On the surface, it might seem that things are looking up for bank customers. Average savings account interest rates and money market rates have risen for four consecutive quarters, making their biggest jumps in the first quarter of 2018. It looks like consumers are finally in line to start earning more on their deposit accounts.But looks can be deceiving.
Most banks leave rates unchanged - or lower
The fact is that the trend toward higher rates is being driven by a relatively small number of banks -- think of them as the rebel banks, leading a movement to offer consumers decent savings account rates while most of the industry continues to offer next to nothing.
Just 22 percent of the banks in the latest MoneyRates.com America's Best Rates survey increased their savings account rates in the first quarter of 2018, compared to 78 percent that left rates unchanged or, in some cases, even lowered them. The overall average savings and money market rates are being pulled up by a relative few banks that offer exceptional rates.
In short, the rate environment is not really getting better for most consumers, despite recent Fed rate increases and rising inflation. The rate environment is only getting better for consumers with accounts at the right banks -- those offering the best savings account rates and the best money market rates.
This article will help you find those banks.
How we spot consistency
The America's Best Rates survey is based on the MoneyRates Index, a cross-section of the retail banking industry consisting of the 50 largest deposit institutions plus 25 medium-sized banks and 25 smaller banks. Rates are averaged throughout the quarter so that rankings are based on consistently high rates rather than just a single snapshot in time.
The best savings account rates - 1st quarter, 2018
The following were the ten best savings account rates in the first quarter of 2018:
Savings account rate
Salem Five Direct (ABR platinum medal winner)
CIT Bank (ABR gold medal winner)
Synchrony Bank (ABR silver medal winner)
4th place (tie)
Goldman Sachs Bank USA (ABR bronze medal winner)
4th place (tie)
FNBO Direct Bank (ABR bronze medal winner)
6th place (tie)
6th place (tie)
American Express National Bank
Not your average bank
Overall, the average savings account rate increased by .031 percent in the first quarter, to 0.305 percent. However, as you can see from the list above, several banks have broken away from the pack and are offering savings account rates more than a full percentage point higher than the average.
Not only are these banks offering much higher rates than the average but, during a quarter when most banks did not raise their rates, all ten of the banks above raised their rates by 0.124 percent or more. That means that:
The top banks are not only offering savings account rates more than four times as high as the industry average, but they are also raising them four times as quickly.
Online bank interest rates 15 times higher
Another important trend is the divergence between online savings account rates and rates at traditional, branch-based accounts. Already significant, the gulf between the two widened during the first quarter. The average online savings account interest rate increased by 0.104 percent to 0.912, while the average traditional savings account interest rate went in the other direction, decreasing by 0.007 percent to 0.059 percent.
This means that the average online savings account offers a rate more than 15 times higher than the average traditional rate. All of the top ten savings account rates in the first quarter were from online accounts.
To put some dollar figures on all these percentages, a customer with a $10,000 savings account taking advantage of the top rate would earn $158 a year in interest. At the average bank, those earnings would be only $30.50 a year -- and customers insisting on a branch-based account would fare even worse, earning just $5.90 a year.
The best money market rates - 1st quarter, 2018
The following were the ten best money market rates in the first quarter of 2018:
Money market account rate
CIT Bank (ABR platinum medal winner)
Able Banking (ABR gold medal winner)
UFB Direct (ABR silver medal winner)
Nationwide Bank (ABR bronze medal winner)
Sallie Mae Bank
First Internet Bank
Bank of Internet
Highest money market rates at online banks
Conditions for money market accounts were similar to those for savings accounts, with a minority of accounts raising rates in the first quarter while some banks are clearly breaking away from the average to push their rates higher. The average money market rate increased by 0.054 percent, to .305 percent. Money market rates had trailed savings account rates on average for eight consecutive quarters, but they pulled even by rising more quickly in the first quarter.
Here again, most of the action comes from the leading banks. A year ago, the best money market rate in this survey was 1.00 percent. Now that rate would not even crack the top ten.
As with savings account rates, online money market rates show a significant advantage over their branch-based counterparts. The average online money market account rate increased by 0.164 percent during the first quarter to 0.893 percent. Meanwhile, the average branch-based money market rate fell by 0.014 percent to 0.112 percent. Nine of the top ten money market rates are for online accounts.
Consistency -- an incentive to switch
The best savings account rates and the best money market rates have broken away to soar much higher than the averages, while most banks have left their rates unchanged. But if you want to earn higher interest rates without the hassle of changing banks all the time, consider one of the banks listed above. They demonstrate their own incentive to stay consistently at the front of the pack, a trend toward higher rates that can make it easier for you to earn the most for your money.
Purpose Of Account:
Currently Banking With:
- Capital One
- Synchrony Bank
- Ally Bank
- CIT Bank
- Sallie Mae Bank
- American Express National Bank
- Discover Bank
Archive of America's Best Rates Surveys
- America's Best Rates: A few banks push trend toward higher rates
- America's Best Rates: Online banks winning the bank rates war
- Bank rates take a turn for the better
- America's Best Rates: Savings, Money Market Rates Down Despite Fed Hike
- America's Best Rates: Online Savings Accounts Break Away from Low Rates
- America's Best Rates: Top accounts offer 4x average savings rates
- America's Best Rates Q2: Which accounts offer 4x the national savings rate?
- America's Best Rates Q2 2015: Persistently low bank rates call for action by consumers
- America's Best Rates 1Q 2015: Updated June 24, 2015
- America's Best Rates 1Q 2015: Savings account rates rise -- for some
- America's Best Rates 4Q 2014: Traditional banks lose more ground
- America's Best Rates Q3 2014: The benefits of banking online
- America's Best Rates Q2 2014: Good deals for smart savers
- America's Best Rates Q1 2014: Finding value in a low-rate environment
- America's Best Rates 2013 Q4: Yields continue declining (with some exceptions)
- America's Best Rates 2013 Q3: Deposit rates suffer a relapse
- America's Best Rates 2013 Q2: Deposit rates drag their feet
- America's Best Rates 2013 Q1: Online banks go their own way
- America's Best Rates 2012 Q4: Online banks press their advantage
- America's Best Rates 2012 Q3: Online banks go against the grain
- America's Best Rates 2012 Q2: The fight against low rates
- America's Best Rates 2012 Q1: A rate hunter's guide
- America's Best Rates 2011 Q4: Getting more from your savings
- America’s Best Rates 2011 Q3: How to buck the low-rate trend
- America’s Best Rates 2011 Q2: Where to put your savings now
- America’s Best Rates 2011 Q1: Where can you get consistently high deposit rates?