Earlier
this year, MoneyRates.com Senior Financial Analyst Richard Barrington, CFA, published an online
article analyzing a survey that MoneyRates.com performed to find the Best
Savings accounts for 2014.
"The
study indicates that the yields on the nation's best savings accounts have
offered more than four times the interest of the survey's average rates, and
that the top accounts have been consistently at the front of the pack quarter
after quarter,” according to Barrington.
Barrington’s
article points out the importance of finding savings accounts with consistently
high rates. Barrington states, “It is smart to compare savings account rates
before choosing a bank, but it is even smarter if you look at a bank's interest
rates over a span of time rather than on any one day. Some banks temporarily
raise rates in an attempt to draw some quick attention, but the more
consistently a bank has featured leading rates in the past, the more likely it
is that this is a long-term strategy that will continue in the future.”
But
where can this information be found, and why is comparing it so significant?
“Every quarter MoneyRates.com lists the top savings accounts, based on their
average rates throughout the quarter, in its America's
Best Rates articles. Then, once a year, MoneyRates.com [calculates] which
savings accounts had the best rates over the course of the prior year,” says
Barrington. “Identifying the banks that offer the best interest rates is
important [because] if you chose the wrong bank to open a savings account a
year ago, you would have earned less than a quarter of the interest you could
have at one of the higher-paying institutions. At a time when bank rates are
generally low, shopping for that kind of edge is more important than ever.”
Based
on the mentioned survey, MoneyRates.com created this list of the top rate
performers of the past year (2013). According to Barrington’s article, “Their
strong performance over the last four quarters places these institutions as the
current favorites to offer the best savings accounts in 2014”:
1)
Ally Bank. “With its user-friendly web site
and welcoming policies, such as free ATM use anywhere in the country, Ally has
become something of a model for how online banking should be done,” says
Barrington. “Ally also delivers some substance to back up its customer-centric
style, in the form of the highest average savings account rates over the past
year.” While savings account rates at the banks MoneyRates surveyed throughout
the past year averaged just 0.186 percent, Ally's average was 0.883 percent.
According to Barrington, “Whether it is the style or the substance, whatever
Ally Bank is doing, it is attracting customers.” The most recent FDIC figures
available show Ally Bank's total deposits up 15 percent year-over-year.
2)
American Express Bank. With
savings account rates that averaged 0.869 percent over the past year,
Barrington claims American Express Bank to be “a strong runner-up to Ally
Bank.” Barrington continues to state that the savings account rates at American
Express Bank “edged out those at Ally Bank during the two most recent quarterly
surveys, so this could be a fun competition to watch over the next year.” Like
Ally Bank, American Express Bank demonstrates that offering competitive rates
helps attract business, with its deposits up 22 percent year-over-year.
3)
Sallie Mae Bank. Sallie Mae
Bank's savings account rates averaged 0.867 percent over the past year, putting
it behind American Express Bank by a miniscule margin, just two one-thousandths
of 1 percent. “Though considerably smaller than Ally and American Express,
Sallie Mae Bank is coming on strong,” claims Barrington. Its deposits
were up by 48 percent year-over-year.
4)
Discover Bank. Discover Bank's savings
account rates averaged 0.800 percent over the past year, and “it showed true
consistency by having the same average rate through each of the last four
quarters,” states Barrington.
5)
EverBank. Savings account
rates at EverBank averaged 0.717 percent over the past year. Barrington says,
“This is another bank whose high interest rates are helping it attract
customers, [since] its deposit base grew by 27 percent year-over-year.”
6)
Capital One Bank. Capital One
kept its savings account rates above the 0.500 percent mark all year, averaging
0.508 percent. Also, Capital One Bank's new online arm, Capital One 360, has
been offering even higher rates “and might be a competitor to watch,” claims
Barrington.
7)
Zions Bank. Zions Bank's savings
account rates averaged 0.495 over the past year. “Zions Bank is a bit of a
throwback compared to most of the institutions on this list, in that it still
has a fairly extensive branch network, albeit one that is limited to Idaho and
Utah. For consumers in those states who want decent rates and traditional,
branch-based banking, this might be an option worth looking into,” according to
Barrington.
Barrington
also includes his list of Honorable Mentions:
“It
should be noted that besides the consistently strong performers listed above, a
number of banks that were added to the MoneyRates.com survey during the course
of the year made the top 10 in their first two quarters.” These banks included Barclays, GE Capital Bank, FNBO Direct and CIT Bank. “With these banks having shaken
up the leader board so quickly, it will be interesting to watch if they can
continue their strong rate performance in 2014,” writes Barrington.
Barrington
summarizes: “Given the recent strengthening of the economy, it seems likely
that bank rates will move upward in 2014. Though rates may change, it is
reasonable to think that banks that offered the best rates at the bottom of the
interest rate cycle are likely to lead the next upward phase of that cycle as
well.”
Barrington
finishes his analysis and recommends, “Looking for even higher deposit rates?
Check out the CD offerings from GE
Capital Bank, Barclays
and Ally.”
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