You may be the type of person who regularly and diligently moves your savings account to wherever happens to be offering the best yields. If so, congratulations! As long as you stick to FDIC-insured banks, this is a smart approach, because moving a savings account won't cost you anything but time.
But for (lazy) people like me, who only work up the gumption to switch banks every few years (or decades), the bank with the highest yield right now isn't necessarily the best choice. Savings yields can drop at any time, and the last thing you want is to get hooked in by a good rate on a savings account and go through the hassle of signing up, only to see your rate drop precipitously a few months later.
How to tell if a good rate will stick
How do you tell whether a bank is going to keep its high yields in place? I guess you could ask them, but I doubt a bank is going to be like, "Actually, we're planning on cutting our yield to 0.0001%, so don't bother signing up." Probably the best you can do is look at what the bank has done in the past and infer from that what it will do in the future.
Fortunately, Bankrate has been collecting data on this for a long time. We maintain an online tool for banks to provide their rate information on nationally available savings accounts at no charge (this isn't pay to play), and then use that information to come up with the 100 highest-yielding savings accounts every week. Credit unions haven't yet been included because they have membership requirements and often don't offer their accounts nationally.
I took that data and looked at banks that had made the list at least two-thirds of the time over the past 5 years, currently offer yields of 0.8% or more and don't have weird fine print on their accounts. Before I list some of the standouts, I should say that some of these banks probably advertise on Bankrate or have in the past, but I haven't been offered any compensation or been told by any of my bosses to write about them; I'm doing this as a service to readers and that's it. Without any further ado, here they are:
- Ally Bank (current savings APY: 1%): made the list in each of the past 261 weeks.
- Discover Bank (current savings APY: 0.95%): made the list in 255 out of the past 261 weeks.
- AloStar Bank of Commerce (current savings APY: 1.05%) made the list in 250 out of the past 261 weeks.
- Colorado Federal Savings Bank (current savings APY: 0.85%) made the list in 235 out of the past 261 weeks.
- iGObanking.com (current savings APY: 1.1%) made the list in 210 out of the past 261 weeks.
- CIT Bank (current savings APY: 0.95%) made the list in 193 out of the past 261 weeks.
- Barclays Bank (current savings APY: 1%) made the list in 182 out of the past 261 weeks.
Based on their track records, these banks may provide a more stable rate on the higher end of the yields out there. If you're interested in this going forward, we regularly update a list of banks that consistently offer top-tier rates on deposit products over the course of each quarter.
"I'm saving my money this summer, need it for college in the fall"
next purchase is a $34 pizza slice floatie for the lake
— Thomas Lanphear (@thomaslanphear1) June 10, 2016
Brexit Brexit Brexit
Did I mention, Brexit? In case you haven't heard of it, Brexit is both a snappy nickname for the impending referendum on whether the United Kingdom will leave the European Union, and the latest reason for global markets to freak out. The big worry is that if the UK does indeed vote to leave the eurozone next week (and it's looking pretty darn close), it will destabilize one of the biggest markets in the world and decelerate already pokey global growth.
What does that mean for deposits, you ask? Well, 2 things:
- If the referendum passes and foreign markets nosedive, the Fed may continue holding off on a rate increase that savers could really, really use right now.
- The other is that when people freak out and pull their money out of the stock market, they look for safe havens. One safe haven is government bonds, which is why the yield on German 10-year government bonds went below 0% for the first time ever yesterday. Another safe haven is FDIC-insured deposit accounts, and if a lot of people put their money there at once to avoid a Brexit-themed stock market sell-fest, it will only add to the deposit glut that's still working its way through the system, depressing deposit yields along the way.
— Pedro da Costa (@pdacosta) June 13, 2016
Tales from the banking beat
Here are a few other savings and personal finance stories I've been following this week.
- Ballers gonna ball: A company called Personal Capital, which is providing a free budgeting tool to NBA players, has released some data on their spending habits, and it turns out saving "did not make the top 10."
- People's passwords are still dumb and bad: Hackers were discovered trying to auction off Twitter login credentials for over 32 million users captured by their malware-infected PCs. Of those users, 120,417 chose to go with the password "123456," and there were plenty of other popular passwords that weren't much better. Users also tend to reuse passwords across sites, so it's more than likely some of these super-easy passwords are also being used to "protect" users' online banking access. If this is you, please stop reading this and go change your password.
- Dodd-Frank replacement being readied for Trump's first 100 days?: House Republicans have unveiled a replacement for the Dodd-Frank financial reform law that would totally revamp banking regulation, perhaps in the hopes that they'll have a more friendly president and Senate come January.
That's all for now. If you have any questions or comments, feel free to leave a comment below or touch base with me on Twitter.