September 2018 Outlook: With the Fed Poised to Raise Twice Before the End of the Year, Here are the 5 Best Savings and CD Products Now

September 2018 Outlook: With the Fed Poised to Raise Twice Before the End of the Year, Here are the 5 Best Savings and CD Products Now

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As we move into the fall with all sorts of political turbulence with potential economic ramifications, the Federal Reserve remains poised to raise the Fed funds rate by 50 basis points to 2.25% to 2.50% before December. 

As we pointed out in our August update and in other recent articles, the Federal Reserves’ dovish position has now led to the spread between 1-year CD rates and online savings rates which has widened out to 60 basis points -- the widest it has been in over a decade. 

The Federal Reserve’s disposition and the likelihood of as many as four additional raises in 2019 cause us to recommend against longer-term CD rates now, especially 5 year CDs.

If you feed obliged to reach for higher yields, we recommend the following 3 products:

  1. Synchrony Bank – 13-Month CD at 2.65% (requires a balance over $2,000)

Synchrony’s 13-Month CD pays more than any online 12-month  CD, and we think it makes sense to lock in for an extra month for the additional yield.  (Editor's Note: As of September 13, 2018, it is possible to find online one-year CDs that yield more than the 13-month Synchrony product.   In many areas of the country, you can also find local 1-year CDs that match or exceed this rate at local banks or credit unions).

  1. Marcus – 12-Month CD at 2.55%

Marcus’s one-year CD rate was recently raised.   We think that the current offering provides enough of an improvement over current savings rates to adequately compensate those investors willing to lock up money that they are certain they won’t need for a year.   See all 1 year CD products here.

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

  1. Ally Bank 11-Month No Penalty CD – 2.00% (requires a balance over $25,000)

For those depositors with over $25,000 to invest, Ally often offers a slight yield improvement over their savings rates. 

Since this product can be terminated easily online with no penalty, it is basically a savings or money market account a wearing different skin. 

By and large however we are more inclined to stick with savings and money market accounts in a rising interest rate environment.  Within that category, we’d prefer to stick with offerings by banks that have made a commitment to this space.   We want to avoid lesser-known names that seek to attract deposits today but may not continue to be competitive as rates rise over the next several months.   Two that we like are:

1.   Radius Bank Online Savings – 1.96% (requires a balance over $25,000)

While it is a relatively new entrant to the online savings arena, Radius has a neat cutting edge user interface and solid reviews.  Since they just raised their rates at the end of August for depositors over $25,000, we suspect that they will continue to be competitive in this space and for this market.

Editor’s Note:  Radius Bank is an advertiser on BestCashCow.   Please read our Advertiser Disclosure here.

2. Marcus – 1.85% Online Savings rate

Marcus has outstanding customer reviews and, with its lightening fast ACH transfers, it is a good place to stash cash that you might need to access quickly.  More importantly, Marcus has proved in 2018 to be just a little bit faster to raise rates than the other most recognized online banks (Amex, Barclays and Ally).   Since Marcus is owned by Goldman Sachs, we feel that depositors, especially those inclined to occasionally deposit over FDIC limits, should sleep well at night. 

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

Before opening an online savings or money market account, BestCashCow always urges depositors you to check local bank rates and local credit union rates.

 

Ari Socolow
Ari Socolow: Ari Socolow is the Chief Economist and Editor-in-Chief at BestCashCow. He is particularly interested in issues relating to financial literacy and bank transparency. Since co-founding this website in 2005, Ari has been frequently cited in the media as an expert on local and national savings accounts, CD products, mortgage and loan products and credit card rewards products.
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