Savings and CD rates were mostly flat this past week with the top rates holding.

Savings Rates

Average rates remained at 1.34% APY. Southern Community Bank continues to have the highest non-promotional ate at 1.75% APY. For promotional rates, Everbank remains on top with their 3-month introductory bonus rate of 2.25% APY. After the three-month period, the rate drops down to 1.26% APY for a blended one year APY of 1.51% APY.

CD Rates

The average 1-year CD also remained steady at 1.57% APY. First City Bank continues to hold the top spot with a 1.80% APY CD. First City Bank is in bad financial shape and has been operating under a FDIC Cease and Desist Order since 10/09. Tennessee Commerce Bank maintained the second spot at 1.70% APY.

The average 3-year CD rate is the only average to drop and it fell from 2.45% APY to 2.43% APY. The top spot continues to be occupied by USAA Federal Savings Bank, which offers a 2.65% APY CD with a minimum deposit of $175,000. The next highest rate is Acacia Federal Savings at 2.50% APY and a $500 minimum deposit.

The average 5-year CD rate remained steady this week at 3.12% APY after dropping from 3.17% APY two weeks ago. The average is now closing in on the 3% mark.

USAA continues to have the top rate at 3.31% APY. Everbank which holds the second highest rate dropped from 3.30% APY to 3.25% APY. Two weeks ago Everbank was offering the same CD for 3.39% APY.

The spread between savings and 3-year CD rates dropped slightly and now stands at 1.09, from from a high of 1.24 in March.. While savings rates have continued to come down, 3-year CD rates are coming down even faster. The ratio between 1-year CDs and 5-year CDs has remained steady over the past month and appears to have topped off. Expect 3-year CD rates to fall further to bring this ratio down.

After remaining steady for the past three weeks, average savings rates and cd rates dropped over the past week. Perhaps more significantly, the top savings rate tumbled.

Savings Rates

Average rates dropped from 1.36% APY to 1.34% APY. The drop unfortunately was led by rate leaders. Southern Community Bank dropped the leading non-promotional rate from 2% APY to 1.75% APY. Franklin Synergy also dropped their rate from 1.65% APY to 1.6% APY. For promotional rates, Everbank remains on top with their 3-month introductory bonus rate of 2.25% APY. After the three-month period, the rate drops down to 1.26% APY for a blended one year APY of 1.51% APY.

I never thought I'd see the day when average rates would go to 1% APY but at this point we're getting awfully close.

CD Rates

The average 1-year CD dropped from 1.61% APY to 1.57% APY. First City Bank continues to hold the top spot with a 1.80% APY CD. First City Bank is in bad financial shape and has been operating under a FDIC Cease and Desist Order since 10/09. Tennessee Commerce Bank maintained the second spot at 1.70% APY.

The average 3-year CD rate also dropped by 2 basis points from 2.47% APY to 2.45% APY. The top spot continued to be occupied by USAA Federal Savings Bank, which offers a 2.65% APY CD with a minimum deposit of $175,000. The next highest rate is Acacia Federal Savings at 2.50% APY and a $500 minimum deposit. Acacia dropped their rate this past week from 2.65% APY.

The average 5-year CD rate dropped the most over the past week moving from 3.17% APY to 3.12% APY. We infrequently see the 5-year drop by more than the other shorter terms.

USAA continues to have the top rate at 3.31% APY. Everbank which holds the second highest rate dropped from 3.30% APY to 3.25% APY. Two weeks ago Everbank was offering the same CD for 3.39% APY.

The Market and Interest Rates

The recent volatility in equity and bond markets has dampened some of the rate pressure from a strenghening economy. Whie Treasury yields rose today with the stock market surge and the news of Europe bailing out debt-ridden economies, Treasury yields are still lower than they were several weeks ago. Throw in jitters about sovereign debt default and yo-yo-stock markets, and repeated statements from Bernanke that rates will remain low for an extended period, and you have the environment that could push savings rates down to 1% APY.

The chart below shows that while the spread between different deposit accounts is still high but is flattening or coming down. The spread between savings and 3-year CD rates has dropped for the past six weeks. While savings rates have continued to come down, 3-year CD rates are coming down even faster. The ratio between 1-year CDs and 5-year CDs has remained steady over the past month.

Sallie Mae Bank today raised their savings account rate from 1.25% APY to 1.40% APY. That represents one of the few rate increases we've seen over the past six months. The 1.40% rate makes it much more competitive on the BestCashCow rate tables and it is the second highest rate for accounts with no minimum balance.

Sallie Mae Bank entered the online savings space relatively recently. Key savings account features include:

• No minimum balance
• No monthly fees
• Daily compounding interest
• Linkage with Upromise that provides a 10% match on Upromise earnings.

The application supports joint accounts and is fully electronic. Once the application is approved you'll receive a welcome letter via email with login information. Deposits are done via ACH with an account you choose to link. The linkage process if verified by two small trial deposits that are made to the external linked account. This is standard online banking procedure and the more automated way to link and transfer funds.

Sallie Mae Bank has three out of five stars from Bauer Financial for its safety and soundness. The bank is FDIC insured and according to the FDIC has $7.9 billion in deposits as of Dec 31, 2009. The bank is part of student loan lender Sallie Mae.