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America's Best Rates 3rd Quarter 2020 - Savings, Money Market and CD Rates

| MoneyRates.com Senior Financial Analyst, CFA

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SURVEY HIGHLIGHTS
  • Savings account interest rates have declined for six consecutive quarters, the longest losing streak in the eight-year history of the survey.
  • The best savings account rate was more than 24 times what you could get from one of the large, national banks.

Bank customers are taking a beating as interest rates fall.

Savings account rates have been falling for a record six consecutive quarters. As a result, they are now 0.25% lower than they were when they peaked in the first quarter of 2019.

Money market rates, 1-year CD rates and 5-year CD rates have all fallen sharply as well.

Falling rates translate into lost income for American consumers. However, there are ways to fight this trend and possibly get more interest out of your bank accounts - even as rates are falling.

That's because huge gaps still exist between the best rates offered in each category and the average. Here's a summary of the latest bank deposit account rates:

Rate TypeSavings Accounts5-Year CDs
3rd Quarter 2020 Average0.19%0.54%
3rd Quarter 2020 Top Rate0.99%1.20%
Average Online Rate0.59%0.77%
Average Branch-Based Rate0.04%0.45%

Shopping around can earn you an above-average rate, and most likely a higher rate than you have now.

In particular, avoiding the very largest national banks is an essential strategy for this low-interest-rate environment. The four largest banks in this survey all offered savings account rates that were well below average. Those large account rates represented just a small fraction of the best rates available.

This article details where to find the best rates for savings accounts, money market accounts, 1-year CDs and 5-CDs. It also discusses recent trends in each category.

America's Best Savings Account Rates: 3rd Quarter 2020

The following were the ten best average savings account rates during the 3rd quarter of 2020:

America's Best Savings Account Rates: 3rd Quarter, 2020
Rank

Bank

2020 Q3 Avg. APY

1st placeBankFive0.99%
2nd placeSFGI Direct0.97%
3rd placeAxos Bank0.96%
4th placeAlly Bank0.92%
5th placeSalem Five Direct0.90%
6th placeAmerican Express National Bank0.88%
7th placeMarcus by Goldman Sachs0.85%
8th placeSynchrony Bank0.85%
9th placeDiscover Bank0.85%
10th placeCapital One Bank0.83%

Rates in the above list that appear to be tied were actually separated by a small fraction of a percent.

Average savings account rate: 0.192%

The average savings account rate fell by 0.082% in the third quarter.

While that may seem miniscule, it was the sixth consecutive quarter during which the average savings account rate declined. This represents a steady drop in interest for savings account customers.

What to watch in this environment

With savings account fees falling to a fraction of 1%, it is especially important to watch out for maintenance fees on savings accounts.

Not all savings accounts charge these monthly fees, but they have become fairly common. With interest rates so low, these fees could more than wipe out any interest earned on a savings account.

You can fight these trends by shopping for a better savings account deal. The top savings account rate during the third quarter was five times the average rate.

Also, finding a savings account with no monthly fee can help ensure your savings account is earning you money, not costing you.

Notably, customers at the very largest banks are especially likely to be getting a raw deal on their savings accounts.

There are four banks in the America's Best Rates survey with over $1 trillion in deposits. These banks offered savings account rates of 0.04% or less.

That means the average rate in the third quarter was nearly five times what these mega-banks offered. The best rate was more than 24 times what you could get from one of the giant banks.

Average online savings account rate: 0.587%

A time-tested way of finding a better savings account rate is to bank online. Online savings accounts consistently offer better rates than traditional, branch-based banks.

The average online savings account rate of 0.587% during the third quarter was better than 12 times the average rate from branch-based savings accounts.

All ten of the best savings account rates for the quarter listed in the table above were from online savings accounts.

America's Best Money Market Rates: 3rd Quarter 2020

These were the best average money market rates over the course of the third quarter. Eleven, rather than ten, are listed because there was a tie for tenth place.

America's Best Money Market Account Rates: 3rd Quarter, 2020
RankBank2020 Q3 Avg. APY
1st placeAxos Bank0.95%
2nd placeSallie Mae Bank0.87%
3rd placeFirst Internet Bank0.87%
4th placeCIT Bank0.86%
5th placeableBanking0.86%
6th placeVirtual Bank0.80%
7th placeDiscover Bank0.69%
8th placeSynchrony Bank0.56%
9th placeTIAA Bank0.56%
10th place (tie)Ally Bank0.50%
10th place (tie)American Plus Bank0.50%

Other than the tie for tenth place, rates in the above chart that appear to be tied were actually separated by a small fraction of a percent.

Average money market rate: 0.159%

The average money market rate declined for the fifth consecutive quarter.

As with savings accounts, consumers can fight the trend of falling money market rates with a little savvy shopping. All the rates listed above represent a significant improvement over the average money market rate. This means that most money market account customers have several opportunities to raise their rates rather than accept less interest on their accounts.

Money market accounts are another area where the largest banks frequently offer some of the poorest deals. Banks in the survey with over $1 trillion in deposits offered average money market rates during the third quarter of 0.04% or lower.

Average online money market rate: 0.490%

Another similarity between money market and savings accounts is that online money market account rates offer a significant improvement over rates from traditional, branch-based accounts.

The average online money market rate of 0.490% was just over seven times the average money market rate from branch-based accounts.

Ten of the eleven best money market rates listed in the table above were from online accounts.

The Best 1-year CD Rates: 3rd Quarter 2020

The following were the ten accounts with the best average 1-year CD rates during the third quarter:

America's Best 1-Year CD Rates: 3rd Quarter, 2020
Rank

Bank

2020 Q3 Avg. APY

1st placeMarcus by Goldman Sachs0.96%
2nd placeiGoBanking0.96%
3rd placeAlly Bank0.91%
4th placeAmerican Plus Bank0.89%
5th placeFirst Internet Bank0.87%
6th placeSallie Mae Bank0.85%
7th placeDiscover Bank0.81%
8th placeTIAA Bank0.81%
9th placeSynchrony Bank0.77%
10th placeVirtual Bank0.75%

Rates in the above table that appear to be tied were actually separated by a tiny fraction of a percent.

Average 1-year CD rate: 0.329%

One-year CD rates have fallen even more rapidly over the past year than savings or money market rates. This may be because banks are cautious about getting locked into paying higher rates in a falling-rate environment.

Even though the average 1-year CD rate is higher than the average savings and money market rate, note that the best 1-year CD rates are more or less in line with the best savings and money market rates.

This means that, if you are willing to shop around, the primary advantage of choosing a 1-year CD rather than a savings or money market account is to protect yourself from further rate declines. There may not be a clear advantage now; but if rates continue to fall, you would benefit from having locked in your rate for a year.

Average online 1-year CD rate: 0.600%

The average online CD rate is about 2.6 times the average rate available from 1-year CDs at traditional, branch-based accounts.

While this is less than the online advantage of savings and money market accounts, a rate advantage can mean more when it comes to CDs because it is locked in for a specified period.

The Best 5-year CD Rates: 3rd Quarter 2020

The following were the ten best average 5-year CD rates during the third quarter:

America's Best 5-Year CD Rates: 3rd Quarter, 2020
Rank

Bank

2020 Q3 Avg. APY

1st placeFirst Internet Bank1.20%
2nd placeTIAA Bank1.17%
3rd placeAlly Bank1.06%
4th placeSynchrony Bank1.04%
5th placeMySavingsDirect1.03%
6th placeDiscover Bank1.03%
7th placeMarcus by Goldman Sachs1.01%
8th placeBankFive1.00%
9th placeTompkins Trust Company1.00%
10th placeRidgewood Savings Bank0.95%

Rates in the above table that appear to be tied were actually separated by a tiny fraction of a percent.

Average 5-year CD rate: 0.528%

The average 5-year CD rate fell by 0.173% during the quarter, the largest drop of any of the deposit products tracked by this survey. This is likely because banks are wary about making a higher five-year commitment when rates are falling.

Average online 5-year CD rate: 0.773%

Online 5-year CDs offer a rate advantage of 0.328 over traditional, branch-based CDs. Since by nature 5-year CDs don't require much interaction with your bank, there is little reason to choose a branch-based CD when you can get a higher rate from an online account.

The America's Best Rates Method: Identifying Consistently Highest Rates

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.

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