Savings Rates and Money Market Account RatesSavings account rates: Search and compare the best savings account rates and the best money market account rates from banks and credit unions. You can search for the highest interest savings rates and MMA rates in the state you live in or by the zip you live in. Once you have entered your search criteria a list of the top savings accounts rates and money market account rates will be displayed. Most savings account interest rates displayed are for regular savings accounts or for Individual Retirement Account (IRA) savings accounts.
Savings account rates remain stable this week but the prospect for higher rates is looking more likely. The Department of Labor released employment numbers for April that were much stronger than expected. For the month of April, 288,000 non-farm payroll jobs were created, which was much higher than the 200,000 jobs analysts were expecting. The unemployment rate fell to 6.3 percent from 6.7 percent, the lowest point since 2008.
Surprisingly, long term bond rates didn’t increase on the strong job numbers. Usually when job creation is strong and the unemployment rate tumbles, it is an early indication of higher inflation in the future due to higher wages. According to the Federal Reserve, there is still a considerable amount of “slack” in the labor force, which will keep a lid on wage inflation.
Current savings rates and money market rates on account balances of at least $10,000 are averaging 0.45 percent this week, up slightly from last week’s average rate of 0.43 percent. The best savings rates in our rate database remain at 0.95 percent with an APY of 0.95 percent. The best money market account rates also remained the same at 0.90 percent.
If the unemployment rate continues to fall quickly and the number of jobs created monthly is in the 300,000 range, interest rates will move higher sooner than later. Deposit interest rates are dependent on a higher fed funds rate which the Federal Reserve has kept near zero percent for more than 5 years.
The Fed is expected to increase the fed funds rate sometime in the summer or fall of 2015 but that could change. We might see interest rates move higher in the spring of 2015 or possibly in the last quarter of 2014. Make no mistake, deposit rates are going up in the coming years, the question is when.
To help you with the never ending search for the highest savings rates and money market rates we have listed the best rates for this week.
Best Savings Account Rates
Best Money Market Account Rates
Heading into 2014, we are facing the prospect of waiting until 2015 for higher savings rates and money market rates. Average deposit rates on savings/money market accounts with balances of $10k is currently at 0.43 percent as reported by MonitorBankRates.com. The FDIC’s national average savings rate this week is much lower at 0.06 percent and the average money market rate is also much lower at 0.09 percent.
These average rates have been hovering around these current levels for years now. Thankfully there are banks offering both savings rates and money market rates well above the averages. The best savings rates this week on our rate table are at 1.00 percent with an APY of 1.00 percent. The best money market account rates are also much higher at 0.90 percent.
Best Savings Rates January 2014
Best Money Market Account Rates January 2014
We have seen wild swings in short term U.S. Treasury rates the past month while savings rates have remained stable. Treasury rates on bonds of 1 year or less rose during the government shutdown and with the looming possibility of the U.S. Government defaulting on its debt. After a deal was reached, rates on bonds declined to levels prior to the shutdown and have declined further on a weak employment report.
Yesterday’s employment numbers for the month of September, released more than two week late because of the shutdown, showed 148,000 jobs were created. Job growth for the month was less than what analysts expected. This sent bond rates down further because the Federal Reserve is more likely to keep their stimulus measures going for now.
Best Savings Rates/ Money Market Rates October 2013
Banks and credit unions are increasing the rates they are paying on savings accounts but the best savings rates available in our database are still at 1.00 percent. The same trend is happening for rates on money market accounts in that rates are increasing but the best rates are still at 0.90 percent.
The best savings rate available right now is from The Palladian PrivateBank at 1.00 percent. On our rate tables, we also have three banks offering savings account rates at 0.90 percent. CIT Bank, Barclays Bank, and GE Capital Retail Bank are all offering rates at 0.90 percent.
The best money market rate in our database at 0.90 percent is from the Sallie Mae Bank, the banking division of the student loan company Sallie Mae. We also have EverBank offering money market rates at 0.86 percent and Mutual Omaha Bank offering rates at 0.85 percent.
Slowly Inching Towards a Higher Federal Funds Rate
Deposit rates are tied to the federal funds rate which has been in a range of zero percent to one quarter percent since December 2008. This policy has sent deposit rates down to the lowest levels in generations and has kept a lid on rates rising though that is about to change.
The Federal Reserve has said the fed funds rate will stay at current levels until the nation’s unemployment rate falls below 6.5 percent. While the September employment report was lackluster, the unemployment rate fell to 7.2 percent from 7.3 percent. For the past year or so, the rate has been falling on average about 0.1 percent a month.
If that trend continues, the unemployment rate could be at 6.5 percent in the April 2014 report. The April report will be released the first Friday of May. That is unless the government has been shut down again.
When Will Deposit Rates Increase and How Fast Will Rates Move Higher?
The Fed is scheduled to meet on April 29 and April 30, 2014. If the Fed decides to increase the fed funds rate at that point, savings rates, money market rates, and CD rates could start moving higher in May 2014. The first increase and subsequent increases in the fed funds rate will probably be in 50 basis point increments.
After the April meeting, the Fed will meet again 5 more times in 2014. The meetings are scheduled in the months of June, July, September, October, and December. If the unemployment rate continues to fall during 2014 and the economy picks up steam, the Fed may increase the federal funds rate after each meeting.
If that scenario plays out, we could see a federal funds rate of 3.00 percent which historically speaking isn’t high and a 3.00 percent rate will be a neutral rate, neither increasing growth nor constricting economic growth. A 3.00 percent fed funds rate will mean savings rates and deposit rates around 3.50 to 4.00 percent and 1 year CD rates near 4.00 percent.
Stay Liquid in Savings Accounts and Money Market Accounts
Since interest rates are moving higher over the next year, one thing we’d recommend is to not lock in a low rate in a long term certificate of deposit. A better bet is to stay liquid in savings accounts or money market accounts.
Another option is to invest in shorter term certificates of deposit. Right now on our 6 month certificate of deposit rate table we have one bank, Zions Direct, offering 6 month rates at 1.00 percent.
Savings rates at credit unions in the state of California are very competitive right now and many credit union’s rates in CA are at the top of rates available anywhere. The best savings rates from any bank right now are around 1.00 percent though you might find some credit union’s dividend rates are also double the going average.
Higher Savings Rates Come with Caps and Restrictions
Credit unions offering a savings interest rate much higher than prevailing rates usually limit the amount of money that can be deposited into the account. One other point to make regarding credit unions is that you are required to join the credit union in order to open an account. Eligibility is usually living, working, or worshiping in a certain area or having a family member that does.
Best Credit Union Savings Rates
The best credit union savings account rate in CA right now is from Foothill Federal Credit Union at 1.50 percent APY. Foothill FCU’s generous rate is on their SummerTime Savings Account. There is a minimum deposit of $50 and a maximum deposit of $2,000 that can earn this rate and yield.
Another CA credit union offering a rate higher than 1.00 percent right now is FME Federal Credit Union (FMEFCU) at 1.25 percent with an APY of 1.26 percent. There are some requirements and restrictions on FMEFCU’s Direct Deposit Savings Account. To earn this rate and yield, you have to set up a direct deposit. You’re also not allowed to make any other deposits or withdrawals. The maximum amount that can earn this rate and yield is $15,000.
Another credit union in California that is offering a rate of 1.25 percent and a yield of 1.26 percent is First Imperial Credit Union. FICU’s Christmas club savings accounts and summer saver accounts earn this rate and yield. I didn’t see any balance caps on these accounts on FICU’s website. You can call this credit union at (760) 352-1540 to find out more.
There are hundreds of other credit union’s in CA offering competitive rates just above or below 1.00 percent. If you’d rather not join a credit union to obtain a slightly better rate, search our rate tables for the best bank savings rates available at Monitor Bank Rates.
Weekly average savings and money market rates barely moved this week. The best interest rates available are also stable, but during this time long term United States Treasury yields are soaring. Yields are moving higher because the markets believe the Federal Reserve will stop buying long term Treasuries.
Quantitative Easing’s Affect on Interest Rates
The Federal Reserve has been selling short term Treasuries and buying long term Treasuries to keep long term interest rates low. This policy, known as quantitative easing (QE), is the third round of easing the Federal Reserve has embarked on. The markets are anticipating an end to QE3 due to strong economic data released the past month.
Ending quantitative easing won’t send short term or long term deposit rates higher. Until the Federal Reserve increases the fed funds rate, deposit rates will remain low. The Fed will increase the fed funds rate sometime in the middle of 2014 once the unemployment rate falls below their target of 6.5 percent.
Average Interest Rates This Week
Savings rates and money market rates on account balances of at least $10,000 are averaging 0.47 percent, unchanged from last week’s average rate. Account balances of at least $25,000 are averaging a rate of 0.61 percent, up from the prior week’s average rate of 0.59 percent. Interest rates on account balances of at least $50,000 are averaging 0.66 percent, down from last week’s average rate of 0.67 percent.
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