2.05% or 2.10% is No Longer A Competitive Online Savings Rate

It has been 3 days since the Federal Reserve raised the Fed Funds target rate to a range of 2.25% to 2.50%.

Over the past year, with each raise, the major online banks have competed to be first to move their savings rate within the new range. Within the last three days, several online banks have raised their online savings rates consistent with the new Fed Funds range. As of this publication, there are nine online banks with savings or money market rates above 2.25% APY. Depending on where you live, you will probably also find savings and money market rates at local banks and local credit unions that are above 2.25% APY.

However, many of the most well recognized online banks have yet to raise their savings and money market rates. While Ally raised its No Penalty CD rate to 2.30% APY and Marcus had raised its to 2.25% APY a week ago, Synchrony Bank, Barclays Bank Delaware, American Express Bank and Purepoint (to name a few) have remained frozen and unresponsive to the new Fed Funds target.

In fact, the major online banks have also chosen not to raise their CD rates, leaving them at rates that do not reflect expectations of higher rates over the course of 2019.

It appears, therefore, that many well known online banks are placing a bet. They are hoping that you are so focused on your huge stock market losses this last week and a reckless leader who is unleashing chaos across the globe, that you will not notice that they are reaping savings by not passing on competitive rates to you. They are also hoping that you are preoccupied with Christmas and New Years.

But, in spite of it all, there is competition for your cash and you should be moving it, when appropriate, so that the rate you are earning lies with the new Fed Funds target rate.