If you’re anything like me, you’re always on the lookout for ways to get more from your money. Unfortunately, recent years haven’t been kind to savers, with saving account interest rates averaging just 0.15% nationally. The good news is that it’s not hard to find to find a better deal.
As evidence, I offer a recent article titled “America’s Best Rates” from Richard Barrington of MoneyRates.com. For those that are unaware, MoneyRates does a quarterly roundup of banks with the best savings account and money market rates.
During the first quarter of 2011, they found seven banks whose savings accounts paid an average of at least 1% (annualized) throughout the quarter. Here they are:
- American Express Bank
- Discover Bank
- Capital One Bank
- Zions Bank
- Ally Bank
- Cashmere Valley Bank
- ING Direct
We actually have accounts with two of these seven banks – Discover Bank and Ally Bank. We do most of our “regular” banking with Discover. As for Ally, we like them for their high CD rates and the associated low early withdrawal penalties.
It’s also worth noting that all three of these banks (along with Capital One, Zions, and Cashmere Valley) were near the top back in Q4 of 2010, so they’ve been fairly consistent with their rate offerings. Not only that, but both Ally Bank and Discover Bank were featured in last year’s post about banks with consistently high interest rates thanks to their two year (plus) history of paying the highest rates.
Are you a rate chaser?
I’ve long since given up chasing rates and am now content to let our money sit at banks that consistently pay high rates, even if they’re not the absolute highest available. What about you? Are you a rate chaser? Whether you are or not, I’d love to hear which banks you prefer and why.
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does anyone know of any bank that gives 4-7 % interest anywhere in the U. S. , Canada, Germany, U.K or maybe Mexico???
does anyone know of a bank that gives 4-7 % interest anywhere in the united states, canada or mexico or even uk, germany or but legit or course??
My Discover update: After 2 weeks of emails and calls they finally refunded the NSF fee. But they refunded it to my online savings account instead of my checking account from my regular bank?!?!? Tired of the hassle I am just leaving it there.
I also inquired about the rate for AAA members. Discover told me I would have to create a whole new account under the special offer to receive the better interest rate. Scared to have them transfer my money again I am leaving things alone for now.
While the rate is good, I am not impressed at all with Discover Banks customer service.
I guess I’m not as smart as G and definitely not a rate chaser- I haven’t moved my savings out of HSBC yet. From like 5.5% when I opened to less than 1% now. I’ve heard good things about Discover Bank though. Maybe I’ll actually switch.
Update on my new Discover Bank account, it’s not pretty. After the test transfer I authorized a transfer of $10,000 (most of my emergency fund money) to be depoisited in the Discover account. The money was removed on 04/28/2011. The next day I find an NSF fee attatched to my regular bank account from Discover.
When I called the customer service rep took more than 15 minutes to tell me that the attempt to transfer the fund was unsuccessful but didn’t listen to me when I kept explaining they took it the day before. Upset I went to my bank first thing Monday morning where the branch manager confirmed that Discover took my money on 4/28 then tried to take it again on 4/29.
Last night I logged into the Discover website and found my money and the 2nd transaction. Why the customer service rep couldn’t find it over the weekend when I called is beyond me. I am waiting for a reply from Discover about refunding the NSF fee since it was their error. Will keep you posted.
G, thank you for the information on AAA memebers. I have not seen that on the AAA website or Discover but I will be asking about that as well.
Patrick:
There’s no “power of compound interest” when we’re discussing savings accounts that have piss-poor interest rates. When inflation’s higher than your interest rates, the purchasing power of your account will decrease over time.
Surprised SallieMae wasn’t on there, pretty sure they’ve been at 1.15% for all of 2011. The deltas in rates aren’t worth rate chasing at this point.
I was a rate chaser but decided to stay with Ally for a while and closed my HSBC. I just opened a Discoverbank account because AAA memebers get .05% more on their accounts, which makes the rate even that much sweeter with a bank that has been consistently higher comparatively. Now I’m sticking with Ally and Discover. Currently it is at 1.20%
I’d concur with Patrick. However, if rates go back to where they were a decade ago, that might be a different story. So in terms of Opportunity Costs, my desire for one less item to keep track of is the amount given up and at these rates, personal preference, but at this time and at these rates, my time and convenience are the more important.
Granted, I am thinking of amounts less than $10K for savings. Beyond that I think investing in in some sort of mutual fund would be better (giving more liquidity than a CD with usually only minimal higher restriction than Regulation D puts on passbook savings account), unless a foreseen need where you only need to park money for a short bit.
Ace: I mostly agree with you, though it’s worth keeping in mind that you won’t be earning interest while your money is “in transit” from one bank to another. It generally takes 2-3 for money to be credited to the new bank after it’s removed from the original bank. While that effect might be small, the rate differences are often small, as well, so it takes longer to make up the lost interest.
Patrick–You certainly might argue that it’s not worth the time and trouble to rate chase for a tiny rate increase, but moving from one bank to another has no effect on compounding interest. You don’t leave your interest behind at the other bank.
I have consistently getting a little above 5% with my
Netspend savings account for the past 2 years.
What is the tipping point for diminishing returns on chasing the highest rate?
I don’t see much point in moving money from one bank to another as the power of compounding interest comes in letting the money sit and eventually earn interest on the interest on top of the capital.
I also hate dealing with multiple tax statements at the end of the year. I guess it really depends on how much money you have in saving. If you have less than $50,000 in savings does it really matter if you make 1.10% or 1.15%? How long does that money have to sit and earn that extra 0.05% to make it worth while?
I use Capital One’s online savings because it gives me bonus interest for using my Capital One credit card that has no fees.
There’s a bank in the Tampa area that offers 4.5% on a high rate checking account. Its a pretty sweet deal. Florida Central Credit Union.
No mention of SmartyPig; currently at 1.35%
Betty: That’s the average rate that they offered during the 1st quarter of this year. Rates have been generally falling, so the average will (in most cases) be a bit higher than the current rate.
I just opened a Discover Bank online savings account this weekend with a rate of 1.15%. Where is 1.22% coming from in the data?
The article must have completely missed Sallie Mae. Though their rates have been falling (like all other online banks), it still pays about 1.10%, which easily gets it into the list.