It is the end of the summer and Labor Day is upon us. It is a nice time of the year. Unfortunately, conservative savers this year are faced with a dilemma of declining savings rates ahead of a Federal Reserve meeting in September where the Fed could lower as much as 50 basis points as Powell and the other Fed governors give into Presidential harassment. There is also the possibility that the Fed could focus on the economy and the continued strong stock market and raise rates back to a 2.25% to 2.50% range that it was at before their most recent cut on July 31.

It is unfortunate that so many major online banks have been so hasty to cut online savings rates. We still, however, see some banks withcompelling rates. These generally fit into two categories.

First, our savings table shows that there are some online banks that have held rates firm. Popular Direct and My Savings Direct, a division of Emigrant Bank, are still offering 2.55% and 2.40% on savings as of today. CIT Bank is more well recognized and is still offering 2.30% on balances over $25,000. While any of these rates could fall at any time, banks that hold their rates constant at what may be the beginning of a cycle of rate declines often signal a hesitancy to reduce rates and risk losing deposits.

Second are those new entrants to the online savings game. Just within the last two months, we’ve seen launches of Brio Direct and Fitness Bank. The reviews on these banks show that there are real issues (we’ve actually removed Fitness Bank from our tables because their limitations make it a difficult choice for all but those who are depositing very small amounts). But, new entrants can often be eager to gain a foothold in the online savings market and are, therefore, particularly reluctant to reduce rates ahead of a prospective Fed cut (and even often late to reduce after a Fed cut). That having been said, Fitness Bank did reduce the rate for those customers in its most active tier from 3.00% to 2.75% APY today.

Those who are particularly anxious about a large and unnecessary decline in the Fed funds rates really need to look outside of savings to protect their assets. Short-term CD rates are firm, but will decline if the Fed actually cuts by 50 basis points. On a one-year CD, you can still get rates around 2.40% to 2.50% which is not that bad especially considering the fact that when expectations were quite different in February and March, these rates never got above 2.85%. We strongly recommend that depositors only use one-year CDs that have early withdrawal penalties of 3 months or less. Ally Bank’s early withdrawal penalty on one-year CDs is only 2 months and CIBC Bank’s is only 1 month. Low early withdrawal penalties can protect you if you need your assets for an emergency or an unexpected large purchase. They will also protect you from the unlikely event that all this craziness ends and the Fed resumes the course that Powell originally laid out in 2017 and 2018.

Have a great month!

It is August and that means that you should be at the beach. While you are there, we suggest you draw a line in the sand.

Last week, the Federal Reserve moved to lower the Fed Funds rate to a range of 2.00% to 2.25%. In anticipation of the Fed move and throughout July, many well known online banks and branch banks lowered the rates they are offering on savings and money market accounts. In the several days since the Fed’s move, still others have followed suit.

However, there are some banks that have held their rates firm. We do not believe that you have to tolerate having your savings rate lowered, especially since the Federal Reserve indicated in its July 31 statement that it may be done lowering rates and that its next move may be to raise rates again.

As of today’s date, we could find 18 banks that are offering online savings and money market rates that are still above 2.30% APY in every state in the country. (Several others online banks have offerings above 2.30% APY that are not available nationally). Those who will not need access to their cash for five business days can also get rates at or above this level with Ally’s or Marcus’s No Penalty CDs. That is a total of 20 national offerings above 2.30%, and you may even find local rates at or above this level at banks and credit unions where you live.

With FDIC and NCUA limits at $250,000 for individuals and $500,000 for couples, it means that you can deposit up to $5 million as an individual and $10 million as a couple across these 20 banks and still be fully insured while earning 2.30%.

And, if you do not need complete liquidity, you can still earn even more than 2.30% in short term CDs.

For this reason, we recommend that your line in the sand be no lower than 2.30%. If your bank tries to lower what it is paying you below this level, we recommend that you look elsewhere.

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%.