November 2018 Update – Five Nationally Available Online Savings And CD Accounts to Consider

Online savings and CD rates rose in October. We continue to favor savings rates over CD rates. It remains likely that the Federal Reserve will raise the Fed Funds rate from its current 2.00 – 2.25% Fed Funds rate to a 2.25% - 2.50% rate in December. While the Fed continues to guide towards a Fed Funds rate over 3.00% before the end of 2019, it is increasingly possible that Presidential histrionics and/or a slowing economy may temper those moves so locking into online CDs may be an attractive proposition to some.

Here are 3 savings accounts that we find interesting at this point:

Citizens Access – 2.25% Savings Rate for balances over $5,000

Citizens Access is a division of Citizens Bank, N.A., a large established bank with over $150 billion in assets. It entered the online market in 2018 with a competitive 2.00% savings rate and has been quick to move rates up in response to Fed Funds moves. The reviews of the bank on BestCashCow are extremely positive.

Editor’s Note: Citizens Access is an advertiser of BestCashCow. Please read our Advertiser Disclosure here.

MySavingsDirect – 2.25% Savings Rate, No Minimum Balance

MySavingsDirect is a division of Emigrant Bank, a large New York-based bank. While the rate is attractive, Emigrant has developed a customer-unfriendly practice of remaining competitive for new customers by raising rates at different subsidiaries when the Federal Reserve moves. This practice leaves earlier customers earning a non-competitive rate. As rates continue to rise in 2019, you can expect that you will need to move your assets out of MySavingsDirect (perhaps to another Emigrant subsidiary) in order to stay competitive. That’s an OK strategy so long as you make a plan to check the latest savings rates on BestCashCow frequently. The good news is that Emigrant’s divisions make accounts easy to open and fund.

Marcus – 2.05% Online Savings rate for balances over $1

Marcus has outstanding customer reviews and lightening fast ACH transfers. Since Marcus is part of Goldman Sachs, depositors, especially those inclined to deposit over FDIC limits, can always sleep well at night. Importantly, as rates have risen through 2018, Marcus has proven to be faster to raise rates than the other most recognized online banks (Amex, Barclays and Ally). While it may not always sit on top of the table, depositors with Marcus can anticipate that their savings will remain competitive as rates rise. Those depositors who follow rates closely and are prepared to make adjustments as rates rise can now get 2.15% in Marcus’s 13-Month No Penalty CD. We recently wrote an article highlighting No Penalty CDs as a relatively risk-free way to boost your savings rate.

Editor’s Note: Marcus is an advertiser of BestCashCow. Please read our Advertiser Disclosure here.

See and compare all of the best online savings rates here.

Those compelled to reach for the higher rates than online CDs offer after a decade of abnormally lower returns on cash may want to consider the following two online CD products:

Citizens Access – 2.70% 1-Year CD for balances over $5,000

Citizens Access, mentioned above for its online savings account, is also offering one of the most competitive online CD rates nationally available. Even if savings rates are above 3.00% at the end of 2019, we don’t think you’ll make much less though 2019 by locking into a one-year CD throughout the course of the year with cash that you know you won’t need to access. Citizens Access has an early withdrawal penalty on CDs of 12-months or less of only 3 months’ interest.

See all of the best 1-year online CD rates here. You should also compare locally-offered 1-year CD rates here.

Citizens Access – 3.05% 3-Year CD for balances over $5,000

We are inclined to question whether a 35 basis point improvement over Citizens Access’s one-year CD rate represents an attractive enough premium for an additional two years’ commitment. However, many economists believe that inflation is not present and that the Federal Reserve just is not going to ever get much above a 3% Fed Funds rate in this cycle. Citizens Access’s early withdrawal penalty on CDs over 12 months is equal to 6 months interest on the CD which is shorter than the penalties for early withdrawal on long-term CDs charged by many other online banks.

See all of the best 3-year online CD rates here. You should also compare locally-offered 3-year CD rates here.

Have a great month and Happy Thanksgiving!