Here is my monthly roundup of the best safe rates available, roughly sorted from shortest to longest maturities. Check out my Ultimate Rate-Chaser Calculator to get an idea of how much additional interest you’d earn if you are moving money between accounts. Rates listed are available to everyone nationwide. Rates checked as of 8/4/18.
High-yield savings accounts
While the huge brick-and-mortar banks like to get away with 0.01% APY, there are a number of online savings accounts offering much higher rates. Keep in mind that with savings accounts, the interest rates can change at any time.
- CIT Bank Money Market offers 1.85% APY with no minimum balance ($100 to open) and no max balance cap. Several others have similar rates (see interactive tool below). Customers Bank offers 2.25% APY guaranteed until 6/30/19, but with a minimum balance of $25k+. On the flip side, Redneck Bank offers 2.00% APY but on a maximum balance of $50k.
- My “hub” bank account is the Ally Bank Savings + Checking combo due to their history of competitive savings/CD rates, 1-day external bank transfers, and overall user experience. The free overdraft transfers from savings allows to me to keep my checking balance at a minimum. Ally Savings is currently at 1.80% APY. From here, I open “spoke” accounts and CDs to lock in higher rates.
Money market mutual funds + Ultra-short bond ETFs
If you like to keep cash in a brokerage account, you should know that money market and short-term Treasury rates have been rising. The following money market and ultra-short bond funds are not FDIC-insured, but may be a good option if you have idle cash and cheap/free commissions.
- Vanguard Prime Money Market Fund currently pays an 2.06% SEC yield. The default sweep option is the Vanguard Federal Money Market Fund, which has an SEC yield of 1.87%. You can manually move the money over to Prime if you meet the $3,000 minimum investment.
- Vanguard Ultra-Short-Term Bond Fund currently pays 2.44% SEC Yield ($3,000 min) and 2.54% SEC Yield ($50,000 min). The average duration is ~1 year.
- The PIMCO Enhanced Short Maturity Active Bond ETF (MINT) has a 2.45% SEC yield and the iShares Short Maturity Bond ETF (NEAR) has a 2.47% SEC yield while holding a portfolio of investment-grade bonds with an average duration of ~6 months.
Short-term guaranteed rates (1 year and under)
I am often asked what to do with a big wad of cash that you’re waiting to deploy shortly (just sold your house, just sold your business, legal settlement, inheritance). My usual advice is to keep things simple. If not a savings account, then put it in a flexible short-term CD under the FDIC limits until you have a plan.
- United Texas Bank has a 1-year CD at 2.80% APY. CIT Bank 1-year CD is at 2.50% APY ($1,000 minimum). Early withdrawal penalty is 3-months of interest. For more flexibility, the Ally Bank 11-month No Penalty CD is at 2.00% APY ($25k minimum) and the CIT Bank 11-Month No-Penalty CD is at 1.85% APY with a lower $1,000 minimum. The lack of early withdrawal penalty means that your interest rate can never go down for 11 months, but you keep full liquidity. You can open multiple CDs in smaller $1,000 increments to get even more flexibility.
- Several other banks now have 12-month CDs at 2% APY and above. Watch the early withdrawal penalties. For example, Synchrony Bank has a 2.45% APY 12-month CD, but the early withdrawal penalty is 90 days of interest. Meanwhile, Ally Bank has a 12-month CD at 2.40% APY with $25k+ deposit (2.25% APY for $5k+) and early withdrawal penalty of 60 days interest.
US Savings Bonds
Series I Savings Bonds offer rates that are linked to inflation and backed by the US government. You must hold them for at least a year. There are annual purchase limits. If you redeem them within 5 years there is a penalty of the last 3 months of interest.
- “I Bonds” bought between May 2018 and October 2018 will earn a 2.52% rate for the first six months. The rate of the subsequent 6-month period will be based on inflation again. More info here.
- In mid-October 2018, the CPI will be announced and you will have a short period where you will have a very close estimate of the rate for the next 12 months. I will have another post up at that time.
Prepaid Cards with Attached Savings Accounts
A small subset of prepaid debit cards have an “attached” FDIC-insured savings account with exceptionally high interest rates. The negatives are that balances are capped, and there are many fees that you must be careful to avoid (lest they eat up your interest). Some folks don’t mind the extra work and attention required, while others do. There is a long list of previous offers that have already disappeared with little notice.
- The only notable card left in this category is Mango Money at 6% APY on up to $5,000, but there are many hoops to jump through. There is a $3 monthly fee and you need to maintain a minimum $800 net direct deposit each month. This means you can’t direct deposit $800 and also take out $800 via online transfer. Checks and ATM withdrawals have additional fees. The only thing left is to spend the money via the Visa debit feature (and miss out on 2% or similar credit card rewards).
Rewards checking accounts
These unique checking accounts pay above-average interest rates, but with unique risks. You have to jump through certain hoops, and if you make a mistake you won’t earn any interest for that month. Some folks don’t mind the extra work and attention required, while others do. Rates can also drop to near-zero quickly, leaving a “bait-and-switch” feeling. That’s just how it goes with these types of accounts.
- Consumers Credit Union offers up to 4.59% APY on up to a $20k balance, although getting 3.09% APY on a $10k balance has a much shorter list of requirements. The 4.59% APY requires you to apply for a credit card through them (other credit cards offer $500+ in sign-up bonuses). Keep your 12 debit purchases small as well, as for every $500 in monthly purchases you may be losing out on 2% cashback (or $10 a month after-tax). Find a local rewards checking account at DepositAccounts.
Certificates of deposit (greater than 1 year)
You might have larger balances, either because you are using CDs instead of bonds or you simply want a large cash reserves. By finding a bank CD with a reasonable early withdrawal penalty, you can enjoy higher rates but maintain access in a true emergency. Alternatively, consider building a CD ladder of different maturity lengths such that you have access to part of the ladder each year, but your blended interest rate is higher than a savings account.
- Ally Bank has a 5-year CD at 3.00% APY ($25k minimum) with a relatively short 150-day early withdrawal penalty. For example, if you closed this CD after 2 years you’d still get a 2.39% effective APY even after accounting for the penalty. (2.61% at 3 years.)
- Connexus Credit Union is offering a 1-year Share Certificate at 2.50% APY (90-day early withdrawal penalty), a 3-year Share Certificate (180-day early withdrawal penalty) at 2.75% APY, and a 5-year Share Certificate (365-day early withdrawal penalty) at 3.25% APY. All have a $5,000 minimum deposit. Anyone can join this credit union via partner organization Connexus Association for a one-time $5 fee.
- You can buy certificates of deposit via the bond desks of Vanguard and Fidelity. These “brokered CDs” offer FDIC insurance, but they don’t come with predictable fixed early withdrawal penalties. As of this writing, Vanguard is showing a 3-year non-callable CD at 3.00% APY and a 5-year non-callable CD at 3.30% APY from a few banks including American Express and Citibank. Watch out for higher rates from callable CDs listed by Fidelity.
Longer-term Instruments
I’d use these with caution due to increased interest rate risk, but I still track them to see the rest of the current yield curve.
- Willing to lock up your money for 10+ years? You can buy long-term certificates of deposit via the bond desks of Vanguard and Fidelity. These “brokered CDs” offer FDIC insurance, but they don’t come with predictable fixed early withdrawal penalties. As of this writing, Vanguard is showing a 10-year non-callable CD at 3.45% APY. Watch out for higher rates from callable CDs from Fidelity. Matching the overall yield curve, current CD rates do not rise much higher as you extend beyond a 5-year maturity.
- How about two decades? Series EE Savings Bonds are not indexed to inflation, but they have a guarantee that the value will double in value in 20 years, which equals a guaranteed return of 3.5% a year. However, if you don’t hold for that long, you’ll be stuck with the normal rate which is quite low (currently a sad 0.10% rate). I view this as a huge early withdrawal penalty. You could also view it as long-term bond and thus a hedge against deflation, but only if you can hold on for 20 years.
All rates were checked as of 8/4/18.
Interactive rate table. Above, I work to curate only the banks with top nationwide rates. I don’t include every bank. Below is an interactive widget that lets you filter by account type (savings, CD term) and deposit amount. I don’t control the results, but it can be useful for comparison purposes to see other competitive rates. Disclosure: If you end up opening a new account using this widget, I may receive a commission.
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So far we’ve gone from Nothing to Almost Nothing and its nice to know that Jamie Dimon and Lloyd Blankfein didn’t have to give up their limos while the rest of us having been trying to eek out retirement on zero percent interest rates.
I’m hoping for a 10 year 4% CD by the end of the year which I will pile into because I think by mid 2019 the Fed will start playing their usual games and get cold feet.
Or even better, let Jamie Dimon keep his Fiat. The rest of us should find solace in the world of crypto.
How about it, Jonathan? There is surely room for bitcoin in any diversified portfolio!
Great update article as usual. One small point for correction I noticed, Synchrony Bank 2.45% CD is now 12 months term not 14 months.
Thanks, having it at 12 months is also better as that lowers the early withdrawal penalty to 90 days. (The 14-month CD had a big 180-day penalty.)
Thanks, Jonathan. Ally’s 2-year Raise Your Rate CD also seems an attractive option. As of 8/6/2018, 2.50% APY for any deposit amount. Compare with Ally’s 1-year CD @ 2.10%-2.40% and Ally’s 4-year Raise Your Rate also @ 2.50% across all deposit amounts. 60-days of interest early withdrawal penalty on the 2-year CD.
The interactive rate table is a disappointment. Those listings look like the ones from Bankrate which always lists its advertisers at the top of the list. Also it shows the same 3-4 choices regardless of how you change parameters. There are a number of nationally available choices from banks with higher rates.
The main post is for the absolute top rates. The table fills in the rest so that I don’t have to list every other “almost” top bank. “Why didn’t you list XXX Bank?” You’re right, the rate table is not exhaustive and it shows mostly bank wanting to promote their rates. But the rates tend to pretty close to the top. A bank isn’t going to promote their 0.05% APY savings account. For example, I see a 1.85% APY savings, 2.5% APY 1-year CD, and a 3% APY 5-year CD.
The disappointment is mostly that it doesn’t matter what you put into the parameters you only get products from Synchrony, Capital One, Discover, and American Express. It is not merely “not exhaustive” but it is extremely limited. Some of the account types give you no results at all. I think that the table is so poor in comparison to the general high quality of your posts that it isn’t fit to be on your blog.
Jonathan – nice roundup, as usual.
Just to share a bit, my wife and I have our house savings in Vanguard’s VBMFX – their total bond market fund. I was thinking that bonds are safer than stocks, so its a viable spot to keep your house savings. Wrong! We’re down by a couple of hundred dollars. : (
Next time I think we’re probably going to explore ultra short term bonds or short term CDs.
Thanks for the update!
The key with Mango Money to maintain your 6% savings rate is monthly net direct deposits. Elect minimum direct deposit $800 from your paycheck. Withdrawal the funds on the first business day of the following month. Max out the balance of savings ($5000) to get 6% interest rate. Annual Interest earned is $264 ($300 – $36) or ($5000 x 6% interest)-($3 fee x 12 months). If you know the timing, you can schedule the transactions to reduce the effort.
How do you withdraw the funds? If you use ACH, you would not longer have a $800 net deposit. Which method incurs the least fees with the least effort?
Also, why isn’t Popular Direct listed here? They are still offering 2.00% APR on new accounts with minimum $5000 deposit. I have read some negative reviews but so far I have not had any negative experiences.
https://www.populardirect.com/products/savings/popular-direct-plus-savings
The purpose of this post is not to list every bank. That’s why I added the rate table, to add some more examples. Popular Direct does not have the highest rate, nor the least restrictions. Indeed, Popular Direct has a little-known policy that restricts new customers from withdrawing their own money from a Popular Direct account for the first 60 days. They also have a history of rejecting any externally-initiated ACH at their discretion and asking for documentation before letting you access your own money. This is not the behavior I want from a savings account.
Vanguard Treasury Money Market (VUSXX) is yielding 1.89% . And in most states the interest is not subject to state income tax, so an extra boost to your yield, compared to interest from a bank account. It does, however, have a $50k minimum.
Synchrony Bank just introduced a 13-month 2.65% CD.
> Rick
I’m always interested in the contrarian and constructive criticism, thanks for commenting in that spirit.
But, unless I misunderstand your intent, could you then list some comparable or better offers in your posts?
Dollar Savings Direct (Emigrant Direct) has been pretty good to me over the years,
currently: 1.80 APY savings, 2.15 APY CD 6mos
For most with under 1% on savings, it’s worth moving anywhere for nearly 1% increase. I struggle with moving savings, unless it’s a 1% increase or better.
For 100k, that would be a move for 1k per year…
10k => 100, 1k => 10, and so on….
>Jonathan, and others…..
You might want to comment on that “sweet spot” where moving is worth it, based on savings amount, percent yields, and the cost of a basket of groceries.
1k extra per year can buy a lot of things, no matter what your level of living standard is. I would assume most folks spend about the same on every day small ticket items.
So for folks with a lot of cash may feel more comfortable moving funds around on smaller percentage differences, than moving 1k for $10 extra per year.
When the percentages get higher then moving smaller cash reserves may be worth the trouble.
I may not articulate this well, but I hope you know what I’m trying to convey.
Please comment, especially if there is some general rules of thumb about this.
Thanks.
If you’re using CIT Bank, I just discovered you can fund a new account with an existing account as an existing account holder. That’s handy! The total time to open another account was less than a minute, actually.
The United Texas Bank CD shows as 36 months now.
Also, if you’re using Quicken, apparently you cannot download transactions for CIT Bank CDs:
“Thank you for contacting CIT Bank.
Please be advised that you are unable to download your transactions for your CD accounts for Quicken.
If you have any additional questions, please feel free to reply to us. You may also call our Customer Contact Center at (855) 462-2652 Mon-Fri 8AM-9PM ET, Sat 9AM-5PM ET and Sunday 11AM-4PM ET.
We hope to have addressed your questions or concerns. We are here to help! Please let us know if we can be of further assistance.”
I was there at the office last week. They have an excellent client relations team in New York. Prapti from the Remittance was very helpful & informative. Keep up the good work SBI New York. I was well impressed.