Fitness Bank is a new subsidiary of Georgia-based Affinity Bank and has unveiled a savings offer that will be interesting to some.

The bank aims to encourage a healthier lifestyle and therefore will reward savings customers based on their daily average steps. You must download their app which will record the number of steps you take each day from your iPhone or Android device. If you average above 12,500 steps per day, their current savings rate is 3% APY. If you are just below that and above 10,000 steps a day, the rate falls to 2.50% APY. And, if you average below 10,000 steps, this program is not for you as the rate can get down to 0.50% APY.

Those over 65 can open an account that has step numbers that are a little more generous. They can achieve the 3% level with only 10,000 daily steps and the 2.50% level with only 7,500 steps.

The account requires only a $100 minimum to avoid fees, and the bank even has a leaderboard so you can compete against others to see how fit you are compared to them. It is worth noting that the bank currently has very few customers or at least very few who are reaching the 12,500 step number (right now, there are only 11 customers at that level).

While it remains to be seen whether Affinity Bank can retain the 3% rate as interest rates fall through the remainder of 2019, I personally find this offer to be interesting. If the rate holds, the account can be an attractive way to earn an above-market rate and improve your health at the same time. For example, on $200,000, you could earn $500 more over the next year than you would make were you to lock into a 1-year CD now at 2.75%.

But, I would note that the 12,500 step number can be tough to reach or exceed on a constant basis. I am very active and I currently have a health insurance program that gives me $1 for each day that I reach that same number. Since I do not always like to carry my IPhone with me when I am working out, running or biking (and I don’t wear an IWatch), this program really wouldn’t work for someone like me (it might have worked well back when I had a small IPhone SE). For some, however, I can imagine it will work very well.

Editor's Note: Following the publication of this article, BestCashCow received user feedback indicating that inbound tranfers are limited to $2,500 per day and outbound transfers are limited to $15,000 per day. This restriction is not disclosed in the bank's literature and is only apparent after you have opened and funded an account and try to use the transfer system. This restriction, a requirement that transfers be scheduled a week in advance and an interface that is unduly dififcult to use have caused us to determine that this account will be inappropriate for most and not to list it as an online bank account in our tables.

Editor's 2nd Note: On September 1, 2019, Fitness Bank lowered its top tier rate from 3% to 2.75%.

Jerome Powell has been testifying in front of Congress for the last two days. You have no doubt heard snippets of his testimony on the evening news or in the financial media. Of note, if Trump calls him to fire him, he will say “no, … the law clearly gives me a four year term and four year term and I fully intend to serve”.

However, when Powell is done playing tough guy and testifies about his view of the economy, it is in fact clear that his views have evolved and he is succumbing to Presidential harassment.

Powell is a student of the economy and he believed when he came to be Federal Reserve Chairman that a neutral Fed Funds rate would be just under 3%. In fact, this time last year, he insisted that his intention was to bring the short term Fed Funds rate temporarily just above 3%. Powell reasoned that with a neutral rate at that level, the Fed would have the bullets to shoot in order to fight the next economic slowdown.

The economic slowdown never came, yet the Fed never got above a near term target between 2.25% to 2.50%. Rather, the President and his allies (Larry Ludlow, etc.) began calling for an immediate cut of as much as one full percentage point. CNBC and Bloomberg became full of pundits (know-nothings) explaining that the Fed had overshot. Even the NY Times editorial board today called for the Fed to cut rates.

Powell is too smart to really believe that we should be cutting rates. But, he is afraid of confrontation, especially with the President. (I, incidentally, believe that the President may have the legal right to fire the Fed Chairman). He, therefore, is testifying about how he is afraid of every economic risk imaginable in order to lay the foundation for cutting rates.

The economic risks that Powell cites are (excluding Brexit) general and always present risks to the economy. They were just as present a year ago when Powell wanted to normalize the Fed funds rate higher than where it is today. Powell knows that.

And so, he is going to sit by and let’s the Republicans try to juice the economy into some sort of unsustainable 3% growth rate over the next year. He has decided that casinos can be fun (perhaps even Trump casinos).

However, by lowering rates right now, Powell just may make the US the new Japan of the last 30 years or Europe of the last decade. We have not had a normalized neutral Fed Funds rate since the 2008 financial crisis; failure to get there and the loss of independence of the Fed are likely to have real consequences down the road.

We have experienced a dramatic fall in interest rates in the US and following the Fed’s most recent meeting in June, CD rates greater than 1-year have come in dramatically. Most recently one-year CD rates and even some online savings rates have begun to fall.

There are three different strategies that you can mix-and-match to continue to earn interest on cash against the backdrop of a likely 25 basis point cut by the Fed at the end of the month.

First, we continue to like No Penalty CDs. We wrote about the benefits of No Penalty CDs over savings rates here. In June, we highlighted the No Penalty CD products of Purepoint, Marcus and Ally. As of this writing, those products are all still be offered with the same rates and minimums. Purepoint continues to have the highest rate for these products at 2.50%, but Marcus has the lowest minimum deposit ($500). [Editor's Note: On the day of publication, Purepoint cut their 13-Month No Penalty CD rate to 2.00%. Depositors should look at the No Penalty CDs offered by Ally and Marcus before considering Purepoint.]

We list all No Penalty CDs and other special term CDs here.

Second, we think that it makes sense to consider locking up money that you will not need in 1-year CDs. Even if the Fed does not lower the Fed funds rate in July since Chinese trade relations may be improving, it is very unlikely that it will raise the rate more than once over the next 12 months. Therefore, we don’t see prevailing savings rates going over 2.70% before the end of June 2020; yet, you can still lock in that rate between now and then at several online banks. To mitigate the risks of rising rates or needing to access your cash, we suggest limiting your CDs to those banks with early withdrawal penalties of 3 months interest or less. As of this writing, there are at least 5 online banks with 3 months early withdrawal penalties that are still offering rates of 2.70% on 1-year CDs.

You can see the complete list of 1-year CDs here.

Third, you can ride this interest rate uncertainty out by staying in savings and money market accounts, but you should fully expect that your interest rate will fall if the Fed lowers the Fed funds rate at the end of the month. You might want to focus new deposits on those banks that are new entrants in the online market (as they will want to stay competitive as long as they are in asset accumulation mode) and those that are keeping their rates high prior to the Fed’s move.

We list all of the best online savings rates here, and you may also want to consider local savings rates and savings and money market offerings from credit unions.