November 2019 Update – Getting Harder and Harder to Get Excited About Cash

The Federal Reserve lowered the Fed Funds target to 1.50% to 1.75% on October 31, marking its third rate cut this year and causing many of the most recognized online banks to lower their savings’ offers below 2%.

The paradox is that the points where it is hard to get excited about cash are those where most banks are lowering their rates and where it becomes more important to be sure that you are maximizing your returns on cash.

And, the reality is that you can still get over 2% APY in online savings and money market accounts from online banks. As of today, BestCashCow shows over 30 online savings and money market accounts that deliver over 2%. Of course, all of these banks are safe for deposits up to FDIC limits, but those who insist of depositing assets only with well-recognized names will find that a solid list includes names such as HSBC, Salem Five and Live Oak. And, of course, you may still find high savings and money market rates at banks and credit unions near you.

Check local savings rates here.

Check local credit union savings rates here.

We’ve written about No Penalty CDs before as a way to lock in a higher rate than savings accounts offer, without risk. While rates of these instruments have fallen, those who have savings accounts at Marcus, Purepoint, Ally or CIT should still consider moving their money into these products for a slight boost and to protect against the possibility that Trump is not removed from office and rates continue to fall in 2020. See No penalty CD rates here.

One-year CDs continue to offer a premium over savings accounts for those who do not anticipate needing access to their capital. Sallie Mae and Live Oak Bank are still offering 2.35% and 2.30% APY, respectively, and these accounts have early withdrawal penalties of only three months’ interest. CIBC Bank is offering 2.25% with an early withdrawal penalty of one month of interest. Again, you may find better rates locally.

Check local CD rates here.

Check local credit union CD rates here.

Finally, it is worth noting that we still see online 2-year CD rates as high as 2.60% and 5-year CD rates as high as 3.00%, and these products could be interesting for those who think low rates are here for some time and do not require access to their capital.

Have a great month and Happy Thanksgiving!