- Savings account interest rates just saw the steepest one-quarter decline in the seven-plus year history of the MoneyRates America's Best Rates bank survey.
- CD rates saw even more dramatic declines as bankers scramble to adjust to a reversal in the direction of interest rates.
Falling rates on deposit products is bad news for consumers with savings. Still, even as rates drop generally, most consumers could actually improve their rates because there remains a significant gap between the highest rates available and the average interest rate.
Below are highlights of trends in savings account rates, money market account rates, 1-year and 5-year CD rates.
America's Best Savings Account Rates: 4th Quarter, 2019
The top ten savings account rates in the 4th quarter of 2019 were:
2019 Q4 Avg APY
|1st Place||SFGI Direct||2.22%|
|2nd Place||UFB Direct||2.06%|
|4th Place||Salem Five Direct||1.95%|
|5th Place||FNBO Direct||1.88%|
|6th Place||Synchrony Bank||1.88%|
|7th Place||Capital One Bank||1.84%|
|10th Place||Marcus by Goldman Sachs||1.81%|
(Note: While there appear to be ties at 1.88% and 1.84%, the bank rates involved are actually separated by a tiny fraction of a percent.)
Though many of the same banks that were in the top ten for the previous quarter also made the top ten in the 4th quarter, the rapidly changing rate environment shook up the order somewhat.
With savings account rates falling overall, the banks that most improved their positions were those that best held the line by keeping rates at or close to their prior levels.
Average savings account rate: 0.405%
The average savings account rate dropped for the third consecutive quarter. This is a decisive reversal of a trend that had previously seen savings account rates rise for eight consecutive quarters.
In the fourth quarter, the average savings account rate fell by 0.034%. That represents the largest single-quarter decline dating back to the inception of this survey in mid-2012.
Savings account rates are subject to change at any time. This means that consumers who stay with the same banks in a falling-rate environment will be earning less interest on their accounts. However, for consumers who are willing to change, there may still be opportunities to raise their rates.
The top savings account rate in the 4th quarter survey was 1.81% higher than the average rate. All of the top ten savings account rates were well over a full percentage point better than the average rate.
This gives consumers with accounts at average banks plenty of opportunities to raise their rates if they switch to one of the top banks. That would allow them to see the amount of interest they earn actually increase even while most bank customers were seeing their interest earned drop.
Average online savings account rate: 1.28%
One of the best ways to find a higher savings account rate is to switch from a traditional, branch-based account to an online account.
In the fourth quarter, the average rate on online savings accounts was 1.28%, while the average on traditional savings accounts was 0.067%. As a result, online savings account customers typically earn 19 times as much interest as traditional savings account customers.
America's Best Money Market Rates: 4th Quarter, 2019
These were the ten best money market rates in the 4th quarter of 2019:
2019 Q4 Avg APY
|1st Place||First Internet Bank||1.96%|
|2nd Place||Sallie Mae Bank||1.88%|
|3rd Place (tie)||ableBanking||1.85%|
|3rd Place (tie)||CIT Bank||1.85%|
|5th Place||Mutual of Omaha Bank||1.76%|
|6th Place||BBVA Compass||1.67%|
|7th Place||Discover Bank||1.63%|
|9th Place||Synchrony Bank||1.20%|
|10th Place||TIAA Bank||1.17%|
Money market accounts followed much the same trends as savings accounts, with many of the same banks remaining in the top ten despite a shake-up in the order as average rates fell.
Average money market rate: 0.376%
The average money market account rate fell for the second consecutive quarter, and by nearly twice as much as the average savings account rate.
As with savings accounts, though, there remains a large gap between the top money market account rates and the average. This gives the customers at most banks an opportunity to fight back against falling interest rates by switching to a bank with one of the top rates.
With smart shopping, a bank customer could find a money market rate more than a full percentage point above the average. In contrast, staying with the typical bank in today's environment means accepting steadily falling interest rates on your money market account.
Average online money market rate: 1.028%
The rate advantage online accounts have over traditional accounts is demonstrated by money market rates. The average of these rates for online accounts managed to remain above 1 percent despite the general drop in rates, averaging 1.028% over the course of the 4th quarter of 2019.
In contrast, the average traditional money market account offered a rate of just 0.172%. As a result of this difference, the average online money market account offers an interest rate nearly six times that of the average traditional money market account.
America's Best 1-Year CD Rates: 4th Quarter, 2019
These were the ten best 1-year CD rates over the course of the 4th quarter:
2019 Q4 Avg APY
|1st Place||Sallie Mae Bank||2.23%|
|2nd Place||Capital One||2.16%|
|3rd Place||TIAA Bank||2.16%|
|5th Place||Discover Bank||2.11%|
|6th Place||Synchrony Bank||2.10%|
|7th Place||Marcus by Goldman Sachs||2.09%|
|8th Place||Ally Bank||2.08%|
|10th Place||First Internet Bank||1.98%|
(Note: While there appears to be a tie at 2.16%, the bank rates involved are actually separated by a tiny fraction of a percent.)
CD rates fell even more sharply than savings and money market rates during the quarter. This is because CDs represent a commitment to rates for a specified period of time. When rates are falling, banks are careful about making such commitments at higher rates.
Average 1-year CD rate: 0.858%
At 0.858%, the average 1-year CD rate still represents an advantage over average savings or money market rates for consumers who are able to commit their money for a full year.
Better yet, as you can see from the list of the ten best CD rates there are several opportunities to earn more than twice as much as the average.
Shopping for a better rate is especially important when it comes to CDs because those rates are typically locked in for a set period of time. This gives you an opportunity to lock in a rate advantage for the length of the CD.
Average online 1-year CD rate: 1.534%
Choosing online CDs is a good way to find that kind of rate advantage. During the 4th quarter of 2019, the average online 1-year CD was 1.534%, which is more than twice as high as the average traditional CD rate of 0.6%.
Since CDs normally entail little or no interaction with the bank during the term of the CD, online CDs offer an opportunity to earn a higher rate without giving up anything in the way of face-to-face service.
America's Best 5-Year CD Rates: 4th Quarter, 2019
These were the ten best 5-year CD rates during the 4th quarter:
2019 Q4 Avg APY
|1st Place||Synchrony Bank||2.31%|
|2nd Place||INTRUST Bank||2.29%|
|3rd Place||Sallie Mae Bank||2.28%|
|4th Place||Ally Bank||2.26%|
|5th Place||TIAA Bank||2.25%|
|6th Place||Marcus by Goldman Sachs||2.24%|
|7th Place||First Internet Bank||2.23%|
|8th Place||State Farm Bank||2.22%|
|9th Place||Axos Bank||2.22%|
|10th Place||Discover Bank||2.21%|
(Note: While there appears to be a tie at 2.22%, the bank rates involved are actually separated by a tiny fraction of a percent.)
Five-year CDs generally suffered the biggest rate declines of the four products tracked by this survey, as banks shy away from the possibility of being stuck paying a higher rate for an extended period of time.
Even so, 5-year CD rates on average still offer the best interest rates of those four products.
Average 5-year CD rate: 1.276%
The average rate of 5-year CDs declined by 0.193% during the 4th quarter, the third consecutive quarterly decline for 5-year CD rates.
As the list of the best CD rates shows, there are still opportunities to improve on the average rate of 1.276% by a full percentage point. Locking in that rate advantage for a 5-year period would make the effort of shopping for a better rate especially worthwhile.
Average online 5-year CD rate: 1.791%
Though the difference between online and traditional rates is less dramatic for 5-year CDs than for other products, there is still clear value to be gained by choosing an online account. The average online 5-year CD rate was 1.791%, compared with 1.087% for traditional, branch-based accounts.
Finding Consistently High Rates: The America's Best Rates Method
Rather than base the America's Best Rates savings, money market account, and CD account rankings on a single snapshot in time, MoneyRates looks to identify the most consistently competitive accounts by averaging rates throughout each calendar quarter. Rates available to customers with a $10,000 balance and no broader relationship with the bank are used for this survey.
Further, to provide a representative view of banking trends, the analysis is based on the MoneyRates Index, a consistent sample of accounts reflecting a cross-section of the retail deposit industry. The MoneyRates Index is comprised of 50 of the largest retail deposit institutions in the United States, plus 25 smaller banks and 25 medium-sized banks.
Purpose Of Account:
Currently Banking With:
- Capital One
- Synchrony Bank
- Ally Bank
- CIT Bank
- Sallie Mae Bank
- American Express National Bank
- Discover Bank