Highest money market rates – consumers overlook record rate hike
- The largest year-over-year increase in the six-year history of the survey showed the average savings account rate increased by 0.114 percent in the year ending June 30, 2018
- The cost of inaction - roughly $184/year for every $10,000 in your savings account
- All of the top 10 savings account interest rates were for online accounts
Savings account rates made a record jump over the past year, but many bank customers seem unaware how much more interest they could earn by moving their traditional accounts earning near-zero interest rates.
The MoneyRates.com America's Best Rates survey for the second quarter of 2018 found that the average savings account rate increased by 0.114 percent since the second quarter of 2017, the largest year-over-year increase in the six-year history of the survey.
Money market account rates made even more progress over the past year, climbing by an average of 0.147 percent. Money market rates have trailed savings account rates for most of the survey's history, but their faster pace of increase over the past year has pulled them roughly even with savings account rates. The average savings account rate is now 0.345 percent compared with 0.342 percent for money market rates.
Missing out on the best interest rates costs consumers
The accelerating increase in deposit account rates is not a rising tide that floats all boats, however. Some banks -- and more significantly, their customers -- are being left far behind in the race toward higher rates.
Take the savings account category, for example. In the second quarter of 2018, the highest rate in that category was 1.85 percent, offered by Salem Five Direct Bank. At the same time, though, 16 percent of the banks surveyed were offering rates of just 0.01 percent. To a customer with a $10,000 savings account, the difference between the highest and lowest savings account interest rate would equate to the difference between earning $185 a year in interest and earning just $1.
The takeaway is that consumers can earn much better rates than have been available for several years, but they should not take for granted that all banks are part of this trend.
Consumers have to actively shop for rates and know what type of savings and money market rates are competitive these days. With the gap between the best and worst rates rapidly growing wider, the reward for rate-shopping is greater than it has been for a long time.
As a general rule, a good place to look for the highest money market rates and savings account interest rates is in online accounts, which on average offered a clear advantage over traditional, branch-based accounts in both account categories.
America's best savings account rates - 2nd quarter, 2018
The average savings account rate was 0.345 percent during the second quarter, up from 0.305 percent in the first quarter. Some accounts are doing much better than that, though. MoneyRates found several that offered savings account rates that were over a full percentage point higher.
The following were the ten highest savings account rates during the quarter:
Savings Account Rate
Salem Five Direct (ABR platinum medal winner)
SFGI Direct (ABR gold medal winner)
Goldman Sachs Bank (ABR silver medal winner)
Synchrony Bank (ABR bronze medal winner)
FNBO Direct Bank
American Express Bank
Sallie Mae Bank
Not only are these highest rates well above average; but, for the most part, they are increasing their advantage by raising rates more quickly than the overall category average. MoneyRates found that nine of the top-ten rates listed above had a higher than average increase during the second quarter.
This reflects a lively competition among some banks to offer the best interest rates, and the real winners from that competition are the customers who are earning higher rates from those banks.
Higher rates are especially prevalent among online savings accounts. The average online savings account rate was 0.987 percent during the second quarter compared to an average rate of just 0.085 for traditional, branch-based accounts. All of the top ten savings account interest rates were for online accounts.
America's best money market rates - 2nd quarter, 2018
The average money market rate during the second quarter was 0.342 percent, up from 0.305 in the first quarter. Once again, though, MoneyRates.com found several banks doing considerably better than average.
Here are the ten highest money market rates in the survey:
Money Market Account Rate
CIT Bank (ABR platinum medal winner)
Able Banking (ABR gold medal winner)
Sallie Mae Bank (ABR silver medal winner)
UFB Direct (ABR bronze medal winner)
First Internet Bank
As with savings accounts, these top banks are growing their advantage by raising money market rates more quickly than the the category as a whole. All top ten money market accounts had an above-average rate increase during the quarter.
Money market accounts also mirrored the trend among savings accounts when it came to the superiority of online accounts. The average online money market account rate was 0.955 percent compared with 0.137 percent for traditional, branch-based accounts. Nine of the ten highest money market rates was offered by an online account.
Our method -- identify consistently competitive banks
The America's Best Rates survey is based on a sample of 100 banks designed to represent all aspects of the retail deposit market, with 50 large banks, 25 medium-sized banks and 25 small banks. Rates listed are based on the average rate each institution offered during the quarter rather than on just one snapshot in time. This helps us identify banks that consistently compete for your business, giving an advantage to savers that are willing to move their deposits to stay ahead of inflation.
In addition to identifying the specific banks that keep pushing the trend toward higher rates, the second quarter America's Best Rates survey also punctuates how critical your choice of bank can be. With the disparity growing between banks that reward consumers with the highest rates and those that don't, inertia on the part of consumers may cost them in the long run.
Purpose Of Account:
Currently Banking With:
- Capital One
- Synchrony Bank
- Ally Bank
- CIT Bank
- Sallie Mae Bank
- American Express National Bank
- Discover Bank