By  Updated on Tue Jun 3, 2014

Savings Rates Report Jan. 2013: Online Banks Drop Rates

 

Savings Rates Report Jan. 2013: Online Banks Drop Rates

(Please check out our latest savings rates report.)

Today’s low savings rates continue to be an eyesore to Americans who want to collect more interest from their hard-earned cash. And, savings rates continue to slip — the national savings rate average is 0.33% APY, down from 0.34% APY last month.

In December, the Federal Reserve revealed the key economic indicator that would drive the central bank’s interest rate policy: the unemployment rate. The Fed predicts that the unemployment rate will not return to acceptable levels until 2015.

Essentially, savers can continue to expect low rates as long as the unsettling job market remains in a concern. At least, we get a better idea of when savings rates will rise. On the other hand, banks are possibly using this metric to determine savings rates.

During the past month, HSBC and TIAA Direct have slashed the rates on their online savings accounts. HSBC Advance, the savings account that used to be the only offering of the now-defunct HSBC Direct, had its rate cut to a measly 0.20% APY, down from 0.40% APY. The account used to stand neck and neck with ING Direct.

TIAA Direct, the young online bank that held the top nationwide savings rate since its launch in early 2012, has reduced the rate on its savings and money market accounts to 1.00% APY, down from 1.25% APY. Currently, TIAA Direct ties for the best nationwide savings rate with Barclays Bank at 1.00% APY.

In a surprising twist, FNBO Direct increased its savings rate from 0.65% APY to 0.85% APY.

The biggest players stay put

The table below shows the changes in savings rates at benchmark financial institutions. From Dec. 15, 2012 to Jan. 15, 2013. We record the rate movement at the largest banks because they tend to signal the trends that are likely to occur throughout the entire banking industry.

At the banking giants, savings rates did not change.

Bank Savings account APY (as of 12/15/12) APY (as of 1/15/13) APY Change
Chase Savings 0.01% 0.01% 0%
Bank of America Regular Savings 0.01 0.01% 0%
Ally Bank High Yield Savings 0.95% 0.95% 0%
ING Direct Orange Savings 0.75% 0.75% 0%
American Express Personal Savings 0.90% 0.90& 0%

Although the national savings rate average stands at 0.33% APY, there are plenty of savings accounts that offer a higher return.


 

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