The August jobs report that was released last Friday didn’t have much effect on the odds of a December Fed rate hike. According to this MarketWatch article:
The mildly disappointing jobs report in August will be little more than a speed bump on the Federal Reserve’s road to continue tightening, economists said Friday.
Economist Tim Duy reviewed the jobs report in his Fed Watch blog post, and he summed up his expectation about December:
the Fed will hike in December even if inflation remains tepid. I think the Fed will need to see more evidence of slowing in the real economy before they cease rate hikes
A December Fed rate hike is far from a sure thing, and that was clear today in a speech by Federal Reserve Governor Lael Brainard. She’s pushing the Fed to move in an even a more gradual pace in raising the federal funds rate. Economist Tim Duy wrote about her influence on Fed policy. According to Duy, Brainard was influential in moving Fed policy in 2016 away from four rate hikes to only one. Duy summed up her speech by saying:
Bottom Line: Brainard is making a push to slow the pace of rate hikes. I am not sure she will be as successful as her last effort to change the course of policy.
I hope Duy is right. This shows the importance of having more inflation hawks at the Fed.
Brainard’s speech didn’t have a big impact on the Fed funds future. The odds of a December Fed rate hike went up from last week (31.5% to 36.9%).
When I saw the Treasury yield changes from last week, I thought the big increase in the 1-month yield was a good sign for a future rate hike, but it appears it had nothing to due with Fed expectations. According to this Reuters article.
Concerns whether the federal debt ceiling would be raised in time to avert a default resulted in a lousy one-month bill auction and the highest interest rate on one-month T-bills in nine years at 1.300 percent.
That 1-month T-bill yield increase from last week of 34 bps far surpassed the size of all other Treasury yield changes. All of the long-dated Treasury yields decreased over the last week, with the 10-year Treasury yield falling the most (6 bps).
- 1-month: 1.30% up from 0.96% last week (0.52% on Jan 3)
- 6-month: 1.13% same as last week (0.65% on Jan 3)
- 2--year: 1.30% down from 1.33% last week (1.22% on Jan 3)
- 5--year: 1.65% down from 1.70% last week (1.94% on Jan 3)
- 10-year: 2.07% down from 2.13% last week (2.45% on Jan 3)
- 30-year: 2.69% down from 2.74% last week (3.04% on Jan 3)
Fed funds futures' probabilities of future rate hikes by:
- Sep 2017 - up by at least 25bps: 0% same as last week
- Dec 2017 - up by at least 25bps: 36.9% up from 31.5% last week
- Dec 2017 - up by at least 50bps: 0.7% up from 0.6% last week
- Dec 2017 - down by 25bps: 0.9% down from 1.8% last week
- Jun 2018 - up by at least 25bps: 50.7% up from 49.4% last week
Savings and Checking Account Rates
We had small surge of rates hikes on savings and money market accounts in the last two weeks. This was a pleasant surprise. In my last liquid account update, I had noted the slowdown of rate hikes. I’ll be surprised to see more of these surges until the odds grow for a December Fed rate hike.
This small surge of rate hikes included two big internet banks, Ally and Capital One. Both increased their rates to 1.20% APY. Ally Bank’s savings account rate increased from 1.15% to 1.20% APY for all balances. Capital One’s 360 Money Market rate increased from 1.10% to 1.20% APY for balances of $10k+.
It’s interesting to note that Capital One is hiking rates on its money market account while its keeping the 360 Savings Account rate at 0.75%, where it has been since ING Direct became Capital One 360 in 2013.
Ally Bank is doing the opposite. It’s raising its savings account rate while the money market rate is left behind.
Other internet banks that increased their rates included EverBank and FNBO Direct.
EverBank increased its first-year intro APY of its money market account from 1.21% to 1.31%. The ongoing rate also increased, but the rate is still low for an internet bank (0.86%).
FNBO Direct increased the rate of its Online Savings Account by 5 bps to 1.15% APY for all balances. FNBO Direct doesn’t appear to want to compete with the leaders, but at least they want to keep it in the ballpark. I miss the good old days back in 2007 when FNBO Direct was on top of the internet banks with a 6% savings account..
These rate hikes didn’t result in any new 1.25%+ rates, thus my 1.25% club has remained the same. This 1.25% club is the group of nationally available checking, savings and money market accounts that have rates of at least 1.25% APY and that are clearly not promotional or temporary. The ten in the club include Northern Bank Direct, Sallie Mae Bank, CIT Bank, ableBanking, Self-Help FCU, BankPurely, UFB Direct, PurePoint Financial, Dollar Savings Direct and Live Oak Bank.
Reward Checking Accounts
Again, there were essentially no changes to my list of nationally available reward checking accounts (Heritage Bank’s eCentive Account rate reduced 1 bps to 1.25% APY). Reward checking rates have been slower to respond to the Fed rate hikes as compared to internet savings account rates. Since much of the rates of reward checking accounts are paid for by debit card activity, banks may continue to go slow with rate hikes.
To find the highest reward checking rates and balance caps in your state or nationwide, please refer to our reward checking rate table. If you're new to reward checking, please refer to my blog post, Overview of Reward Checking and Our Reward Checking Table.
Certificate of Deposit Rates
I’m now publishing my CD survey as a separate post. Please refer to my survey of the best CD rates. This recap will focus on banking news of the week and liquid accounts.
CD Deals: I just wanted to include this reminder of a few noteworthy CD deals that are available.
Advancial Credit Union had been a rate leader for most CD terms, but it reduced several of its CD rates at the start of September. Its Jumbo 5-year CD now earns 2.49% (down from 2.67%). On the positive side, its shorter-term CDs continue to be rate leaders. Its Jumbo 1-year CD now earns 1.78% APY. More details about this credit union and its CDs are available in this blog post and in the comments of that post.
USALLIANCE Financial ended its special Cooperative Rewards CDs in September, but it came out with higher rates on its longer-term CDs. It now holds the top spot for a 2-year term (2.00% APY, 25-month) and for a 3-year term (2.17% APY, 36-month). Please see this blog post for a review of USALLIANCE and these CDs.
Ally Bank continues to offer a 1.50% APY on its 11-month No Penalty CD for balances of at least $25k. Balances of $5k to under $25k earn a 1.25% APY. Please refer to this blog post for more details. Ally now has some competition for No Penalty CDs. CIT Bank just increased its 11-month No-Penalty CD rate to 1.45% APY, with only a $1k minimum deposit (see blog post).
For those who want a longer-term CD, Ally Bank’s 5-year CD (2.25% APY for all balances) is a good choice. It isn’t the 5-year rate leader, but its 5-year CD is very competitive when you factor in the mild early withdrawal penalty (150 days of interest). Sallie Mae Bank is giving Ally some competition. Its 5-year CD APY is 2.35%. This CD’s early withdrawal penalty is just slightly larger than Ally’s (180 days of interest). An easy-to-join credit union recently surpassed Sallie Mae Bank for a top 5-year rate with a mild early withdrawal penalty. Signal Financial Federal Credit Union’s 5-year CD earns 2.40% APY, and its early withdrawal penalty equals six months of interest. You can see the effective yields of these CDs when closed early by using the CD Early Withdrawal Penalty Calculator.Rates as of September 5, 2017
Checking/Savings/Money Market Accounts:
- Best Savings Account Rates (Nationwide and by State)
- Best Money Market Rates (Nationwide and by State)
- Best Checking Account Rates (Nationwide and by State)
- Noteworthy Accounts Available Nationwide:
|State Bank of Texas||1.55% ($100k)||Jumbo MMDA - Account review|
|All America Bank||1.50% (up to $35k), 0.50% ($35k+)||Mega Money Market Account - Account review|
|Redneck Bank||1.50% (up to $35k), 0.50% ($35k+)||Mega Money Market Account|
|DollarSavingsDirect||1.40% (no min)||Dollar Savings Account - Account review|
|Live Oak Bank||1.40% ($250k max)||Savings Account - Account review|
|Self-Help Federal Credit Union||1.37% ($500k), 1.27% ($500)||Money Market - Account review|
|Salem Five Direct||1.35%||eOne Savings, for new customers only Account review|
|Signal Financial Credit Union||1.35% ($25k, enrollment in Premium Bundle)||Premium Money Market - Account review|
|EverBank||1.31% (1yr intro rate) 0.86% ongoing rate||MMA - Account review|
|Nationwide Bank||1.30%||Online Savings - Account review|
|CIT Bank||1.30% (up to $100k), 1.25% ($100k+)||Premier High Yield Savings - Account review|
|Sallie Mae Bank||1.30%||MMA - Account review|
|BankPurely||1.30% ($1 min)||SavingPurely - Account review|
|ableBanking||1.30% ($250 min)||Money Market Savings - Account review|
|PurePoint Financial||1.30% ($10k min)||Online Savings - Account review|
|UFB Direct||1.30% ($25k+), 0.20% ($100)||Premium Savings - Account review|
|The Palladian PrivateBank||1.30% (6mo intro rate) 1.10% blended APY||Savings Account - Account review|
|Northern Bank Direct||1.26% ($250k max)||Money Market - See review|
|BBVA Compass||1.25% ($10k min)||ClearChoice MMA Promo - Account review|
|EBSB Direct||1.25% ($10k min)||Money Market Special 3 - Account review|
|McGraw-Hill Federal Credit Union||1.25% ($75k), 1.10% ($20k),1.00% ($5k) (guaranteed through 8/31/17)||Ascend Account - Account review|
|EverBank||1.21% (1yr intro rate) 0.71% ongoing rate||Checking - Account review|
|SFGI Direct||1.21%||Savings account - Account review|
|Incredible Bank||1.21% ($2.5k), 0.05% ($250k+)||IncredibleBank Savings - Account review|
|Popular Direct||1.21%||Popular Direct Plus Savings - Account review|
|Barclays||1.20%||Online Savings - Account review|
|Synchrony Bank (formerly GE Capital Retail Bk)||1.20%||High Yield Savings - Account review|
|GS Bank||1.20%||Online Savings Account - Account review|
|Radius Bank||1.20% ($2.5k min)||Radius High-Yield Savings - See review|
|Ally Bank||1.20%||Online Savings - Account review|
|Capital One||1.20% ($10k+), 0.60% (up to $10k)||360 Money Market - Account review|
|American Express Bank||1.15%||High Yield Savings - Account review|
|My e-BAnC by BAC Florida Bank||1.15%||Super Saver - Account review|
|Discover Bank||1.15% (no min)||Online Savings - See review|
|FNBO Direct||1.15%||Online Savings|
|MyBankingDirect||1.15% ($5k+), 0.25% (less than $5k)||Earn >More Money Market|
|SmartyPig||1.15% ($10k min), 1.05% (less than $10k)||SmartyPig Savings - Account review|
|Nationwide Bank||1.15% ($10k), 1.00% ($1)||Nationwide Member Checking Account|
|Connexus Credit Union||1.15% ($100k), 1.00% ($50k,) 0.75% ($20k)||MMA - active chk required|
|Northpointe Bank||1.12%||Statement Savings - Account review|
|Alliant Credit Union||1.11% ($100 min)||High-Rate Savings - See review|
|Northeast Bank||1.10%||Pearl Money Market Promo, new customers - Account review|
|Dime Savings Bank||1.10%||Dime Direct Money Market, new money - Account review|
|iGObanking.com||1.10% ($25k min)||MMA, New accounts and new money only, Account review|
|Chevron Federal Credit Union||1.10% ($250k+), 1.00% ($2.5k+)||MarketEdge Savings|
|Pacific National Bank||1.06%||Money Market Deposit Account - See review|
|AloStar Bank of Commerce||1.05%||Savings account - Account review|
|Discover Bank||1.01% ($100k min), 0.95% ($2.5k)||MMA - See review|
|iGObanking.com||1.00%||iGOsavings - Account review|
|MySavingsDirect||1.00%||MySavings Account - Account review|
|UFB Direct||1.00% ($25k min)||UFB Savings - Account review|
Reward Checking Accounts:
- Noteworthy Accounts Available Nationwide:
|Northpointe Bank||5.00% (up to $10k), 0.10% ($10k+)||UltimateAccount - Account review|
|Consumers Credit Union||4.59% (up to $20k)||Rewards Checking - debit card and $1k credit card requirements|
|Consumers Credit Union||3.59% (up to $15k)||Rewards Checking - debit card and credit card requirements|
|One American Bank||3.50% (up to $10k), 0.25% ($10k+)||Kasasa Cash - Account review|
|Consumers Credit Union||3.09% (up to $10k)||Rewards Checking - debit card with NO credit card requirements|
|Evansville Teachers Federal Credit Union||3.00% (up to $15k), 0.00% ($15k+)||Vertical Dividend Checking - Account review|
|Lake Michigan Credit Union||3.00% (up to $15k), 0.00% ($15k+)||Max Checking|
|Great Lakes Credit Union||3.00% (up to $10k), 0.10% ($10k+)||Ultimate Checking|
|Security State Bank||3.00% (up to $10k), 0.25% ($10k+)||Kasasa Cash - Account review|
|Partner Colorado Credit Union||3.00% (up to $10k), 0.50% ($10k+)||High Interest Checking|
|American Bank & Trust||2.51% (up to $10k), 0.25% ($10k+)||Kasasa Cash|
|Industrial Bank||2.50% (up to $15k), 0.25% ($25k+)||Kasasa Cash|
|Capital Educators Federal Credit Union||2.50% (up to $10k), 0.20% ($10k+)||High Yield Checking|
|New Buffalo Savings Bank||2.27% (up to $35k), 0.2497% ($35k+)||Kasasa Cash - Account review|
|Bellco Credit Union||2.25% (up to $25k), 0.25% ($25k+)||Boost Interest Checking - Account review|
|Main Street Bank||2.25% (up to $25k), 0.25% ($25k+)||Kasasa Cash - Account review|
|Altra Federal Credit Union||2.25% (up to $15k), 0.50% ($15k+)||A+ Checking|
|Coastal Credit Union||2.25% (up to $10k), 0.10% ($10k+)||Go Green Checking - Account review that includes companion Go Green MMA|
|Georgia Bank Company||2.15% (up to $25k), 0.40% ($25k+)||Kasasa Cash - Account review|
|TruStone Financial Credit Union||2.02% (up to $20k), 0.10% ($20k+)||TruRate Checking - Account review|
|BankFirst||2.02% (up to $10k), 0.15% ($10k+)||Kasasa Cash|
|Finex||2.018% (up to $25k), 0.20% ($25k+)||Axcess Rewards Checking, Premier Account (formerly First New England Federal Credit Union)|
|XCEL Federal Credit Union||2.01% (up to $25k), 0.03% ($25k+)||Kasasa Cash Checking|
|Bay State Savings Bank||2.01% (up to $20k), 0.25% ($20k+)||Kasasa Cash - Account review|
|Legence Bank||2.01% (up to $10k), 0.25% ($10k+)||Kasasa Cash|
|5Star Bank||2.00% (up to $25k), 0.15% ($25k+)||Kasasa Cash Checking Account review|
|Country Bank||2.00% (up to $20k), 0.25% ($20k+)||Kasasa Cash Checking Account review|
|Elements Financial||2.00% (up to $20k), 0.10% ($20k+)||High Interest Checking - Account review|
|MainStreet Bank||2.00% (up to $15k), 0.25% ($15k+)||Kasasa Cash - Account review|
|Blue Federal Credit Union||2.00% (up to $15k), 0.25% ($15k+)||Extreme Checking (up to 4% w/account relationships) - Account review|
|All America Bank||2.00% (up to $10k), 0.50% ($10k+)||Ultimate Rewards Checking|
|United Educators Credit Union||2.00% (up to $10k), 0.25% ($10k+)||Kasasa Cash|
|KS StateBank||1.95% (up to $25k), 0.50% ($25k+)||Check PLUS - Account review|
|Connexus Credit Union||1.75% (up to $25k), 0.25% ($25k+)||Xtraordinary Checking|
|First Tech Federal Credit Union||1.58% (up to $10k), 0.16% ($10k+)||Dividend Rewards Checking|
|MemoryBank||1.50% (up to $250k)||EarnMore Interest Checking - Account review|
|Superior Choice Credit Union||1.50% (up to $30k)||AMP Checking|
|Bank of Internet USA||1.25% (up to $150k), 0.00% ($150k+)||Rewards Checking|
|Heritage Bank||1.25% (up to $25k), 0.10% ($25k+)||eCentive Account|
|ABCO Federal Credit Union||1.01% (up to $25k), 0.10% ($25k+)||Rewards Checking|
|Community Bank of Raymore||1.01% (up to $10k), 0.20% ($10k+)||Kasasa Cash|
|Community Bank of Pleasant Hill||1.01% (up to $10k), 0.20% ($10k+)||Kasasa Cash|
|First American Bank||1.00% (up to $15k), 0.21% ($15k+)||Everyday Rewards Checking|
|Bank of Blue Valley||1.00% (up to $10k), 0.10% ($10k+)||$1k/month debit card req (formerly Ultimate Checking)|
Certificates of Deposit:
- Best CD Rates (Nationwide and by State)
- Best IRA CD Rates (Nationwide and by State)
- Survey of the Best CD Rates (Nationwide and Local)
Bank Account Alternatives - NOT FDIC Insured
|Ally Financial Demand Notes||1.15% rate for $50k+|
|Duke Energy PremierNotes||1.15% rate for $50K+||Duke Energy PremierNotes review|
|Ford Interest Advantage||1.15% rate for $50k+||Ford Interest Advantage review|
|Vanguard Prime Money Market Fund||1.11% 7-day yield|
|Fidelity Money Market Fund||0.97% 7-day yield||reviews on Fatwallet|
|Vanguard Tax-Exempt Money Market Fund||0.71% 7-day yield|
|Fidelity Municipal Money Market Fund||0.49% 7-day yield|