Deposit accounts that encourage savers to stow away their cash for a longer period of time, such as savings accounts, have historically offered the best interest rates compared to short-term financial products, like a checking account. But the tides have clearly shifted, as a new a investigation reveals the shocking reality that checking rates have gained an edge over savings account rates.
An April GOBankingRates probe uncovered that the percentage change between average national checking account rates and average savings interest rates today is 77 percent — checking accounts currently average 0.23% APY, with savings accounts trailing that rate at 0.13% APY. The new findings demonstrate a shift in terms of which banking products are likely to be a better savings vehicle for customers.
Best 10 Checking Account Rates
A greater number of checking account rates were found to offer depositors high-yield interest rates, compared to their savings account competitors. Within the list of best 10 checking account rates in the nation, Louisiana-based JD Bank ranked as having the No. 1 checking interest rate nationwide, at 3.25% APY.
|Rank||Institution Name||Headquarter Location||Product||APY|
|1||JD Bank||Jennings, LA||Kasasa Cash Checking||3.25%|
|2||Community Financial Services Bank||Benton, KY||Kasasa Cash Checking||3.05%|
|3||Adirondack Bank||Utica, NY||eCo Checking||3.04%|
|4||Southern Bank||Poplar Bluff, MO||Kasasa Cash Checking||3.01%|
|4||American Trust & Savings Bank||Dubuque, IA||REWARDChecking||3.01%|
|4||The Community Bank||Zanesville, OH||Reward Checking||3.01%|
|5||Citizens Bank & Trust||Guntersville, AL||Kasasa Cash Checking||3.00%|
|5||Partner Colorado Credit Union||Arvada, CO||High Interest Checking||3.00%|
|5||Great Lakes Credit Union||North Chicago, IL||Ultimate Checking||3.00%|
|5||Lake Michigan Credit Union||Grand Rapids, MI||Max Checking||3.00%|
|5||Mercantile Bank of Michigan||Grand Rapids, MI||WOW Checking||3.00%|
|5||First Financial Bank||El Dorado, AR||Kasasa Cash Checking||3.00%|
|5||Gulf Coast Community Federal Credit Union||Gulfport, MS||Kasasa Cash Checking||3.00%|
|5||Consumers National Bank||Minerva, OH||Brilliant High Yield Checking||3.00%|
|6||UniWyo Federal Credit Union||Laramie, WY||Xtraordinary Checking||2.99%|
|7||DuPont Community Credit Union||Waynesboro, VA||Grow Green Checking||2.78%|
|8||First National Bank of McMinnville||McMinnville, TN||Premium Preferred Checking||2.75%|
|9||IC Federal Credit Union||Fitchburg, MA||Intelligent Checking||2.59%|
|10||Teutopolis State Bank||Teutopolis, IL||Kasasa Cash Checking||2.55%|
A handful of institutions, such as Great Lakes Credit Union and Gulf Coast Community Federal Credit Union, fell in the middle of this pack of high achievers, offering an impressive 3.00% APY checking account. Rounding out the list of the best checking accounts is Teutopolis State Bank‘s Kasasa Cash checking account, at 2.55% APY.
Best 10 Savings Account Rates Today
While the findings favored checking accounts as the leading banking product when it came to interest rates, the best 10 savings account rates were also competitive — and the top one dominated.
|Rank||Institution Name||Headquarter Location||Product||APY|
|1||First Western Bank||Rogers, AR||Christmas Club & Wish List Savings||6.00%|
|2||Navigator Credit Union||Pascagoula, MS||Save’N Up||5.50%|
|3||Rockport National Bank||Rockport, MA||Ultimate Online Savings||5.00%|
|3||Northern Federal Credit Union||Watertown, NY||Next eSavings||5.00%|
|4||The Bank of Greene County||Catskill, NY||e-Savings||4.00%|
|4||Community America Credit Union||Lenexa, KS||High Interest Savings||4.00%|
|5||Alabama Telco Credit Union||Birmingham, AL||Centsible Savings||3.00%|
|5||Bethpage Federal Credit Union||Bethpage, NY||Youth Savings||3.00%|
|6||Pioneer Mutual Federal Credit Union||Houston, TX||Share Savings||2.52%|
|7||Houston Police Federal Credit Union||Houston, Texas||Regular Share||2.02%|
|8||Genuine Parts Credit Union||Norcross, GA||Share Savings||1.76%|
|9||Win-Hood Co-Op Credit Union||Chicago, IL||Passbook Savings||1.75%|
|10||TwinStar Credit Union||Olympia, WA||Planned Savings||1.61%|
Arkansas’ First Western Bank secured the No. 1 spot on the list with an available savings account rate of 6.00% APY. Brick-and-mortar financial institutions kept savings account rates competitive, with the top half of the list offering at least 3.00% APY.
Checking Account Interest Rates Today Help Banks and Depositors
The national interest rate data, pulled April 7 from the GOBankingRates interest rates database and Informa Research Services, reveal the role reversal that checking accounts have experienced recently. Checking account rates faring better than savings account rates is far from a phenomenon, but, rather, a nod to the demand — and opportunities — that checking products provide banks and their customers.
Since the recession, interest rates on loans and deposit products — including savings accounts — have remained low. With limited hope of earning a substantial return through conventional savings accounts, consumers have turned their focus to the daily transactions of their checking accounts.
How Can Banks Offer High Checking Account Rates?
Depositors benefit from the promise of high yields on their checking account funds, but banks also have a good reason to draw in more checking account customers. In an October 2013 letter to the Consumer Financial Protection Bureau, the American Bankers Association said the yearly operating cost associated with a checking account was $280.
Financial institutions rely on the fees generated by checking accounts — more accounts mean more maintenance fees for those who do not meet waiver requirements, and more debit card transactions might result in more overdrafts. With the median overdraft fee at $30, according to Moebs $ervices, the potential for profit is clear.
Richard Riese, senior vice president of the Center for Regulatory Compliance at the American Bankers Association, wrote in a letter to the CFPB that not many checking depositors succumb to overdraft charges:
“They are in the best position to know what their ‘actual’ balance is, and may easily avoid overdrafts – as 85% of accountholders do – by keeping track of account balances, maintaining a cushion in an account, linking to another account such as a savings account or overdraft line of credit, or requesting low balance alerts.”
In addition to checking account fees for customers, merchants that accept debit card transactions as payment incur not one, but two fees. These merchant fees are called the interchange fee and the discount rate, which are charged by the issuing bank (the customer’s financial institution) and the acquiring bank (the institution that processes transactions for the merchant), respectively.
Retailers hoping to dodge merchant processing fees might offer a small discount to patrons who pay with cash. This markdown can sometimes be found at local gas stations advertising a lower cost per gallon of gasoline for cash-only payments.
GOBankingRates’ best 10 list includes several Kasasa checking products, which are are undeniably a helpful asset for depositors in good standing.
CEO of Kasasa Gabe Krajicek shared how high-interest checking products are possible.
“Community banks and credit unions that offer Kasasa accounts can offer yields that are higher than the national average, because we ask our account holders to do a few things most consumers do already that save or make the bank or credit union money,” he said. “Unlike most financial institutions, we pass those savings right back along to the consumer in the form of earning rewards like high yields. What’s even better, Kasasa checking and savings accounts are unconditionally free, offer nationwide ATM fee refunds and do not require a minimum balance to maintain the account.”
At times, fees are a reality for those who stumble when managing their money. However, the high-yield checking account trend, particularly through Kasasa, is an advantageous way for depositors to supplement their account balances without locking funds into an untouchable deposit account. Checking accounts yield more flexibility and, possibly, more returns.
Great Lakes Credit Union is a client of GOBankingRates.
Photo credit: RambergMediaImages