America's Best Rates on Savings, Money Markets and CDs - 2nd Quarter, 2020

Even with interest rates falling, bank customers may have an opportunity to earn higher rates. Here's where to find the best interest rates on savings, money market, 1-year CD and 5-year CD accounts.

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SURVEY HIGHLIGHTS
  • Savings account rates suffered their biggest quarterly decline in the eight-year history of the America's Best Rates Survey
  • Most savings accounts now charge monthly fees which would cost smaller customers much more than they would earn in interest.
  • For savings accounts, money market accounts and 1-year CDs, there is over a full percentage point difference between the best interest rates and the average for each category.

These are tough times for bank customers.

The latest America's Best Rates survey from MoneyRates.com found that savings account rates suffered a record decline in the second quarter of 2020.

Money market account rates and rates on 1-year and 5-year certificates of deposit (CDs) also had their biggest declines on record.

In this environment, if you make the wrong choice for your savings account, money market account or CD, you could earn less interest than ever - or even lose money.

The silver lining is that, even with interest rates dropping sharply, there is still a way for most bank customers to raise the amount of interest they earn on their savings.

Here's a summary of the latest bank deposit account rates:

Rate TypeSavings Accounts5-Year CDs
2nd Quarter 2020 Average0.27%0.70%
2nd Quarter 2020 Top Rate1.57%1.62%
Average Online Rate0.88%1.15%
Average Branch-Based Rate0.05%0.55%

America's Best Savings Account Rates, 2nd Quarter 2020

These were the top ten savings account interest rates in the 2nd quarter:

America’s Best Savings Account Rates: 2nd Quarter, 2020
Rank

Bank

2020 Q2 Avg APY

1st placeUFB Direct1.57%
2nd placeSFGI Direct1.55%
3rd placeMarcus by Goldman Sachs1.39%
4th placeAmerican Express National Bank1.39%
5th placeAlly Bank1.35%
6th placeCapital One1.34%
7th placeBarclays1.32%
8th placeSynchrony Bank1.31%
9th placeAxos Bank1.30%
10th placeDiscover Bank1.28%

(Note: While there appears to be a tie for third place, the bank rates are actually separated by a small fraction of a percent.)

Average savings account rate: 0.274%

The average savings account rate dropped by 0.102% in the second quarter, the largest single-quarter decline in the eight-year history of this survey.

With the average savings account rate now at just 0.274%, the good news is that there are several options that pay significantly more than average.

As the top-ten table shows, there plenty of banks that still offered an average rate of over 1% during the recent quarter. That means it can be well worth your while not to settle for average.

Average online savings account rate: 0.879%

One way to get a better savings account rate is to bank online. The survey found that the average online savings account rate was 0.879%.

That may not sound like much, but it would pay nearly 17 times as much interest as the average savings account from a traditional bank branch.

Fees Can Wipe Out Savings on Some Accounts

While banks generally emphasize interest rates when they advertise savings accounts and other deposit products, consumers need to take a closer look.

MoneyRates.com found that more than half the savings accounts surveyed now charge a monthly fee, regardless of how you use the account.

Fees are often waived if you maintain a certain minimum balance; but for smaller accounts, they could more than wipe out the interest earned and actually eat into savings.

For example, a common arrangement is to charge a $5/month fee for accounts under $300.

With the average savings account interest rate at 0.274%, a typical $250 account would earn just over 68 cents a year in interest.

Meanwhile, a $5-a-month fee would cost that customer $60 a year. Thus, rather than earning the customer money or even keeping the existing amount safe, this type of savings account would reduce a $250 account to just over $190 in a single year.

To avoid this, bank customers should look for savings accounts that don't have a monthly fee. MoneyRates.com found that roughly 45% of savings accounts do not charge these fees.

Online banking may be your best option if you want to avoid monthly fees. MoneyRates.com found that only 9% of online savings accounts charge them.

America's Best Money Market Rates, 2nd Quarter 2020

The following were the best money market rates for the 2nd quarter:

America’s Best Money Market Account Rates: 2nd Quarter, 2020
RankBank2020 Q2 Avg APY
1st placeCIT Bank1.45%
2nd placeFirst Internet Bank1.40%
3rd placeableBanking1.36%
4th placeSallie Mae Bank1.21%
5th placeDiscover Bank1.13%
6th placeAxos Bank1.05%
7th placeTIAA Bank0.94%
8th placeVirtual Bank0.80%
9th placeSynchrony Bank0.77%
10th placeNortheast Bank0.73%

Average money market rate: 0.229%

The average money market rate declined by 0.12% during the second quarter. This is the largest single-quarter decline in the eight-year history of this survey.

While average money market rates are now approaching zero, there were still a few banks offering average rates of over 1% in the most recent quarter. This makes it worth the effort to shop for money market rates.

Average online money market rate: 0.718%

A good place to find a better money market rate is in an online account. MoneyRates found that the average online money market rate was 0.718%, which is more than seven times the average rate from a traditional, branch-based money market account.

America's Best 1-Year CD Rates, 2nd Quarter 2020

These were the top ten 1-year CD rates for the 2nd quarter of 2020:

America’s Best 1-Year CD Rates: 2nd Quarter, 2020
Rank

Bank

2020 Q2 Avg APY
1-Year CD Rates

1st placeMarcus by Goldman Sachs1.48%
2nd placeAlly Bank1.36%
3rd placeCIT Bank1.34%
4th placeFirst Internet Bank1.32%
5th placeTIAA Bank1.32%
6th placeDiscover Bank1.32%
7th placeBarclays1.29%
8th placeSynchrony Bank1.25%
9th placeCapital One1.20%
10th placeSallie Mae Bank1.18%
(Note: While there appears to be a tie for fourth place, the bank rates are actually separated by a fraction of a percent.)

Average 1-year CD rate: 0.461%

The decline of CD rates in the second quarter was even more severe than the drop in savings account and money market rates. In a falling-rate environment, banks are especially wary about getting locked into paying higher rates on CDs.

The average 1-year CD rate dropped by 0.313%, to an average of 0.461%. Still, as seen in the table above, there are several CDs offering significantly higher rates.

Shopping for higher CD rates can be especially rewarding because CDs allow you to lock in your rate advantage.

Average online 1-year CD rate: 0.936%

As with savings and money market accounts, online CD accounts are a likely place to find higher rates.

The average 1-year CD rate from an online account is 0.936%, which is more than three times the average 1-year CD rate from a traditional, branch-based account.

America's Best 5-Year CD Rates, 2nd Quarter 2020

The following were the top ten 5-year CD rates for the 2nd quarter of 2020:

America’s Best 5-Year CD Rates: 2nd Quarter, 2020
Rank

Bank

2020 Q2 Avg APY
5-Year CD Rate

1st placeFirst Internet Bank1.62%
2nd placeTIAA Bank1.62%
3rd placeMarcus by Goldman Sachs1.53%
4th placeSynchrony Bank1.49%
5th placeAlly Bank1.48%
6th placeCIT Bank1.47%
7th placeDiscover Bank1.46%
8th placeAmerican Express National Bank1.40%
9th placeCapital One1.31%
10th placeBarclays1.28%
(Note: While there appears to be a tie for first place, the bank rates are actually separated by a fraction of a percent.)

Average 5-year CD rate: 0.701%

The average 5-year CD rate during the 2nd quarter of 2020 was 0.701%. This was a drop of 0.480% from the first quarter's average rate and a drop of 0.989% from the average 5-year CD rate a year ago.

While 5-year CD rates are falling quickly, some banks still offered rates in excess of 1% during the 2nd quarter. This means consumers can lock in a higher rate for five years by shopping around for the best CD rates.

Average online 5-year CD rate: 1.150%

Once again, online accounts offer a significant rate advantage over traditional, branch-based accounts.

The average online 5-year CD rate of 1.150% during the 2nd quarter was over half a percent higher than the average of 0.546% for traditional accounts.

Given the rate advantage, 5-year CDs are particularly good products for online banking.

Since these products are designed to go untouched for five years, there is little value in having the account at a local bank branch if that branch cannot offer a competitive rate.

America's Best Rates: Identifying Consistently High 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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