long last, banks are becoming a little more generous
the emphasis here is on "a little." If you
have been looking around for higher interest rates, you’ll
be able to find an appetizer now, but not a feast.
don’t expect them to come to you. Higher interest
rates probably won’t be served up by your friendly
neighborhood banker. You are going to have to hunt for
them. Here are four ways savvy savers can snag higher
bricks-and-mortar. The best deals around usually are not
at bricks-and-mortar banks, and especially not large
banks, although these institutions do intermittently
offer special rates on CDs and savings accounts. The
best interest rates are most often offered by
institutions that operate on the internet, said Ken
Tumin, founder and editor of DepositAccounts.com.
ebanks may have unusual names, but as FDIC-insured
institutions, your money will be safe up to $250,000.
savings accounts offered by some internet banks are
currently six times higher than the 0.185 percent banks
are offering on average, Tumin said. Dollar Savings
Direct has been one of the highest recently with a 1.4
percent interest rate on savings accounts.
rates have been drifting upward for about six months as
banks and credit unions anticipate more rate increases
by the Federal Reserve, said Greg McBride, senior vice
president and chief financial analyst of Bankrate.com.
banks are often the quickest to adjust their rates in
anticipation of Federal Reserve moves because online
customers can easily transfer their money from one
institution to another, while bricks-and-mortar bank
customers tend to remain on autopilot, Tumin said.
Internet banks also don’t incur costs such as rent and
rates are constantly changing. To shop for the best
rates try www.DepositAccounts.com, www.Bankrate.com,,
www.NerdWallet.com and www.GoBankingRates.com.
an eye on constantly fluctuating rates. The interest
rates you see online today may not be there in a few
days or months.
they try to attract customers, banks may offer high
interest rates for awhile, and then lower them. New
customers might be treated to specials, while existing
customers are not, Tumin said. For example, about a year
ago, iGO Banking was offering a 1.25 percent interest
rate, and then about 12 months later a 0.15 percent
rate, he said. That means customers who moved funds to
the bank for the 1.25 percent rate eventually ended up
collecting a much lower interest rate, Tumin said.
suggests that savers check their accounts at least once
a year to make sure they’re paying what you think they
when hunting for the best interest rates, note rules
about maximum and minimum deposits. CIT Bank, for
example, is paying 1.3 percent, but only on a maximum of
$100,000. GS Bank is paying 1.2 percent, but that’s
limited to new customers with less than $250,000.
you’re dealing with an internet bank, make sure your
savings account with that ebank can be linked to your
checking account at a traditional bank, and that money
can be transferred between the accounts free of charge.
savings accounts against CDs. If you need to be able to
reach your money at any time, savings accounts are your
best bet because many CDs penalize you if you withdraw
the money before it’s matured. And banks are making
penalties for withdrawing money early more stringent,
Tumin said. In the past you might have lost three or six
months of interest if you withdrew money early from a
CD. Now, it’s becoming more common to lose a year of
many internet banks offering more than 1 percent
interest on savings accounts, the accounts can be a
better deal than many one-year CDs. To be sure, there
are some attractive rates to be had on CDs — such as
the 1.7 percent being offered on a one-year CD with a
$25,000 minimum at Crestmark — but the average
one-year CD now pays just 0.56 percent, Tumin said.
accounts also have the benefit of flexibility. If you
are in a savings account and rates become more alluring
elsewhere, you will have the freedom to move your money.
a shopper. For people with a lot of money and little
interest in shopping for the best rates,
www.MaxMyInterest.com provides a solution.
site looks for the best rates offered by major
institutions and moves your money to the highest paying
entities regularly. Since FDIC insurance applies to only
$250,000 at a single bank, if you have large sums to
invest, MaxMyInterest will divide your money so only
$250,000 goes into a single institution. There is an
annual fee of 0.08 percent for the service, but recently
customers were earning about 1.14 percent after fees.