Savers Earn Slightly Better Yields
The Federal Reserve's rate hikes have (slightly) raised yields for savers.
After years of suffering rock-bottom interest rates, savers are starting to see a glimmer of upward movement. The reason? The Federal Reserve has orchestrated three hikes of the federal funds rate in the past year of one-fourth percentage point each. (Kiplinger expects the Fed to lift its benchmark rate once more in 2017.)
Internet banks are leading the way on boosting rates. GS Bank and Synchrony Bank had offered an interest rate of 1.05% for more than two years on their no-fee savings accounts. Both accounts now yield 1.2%. Ally Bank has lifted the rate on its no-fee savings account from a long-standing 1% to a current 1.15%. Dollar Savings Direct raised the rate on its no-fee savings account from 0.55% to 1.25% in April, boosted it to 1.3% in May, and bumped it up to 1.4% in July. To search for the best savings account rates available to you, see the tables at right or visit www.depositaccounts.com.
Rather than raise rates on current accounts, some banks are creating new accounts with higher yields, hoping they’ll attract new customers—and that current customers either won’t notice or won’t take the time to move their money, says Ken Tumin, of DepositAccounts.com. For example, New York’s Flushing Bank recently opened a new internet division, BankPurely. BankPurely’s no-fee savings account yields 1.3%. But Flushing Bank also owns internet bank iGoBanking, with a no-fee savings account that yields 1%.
Don’t expect the rates on savings accounts at big brick-and-mortar institutions to budge much, if at all, the rest of the year. “Most banks will likely wait for loan growth to pick up before making any meaningful change to offered rates,” Fitch Ratings noted in a recent report.