Savings account interest rates have dropped again. However, there is some good news. Since my last update, I have added a couple of new banks to my list that are offering 2.05% APY on a money market account. These banks are Ally Bank and ShoreBank Direct. These were the highest money market yields that I could find. There is no telling how long these offers will last, but I think that it is worthwhile to consider these options if you are willing to open a new account.
It has been difficult to keep track of which financial institution has the best interest rates on deposits. So periodically, I will post a list of the annual percentage yields (APYs) for institutions that I have accounts at, or have otherwise mentioned in my blog. These rates are sorted by APY:
2.05% Ally Bank Online Savings
2.05% Shorebank Direct Online High-Yield Savings
1.80% Umbrellabank Pot O' Gold Money Market
1.55% HSBCDirect Online Savings
1.50% Citibank Ultimate Money
1.50% Bank of America SavingsLink**
1.50% ING Direct Orange Savings
1.40% Citibank Ultimate Savings
1.00% Guaranty Bank Gold Rewards Money Market
0.95% E*TRADE Complete Savings
0.75% Chase (formerly WaMu) Online Savings
0.75% Western FCU Money Market
0.14% PayPal Money Market*
*Note that the PayPal Money Market fund is NOT FDIC insured.
**SavingsLink account is no longer offered to new customers.
Rates are believed to be accurate as of 6/15/09. I did not include banks that had special, or introductory rates in the list because they are not ongoing interest rates. I am also not including non-liquid accounts such as CD's in the list.
I think that the big news is that there are banks that still offer higher interest rates, but you really have to seek out these banks. A note about Ally Bank is that it not exactly a new bank, but it is actually the reincarnation of GMAC Bank (originally General Motors Acceptance Corporation). With the former parent company (GM) in bankruptcy, they have made an effort to shed any remaining association with the original GM. The SavingsLink account (originally from Countrywide Bank) has fallen considerably from the top of the list, and Bank of America no longer offers this account to new customers.
Historically, money market funds (offered through brokerages) have paid a higher interest rate than their counterparts at commercial banks. However, this situation has reversed itself, and the money market funds are now at the bottom of the list. Money market funds are NOT insured by the FDIC. However, money market accounts offered through banks are.