A new online bank called Incredible Bank (great name, right?) has launched a high yield checking account that pays 2.02% APY. Now, I realize that’s not that high yield, but it is better than a lot of other checking account rates out there. The best comparison is Everbank’s FreeNet Checking Account that currently pays a 3-month bonus of 2.51% APY and a first-year APY of 1.77%.
Incredible Bank if the online division of River Valley Bank. All accounts are FDIC insured up to $250,000.
According to BestCashCD , 5-year CD rates showed their biggest decline since August. All of you savers hoping for a break will have to wait a bit more. It’s unfortunate that the government has decided to bail out the speculators instead of the savers. But that’s the way of the world.
Savings Rate and CD Rate Analysis
At least rates aren’t dropping like a rock. There are even a few good deals out there. Everbank continues to offer a 2.51% teaser rate on a savings account and money market account. The one year APY is 1.77% APY. Yeah, I know, pretty pathetic but it’s better than nothing.
I site that go to a lot for savings and cd rate information has recently expanded and is now offering mortgage rates and home equity rates. The rates are broken down by state. They’ve also added a section for auto loans.
I interviewed one of the site’s founders, Sol Nasisi and he had this to say:
We’ve always wanted to have the most comprehensive rate information and this is a first step in that direction. We’ve tried to design the rate tables so that they are easy to use. The last thing we wanted to do was force users to answer a lot of questions before providing them with the rate information they are looking for.
That sounds like a bingo to me. I’ve been on other sites and they ask so many questions it takes 15 minutes to just see a rate. Just give me a mortgage rate people!
Anyway, I like what they’ve done. It’s not perfect and the design could use a bit more work but I think they are headed in the right direction.
While California melts down financially, and has to raise the rate it is offering on its municipal bond offering, local cd rates in California are not keeping up with the national averages. The top three rates in California are:
La Jolla Bank, FSB at 1.90% APY
First Federal Bank of California at 1.80% APY
First Republic Bank at 1.50% APY
While these are competitive, there are some national rates that are even better. MetLife is offering a CD nationally that is paying 2.15% APY and can be opened online. ING Direct is offering a national CD with a rate of 2.10% APY.
Still, if you are looking for banks that are local and that you can go into the branch, the list above is a place to start.
BestCashCow has a good article about how inflation impacts your savings rate. The bottom line: inflation makes a difference in how much you are really earning. 3% with a 0% inflation rate is as good as 7% with a 4% inflation rate.
Right now, inflation is close to 0% so the real return isn’t bad. While rates have come down, the return you are getting by putting your money in the bank is actually better than it was at the same time last year – before the financial meltdown started in earnest.
GMAC Bank is offering some very competitive rates on Certificates of Deposit accounts. As the BestCashCow rate table shows, the bank is offering the top rate on 3, 6, 12, 18, and 24 month cd rates.
GMAC has had problems recently stemming from GMs problems as well as record defaults on mortgages. But the company was recently converted to a bank holding company, allowing it to receive TARP funding. The bank is aggressively seeking deposits and I’ve seen ads online, via television, on billboard, and in print.
The reviews of GMAC Bank are mostly positive although there were a few complaints about the responsiveness of service. If you can live with that, you can lock in a decent rate even as other investment options are becoming less attractive.
DollarSavingsDirect, a division of Emigrant Bank has the highest rate in the country at 4% APY. I thought for sure that after the Fed cut rates to 0-.25% DollarSavingsDirect would cut their rate but when I checked, it was still there. Good for them.
The account has a $1,000 minimum deposit has received mostly favorable reviews from BestCashCow.
As this chart from BestCashCow shows, banks have been pretty good at maintaining savings rates despite the drop in the Fed Funds rate over the last six months.
As the graphs below show, the probability of a rate cut in December remains abover 90%. The highest probability is a cut to .50% although the probability of a cut to .25% has grown significantly over the last monty and now stands at almost 30%. There is a 15% probability of a cut to 0% in January. Look for this probability to grow as retailers report dismal holiday shopping numbers and several file for bankruptcy in January.
How will this impact the rates on savings accounts, cds, and money markets?
The Fed Funds Rate is a key indicator in determing the savings account rates, money markets rates, and CD rates that banks will pay. If the Fed funds rate goes down, banks usually lower their rates while the opposite is true if the Fed raises rates. Despite the increased probabilty of a rate cut in the coming months, CD rates and Savings rates have remained firm. Rates on 5 year CD rates have even increased slightly over the last week. Banks want your cash and can’t afford to lower rates and lose deposit dollars. It’s hard to imagine deposit rates staying at current levels though if the Fed cuts further and looks headed for a 0% Fed Funds Rate.
The State Bank of India is getting super aggressive in the rate game, raising its six month CD rate to 4.32% APY and its 12 Month CD to 4.68% APY. According to the BestCashCow rate tables, these are the best six month CD rates and the best 12 month CD rates.
GMAC Bank is offering some very competitive rates on Certificates of Deposit accounts. As the BestCashCow rate table shows, the bank is offering the 
