Over the last couple of days, many of the top savings rates have dropped. The downward trend in savings rates continues and while just two weeks ago DollarSavingsDirect offered a 4% APY savings rate, those days look long over. Banks, clearly sensing that they can attract deposits well below 4% have followed each other lower. Now, a rate above 3% is competitive. At this pace, it's not unfathomable to think that over the next couple of months top savings rates could go as low as 2 - 2.5% APY.
Recent rate cuts have come from many of the banks that led the rate tables over the last couple of months. They include:
- VentureBank which dropped 82 basis points from 3.3% APY last week to 2.48% APY today.
- ClearSky Accounts dropped from 60 basis points from 3.75% APY to 3.15% APY
- Everbank dropped 45 basis points from 3.18% first year APY to 2.73% first year APY.
- Flagstar Bank droppped 45 basis points from 3.18% APY to 2.74% APY.
- DollarSavingsDirect dropped 30 basis points from 3.5% APY to 3.2% APY.
Looking at the savings rate table, the days of 4% APY savings account rates are now long gone. As the chart below shows, there has been a slow, steady erosion in rate that shows no sign of abating.
The Fed and Treasury's attempts to re-liquify the banking sector seem to be working, but at the expense of savers, who have months of low rates to look forward to.
Still one must have look at it from a relative perspective. Even at 3% APY, these rates are better than what you'll get at a big bank. According to their websites, Bank of America's Regular Savings account is offering a rate of .2% APY, and Chase Savings is offering the whopping rate of .01% APY.
And when you consider that inflation is at its lowest in years (they're even talking about deflation), a 3% APY rate may not be as bad as it seems.
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