Financial experts have been predicting a rise in interest rates with the end of quantitative easing by Q1 of 2015. With an end to the Fed’s stimulus program, we’ll see rates on both deposit and loan products increase to pre-recession levels. In the meantime, however, we’re still plagued by low interest rates on deposits and positioned to take advantage of low loan rates before they creep up.
Those looking to make the most on their deposited funds should opt for a credit union, as a national survey of deposit rates found that, though rates haven’t changed noticeably year over year, credit unions are outpacing banks when it comes to offering high interest rates. The average deposit rate offered by credit unions today is 0.14% APY, whereas the average rate offered by banks is a mere 0.08% APY on average, or 43 percent lower than what you’ll typically get at a credit union.
Averages, however, aren’t necessarily reflective of the kinds of rates available to those who shop around. For example, the highest interest rate found at a credit union is a 3.00% APY from Alabama Telco Credit Union, whereas the highest rate currently being offered by a bank is a 4.00% APY from The Bank of Greene County. The rate at Alabama Telco Credit Union is over 21 times the average credit union yield, whereas The Bank of Greene County‘s APY is 50 times the average bank yield.
When it comes to online banks, savings rates reflect lower overhead costs. The average online savings account rate is 0.55% APY — nearly four times higher than the average credit union savings rate and nearly seven times that of brick and mortar banks. However, with the highest online savings account rate being 1.00% APY, account seekers can still benefit from comparing online offers to those at their local banks and credit unions.
Best Savings Account Rates From Credit Unions — August 2014
|Alabama Telco Credit Union||Birmingham, AL||3.00%|
|Pioneer Mutual Federal Credit Union||Sugar Land, TX||2.78%|
|Houston Police Credit Union||Houston, TX||2.02%|
|Genuine Parts Credit Union||Norcross, GA||1.76%|
|Win-Hood Co-Op Credit Union||Chicago, IL||1.75%|
|Twinstar Credit Union||Centralia, WA||1.61%|
|University Settlement Federal Credit Union||New York, NY||1.50%|
|Bivins Federal Credit Union||Masterson, TX||1.26%|
|Birmingham Police Credit Union||Birmingham, AL||1.26%|
|Telhio Credit Union||Hilliard, OH||1.15%|
Best Savings Account Rates From Banks — August 2014
|The Bank of Greene County||Catskill, NY||4.00%|
|Gilmer National Bank||Gilmer, TX||1.06%|
|Citizens State Bank||Steinhatchee, FL||1.06%|
|Mountain Commerce Bank||Oklahoma City, OK||1.02%|
|Bank2||Oklahoma City, OK||1.01%|
|SFGI Direct Community Bank||Moorefield, WV||1.01%|
|Bank of Bolivar||Bolivar, MO||1.01%|
|Franklin Bank & Trust||Bowling Green, KY||1.00%|
|Biscayne Bank||Chicago, IL||1.00%|
Best Savings Account Rates From Online Banks — August 2014
|My Savings Direct||1.00%|
|GE Capital Bank||0.95%|
|Colorado Federal Savings Bank||0.85%|
|Capital One 360||1.90%|
Tips to Finding the Best Savings Accounts
Like any product you purchase, shopping around will help you get the best deal. Beyond yields, there are a number of factors to consider when shopping for any deposit product, especially a savings account. Because savings accounts are meant to be a vehicle through which you can grow your money, accounts riddled with fees or accounts that have strict minimum balance and deposit requirements can hinder your progress.
Here are some considerations when comparing savings accounts at credit unions, banks and even online:
- Minimum balance requirements: Do you need to have a certain amount of money on hand to earn the advertised APY? Keep this in mind if your available funds for deposit are limited. You wouldn’t want to jeopardize the liquidity of your funds to pay for daily expenses by having to tie up too much in a savings account and maintain that balance to get the rate you’re hoping for.
- Rate drops at balance thresholds: Many savings accounts drop the rate given when balances reach a certain amount, while others increase the rate to reward higher balances. If your goal is to save a lot of money in the account, you want to know upfront if the financial institution will reward your hard work or penalize you for it. The converse is true, as well; if you have little cash on hand to put into your savings, look for an account that gives depositors a high yield regardless of how little is deposited.
- Customer service: It’s important to bank with a financial institution that values you just as much as it values your money. By working with a bank or credit union you trust, you’ll be able to bank with confidence while also dealing with less hassle to access funds or talk to a representative.
- Convenience: It’s not a wise move to opt for a bank with a higher-yield savings account if it means driving outside of city limits every time you want to conduct your banking in person. Keep your parameters local enough to home or places you frequent often in order to reduce loss of funds to your gas bill for every trip you have to make to speak to a banker. Look at online savings accounts, too, like the ones listed above.
- Fees: If you’re depositing your funds with a financial institution that will nickel and dime you every chance it gets, you’re likely not going to benefit from that higher APY. Look at all fees the bank charges on its products before committing to any.
- FDIC or NCUA protection: This one is big. Banking with a financial institution that isn’t insured could be disastrous, especially at the rate that banks fail. Check that the institution you’re interested in is insured before sealing the deal.
- Other appealing products: It’s common for people to conduct all of their banking with one institution. Loyalty programs and relationship discounts help foster this, as does sheer convenience. When deciding where to store your deposits, take a look at other loan products and offers available at the institution to see if it would be a good fit for all of your needs.
Sources: GOBankingRates.com and Informa Research Services Inc. (www.informars.com). Although the information has been obtained from the various financial institutions, the accuracy cannot be guaranteed.
All interest rates are accurate as of Aug. 28, 2014, except for Ally Bank, Capital One and CIT Bank, which are accurate as of today, and are the highest rates depositors can qualify for, assuming a $10,000 deposit. Rates are subject to change at any time at the discretion of individual financial institutions. Additional terms and restrictions could apply. Please verify rates before opening an account.
Photo credit: zack Mccarthy