a subsidiary of Banco Popular North America, a bank that continues to be the subject of acquisition rumors.  The online bank’s website was recently revamped, and it now has raised their savings rate all the way to 2.00% for new depositors.  We generally encourage depositors to be careful to stay below FDIC insurance limits with FDIC limits and we would recommend extraordinary caution here.

2. Purepoint – 1.75% Savings rate

Purepoint is a relatively new name in the space and we have written about the bank before.  There is plenty of things not to like about Purepoint (such as odd customer service hours and offering better rates in some areas than others), but the customer reviews on BestCashCow are generally very good.   The recent move in their savings rate to 1.75% shows some commitment to continue to be aggressive.

3. Marcus – 2.10% 1-Year CD rate

Marcus is the new name for Goldman Sachs’s online bank.  With generally outstanding service, we think that this is a good place to stash cash, and it is the only one of the major online banks where I would consider going over FDIC limits.  Their 2.10% 1-Year CD rate is among the best 1-year CD rates.   We see very little risk in locking in for such a short period.

Editor’s Note:  Marcus is an advertiser of BestCashCow.   Please read our Advertiser Disclosure here

4. Live Oak Bank – 2.40% 18-Month CD rate

Live Oak Bank’s 18-month CD is attractive as it offers a premium over one-year CD rates, yet the early withdrawal fee is only 90 days’ interest which will allow you to withdraw your month early with a payment of only 0.60% of your principal if rates were to move dramatically higher.

5.  Live Oak – 2.70% 5-Year CD rate

We certainly are not recommending a 5-year CD at this point in the cycle, but if you were to want to protect yourself from the possibility of a reversal in Fed policy, this would be the one to look at.   Live Oak’s early withdrawal penalty for their 5-year CD is only 180 days’ interest.   In other words, if rates move up, you can withdraw your money early with the payment of 1.35% of your principal (many other online banks have penalties for early withdrawal of 5-year CDs of at least one year’s interest). 

While the above rates are all available online, you may find better rates from brick-and-mortar banks and credit unions.  BestCashCow enables you to check the best savings rates for local banks and credit unions where you live.   CD rates for local banks and CD rates for credit unions can also be checked here.


Fed Hikes 25 Basis Points In Jay Powell’s First Meeting as Chairman

Fed Hikes 25 Basis Points In Jay Powell’s First Meeting as Chairman

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

The Federal Reserve raised the Fed Funds rate by 25 bps to a target of 1.50% to 1.75% this afternoon.

The move marks the sixth such move since the Fed began moving the Fed Funds rate from zero in December 2015, and was unanimous.   While the Fed did not raise its outlook for 2018 (the median forecast remains at a total of 3 hikes), it raised its Fed funds rate forecast to 2.75% at the end of 2019 and 3.40% at the end of 2020 (the long-run forecast was also raised to 2.90% from 2.75%).

The Fed’s decision to raise to a 3.40% Fed funds forecast basically assumes an additional 2 more 25 basis point hikes over the next three years than it had guided to previously.  Interestingly, it is making these forecasts at a time when it also does not see inflation rising much above 2% between now and the end of 2020, and sees the unemployment rate falling from its current 4.1% level all the way to 3.6% in 2019. 

Unforeseen economic events can often cause the Fed to quickly change policy.  In this case, however, the Fed is guiding towards a faster pace of action against both the assumption of a very stable inflationary environment and the increasing likelihood of economic disruption caused by an unhinged President Trump.

We would, therefore, continue to be very, very cautious about locking into CDs longer than 1-year right now.  

Image: Politico

5 Savings and CD Accounts to Take a Look at In March 2018

5 Savings and CD Accounts to Take a Look at In March 2018

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

Savings and CD rates continued their climb towards the end of February.  We expect rates to continue to go up into Jay Powell’s first meeting as Fed Chairman.  Powell’s testimony in front of Congress this week has made very clear that he will be a hawk and not a dove.  Interest rates are going up 3 times, maybe 4 and maybe even 5 before the end of 2018.  While we cover long-term CDs, we have never been as adversely inclined towards them as we are now.

Here are 5 related products that have caught our attention as we begin March.

1. Dollar Savings Direct – 1.80% Savings Rate

Dollar Savings Direct is a subsidiary of Emigrant Direct.  As we noted last month, DSD has been way ahead of the curve in raising their rates as rates have been increasing.   On February 27, 2018, they raised their savings rate by 20 basis points from 1.60% to 1.80%.   It continues to be a fairly solid bet and user reviews are generally good.  We’ve been made aware that they cannot link for ACH transfers with Morgan Stanley (UMB Bank) and Merrill Lynch.   And, given Emigrant’s troubles over the last decade, we’d be very careful to stay within FDIC insurance limits.

2. Popular Direct – 1.65% Savings Rate

Popular Direct is a subsidiary of Banco Popular North America, a bank that had real troubles in 2009 and been the subject of recent acquisition rumors involving some major Spanish banks.  The online bank’s website was recently revamped, and we think it could be worth a look, although we again urge you to be very careful to stay below FDIC insurance limits.

3. Marcus – 1.50% Savings Rate

Marcus is the new name for Goldman Sachs’s online bank.  While the rate isn’t so attractive at 1.50%, if you want to open a bank account at a place where you will feel comfortable occasionally exceeding FDIC insurance limits, Goldman Sachs is the one.

4. Live Oak Bank – 2.10% 1-Year CD rate

While we want to be cautious about CDs, Live Oak Bank’s 1-year CD continues to be the best nationally available online CD rate.  If you must submit to your desire to pick up a couple more basis points, this is the one to go for, especially since their early withdrawal penalty is only three months’ interest (other banks have more onerous penalties) and you will be able to get out with little damage if rates really start to move dramatically higher quickly this spring or summer.

5.  Capital One 260 – 2.65% 5-Year CD rate

Again, we certainly aren’t recommending a 5-year CD at this point in the cycle.  But, if you feel that rates aren’t going to get much higher and want to get into a 5-year product, this is the one we would recommend at the moment, especially since Capital One’s early withdrawal penalty for their 5-year CD is only 6 months’ interest (many other banks have penalties for early withdrawal of 5-year CDs of one year’s interest or even more). 

The great thing about the above rates is that they are all readily available online.  However, brick-and-mortar banks and credit unions are also becoming rate competitive.

Here you can check the best savings rates for local banks and credit unions where you live.   CD rates for local banks and CD rates for credit unions can also be checked here.

Image: Pexels