Since mid-February, two of the biggest online banks slashed rates on their savings accounts and contributed to a noticeable drop in the national savings rate average, which fell from 0.32% APY to 0.30% APY in the past month.
American Express Bank’s savings rate went from 0.90% APY to 0.85% APY. Ally Bank followed up last month’s savings-rate cut from 0.95% APY to 0.90% APY with another rate cut; now, it’s down to 0.84% APY.
Meanwhile, Barclays Bank continues to hold the top nationwide savings rate at 1.00% APY. But, with the rate drops at big online banks, Barclays Bank isn’t likely to maintain that attractive rate for long. Newer online banks tend to offer highly competitive rates to bring in new customers and deposits. When American Express Bank was still a newcomer, it offered the best saving rate for some time, before making rate cuts.
Usually, a significant drop in savings rates follows grim news from the Federal Reserve. But, the central bank didn’t hold a board meeting in the past month. Another meeting is slated for next week.
Since the Fed pegged a possible interest rate hike to an improving employment market, savers should keep an eye on jobs data. One piece of good news is the falling unemployment rate, which was reported to be 7.7 percent in February, down from 7.9 percent in January, according to the Bureau of Labor Statistics.
The table below shows the changes in savings rates at benchmark financial institutions from Feb. 15, 2013 to March 15, 2013. By monitoring the savings rates at some of the largest banks, we get an idea of where rates at other banks and financial institutions are headed.
|Bank||Savings account||APY (as of 2/15/13)||APY (as of 3/15/13)||APY Change|
|Bank of America||Regular Savings||0.01||0.01%||0%|
|Ally Bank||High Yield Savings||0.90%||0.84%||-0.06%|
|Capital One 360||360 Savings||0.75%||0.75%||0%|
|American Express||Personal Savings||0.90%||0.85%||-0.05%|
With more and more online banks being introduced, savings rates can vary greatly. It’s a good idea to compare rates and features if you’re looking for a new savings account.