Three of the banks with the highest deposit rates on CDs, savings, Money Market and checking accounts dropped some of those rates late this week. Sallie Mae Bank, Ally and EverBank all cut rates on various accounts in correspondence with the near-zero federal funds rate put into place by the Federal Reserve.
Sallie Mae Bank cut its CD rates and its savings account rates Friday. Even with the 0.10% drop, Sallie Mae’s High-Yield Savings Account holds a 1.30% interest rate, tied for the best available. Sallie Mae’s one-, three-, and five-year CDs underwent rate slices of 0.10%, 0.15% and 0.30%, respectively. Each of the aforementioned Sallie Mae CDs still offers among the top few rates for its particular term.
Sallie Mae, which did not reduce its rates last week, has slowly decreased the yield on its CDs over the past few months.
Ally on Thursday enacted rate decreases on two of its accounts. The online bank dropped interest rates on its Money Market account to 1.19% from 1.24% and its Online Savings account rate at the same amount to 1.19% from 1.24%. Ally’s Money Market and Online Savings accounts still include rates in the top ten available, according to MyBankTracker.com’s savings rates table.
Ally, which receives generally solid reviews from MyBankTracker.com users, has dropped rates on some of its accounts in two consecutive weeks. Ally last week cut CD rates by between 0.04% and 0.01%.
EverBank cut the rates on four tiers of its Yield Pledge Checking account. Small-balance rates underwent a cut to 0.70% from 0.74% while rates on accounts with higher balances fell by between 0.14% and 0.15% to new rates between 1.01% and 1.11%. Everbank, a Jacksonville, Fla.-headquartered bank with a stronger presence online than in-person, still offers checking interest rates in the top ten.
Other Online Bank Rates Take Hits
USAA, one of the nation’s deposit rates trendsetters, sliced its 60-month CD rate to 2.40% from 2.55% and its 48-month CD to 2.20% from 2.25%. USAA’s new rates place it ninth and third, respectively, in the CD rates race.
E-Loan dropped its CD rates across the board. The online-only institution chopped 0.05% off all of its CD terms. Its current rates sit just below those of USAA.
Low Fed Rates, Low Interest Rates
The average savings rate is currently at 0.52%, down about 0.03% from early September. The average rate on a 12-month CD has also fallen during that time period.
The main reason banks have held interest rates low is because the Federal Reserve is holding its Federal Funds rate at a near-zero level. Since the economic collapse, the Fed has held its main rate at an extremely low level, giving loans to banks with almost no interest rate. The Federal Funds rate is currently at 0.19% and has sat between 0.20% and 0.15% for the past month.