BB&T and SunTrust Bank announced their merger this morning. The banks are the 12^th and 13^th largest US banks based on assets and the combined entity will become the sixth largest US bank. (A complete list of the largest banks based on asset size is here).

I spent my morning reading all of the articles across financial media that have been trying to explain the rationale for this merger, which is the largest proposed bank merger in over a decade. I then waited until 10 AM to watch the CEOs of the two institutions appear on CNBC.

I am not seeing any reason for consumers to be excited about this merger.

Bank of America and Wells Fargo have proven over the last decade that bigger is not better. Their large asset size has not enabled a better lending portfolio, nor has it enabled them to extend more meaningfully into new or more creative financing initiatives in the public interest.

In terms of consumer banking, their large size does not necessarily enable them to offer more creative mortgages products, home equity loans or auto loans. Neither these two - nor JP Morgan Chase or Citibank – have used their size to offer competitive savings rates or CD rates.

We are living in a world where small and creative institutions can offer more unique solutions. We have seen an influx of smaller banks and tremendously talented so-called Neobanks that offer technology solutions that outflank anything that the larger banks can produce. It is a sheer fact that in relation to technology, being smaller and more nimble is an advantage.

Therefore, when Kelly King, BB&T Chairman and CEO, and Bill Rogers, SunTrust Chairman and CEO, began speaking on CNBC this morning about the primary driver for their merger was technology investment, it struck me as being about as compelling as a Trump State of the Union address. The truth is that both banks, in their current position and without a merger, should be able to find the technology talent and resources in Atlanta or Charlotte to compete technologically across all consumer and the institutional spectrums.

Towards the end of the interview, Sara Eisen asked point blank whether this merger is in fact a defensive move designed to address the issue of contracting net interest margins. Kelly King, who has always been a straight shooter on CNBC, turned very candid and indicated that his view of some sort of inflection point in net interest margins is a motivating factor.

In other words, this merger is like an old-line industrial merger. It is being done to drive costs out of the system. Excessive branches in Florida, Georgia and the Carolinas will be shuttered, and people will lose their jobs. Investors in the companies may or may not make money, but few if any benefits are going to inure over the short or medium term to customers of either bank.

As someone who watches innovation in the banking space, I see nothing to celebrate here and I hope that this is the last, and not the first, of a new wave of bank mergers.

Full Disclosure: The author has been an investor in and a consumer of services of both BB&T and SunTrust in the past, and would have no interest in going near either one right now.

Savings and CD rates continued to firm into the end of 2018. However, as we predicted back in November, Fed Chairman Jay Powell has now fully equivocated as a result of presidential harassment and the Federal Reserve has now held the Fed Funds rate at 2.25% to 2.50%. It is possible that rates could be here until later in 2018. Here are 3 savings accounts that we find attractive at this point:

1. MySavingsDirect – 2.40% Savings Rate, No Minimum Balance

MySavingsDirect is a division of Emigrant Bank, a large New York-based bank. Customer reviews are mixed and Emigrant has a history of dropping rates in one division (holding customers who don’t regularly check their rates) while raising rates in other divisions. However, MySavingsDirect has been competing for depositors by raising rates for some time and, it is, at least for the moment, the highest yielding account without a minimum balance requirement. In addition to the need to stay on top of the rate to make sure it isn’t lowered, those considering MySavingsDirect should know that it does have direct ACH connections to all other banks (which is something that is pretty standard among most online banks).

2. CIBC Bank – 2.39% Savings Rate, No Minimum Balance

A couple of years ago, The Private Bank which operated out of Chicago offered competitive online savings rates. The bank was purchased by the CIBC, one of Canada’s largest banks, which in late 2018 re-launched the platform under the CIBC Agility brand in order to compete for deposit accounts in the U.S. CIBC now appears to be a very aggressive market participant. It has been among the first to raise their rates when the Federal Reserve raised the Fed Funds rate. To boot, the bank’s online savings account has no minimum balance.

3. CIT Bank Savings Builder – 2.45%, Requires $25,000 Balance or $100 plus an additional deposit of $100 a month

CIT Bank’s reviews are ordinarily favorable and their rate is very attractive. However, unlike the above two savings accounts, this rate does have a minimum balance requirement. There are two ways to qualify for the savings builder account – either to maintain a $25,000 balance or to open the account with $100 and deposit at least $100 during each monthly measurement period (between the 4^th day of each month until the 4^th day of the following month). We think CIT is likely to remain competitive and named it one of our best bets for 2019.

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

While we have been hesitant to recommend CDs with rates rising, the Federal Reserve’s recent decision to slow the pace of rate increases may provide reason to take a look at one-year CDs, particularly those with low early withdrawal fees. Here are two that are competitive, and will penalize you with only 3 months of interest should you need to break the CD early.

4. Live Oak Bank – 2.85% 1-Year CD, $2,500 Minimum

Live Oak Bank is a small North Carolina bank that entered the online banking arena last year. It has not been a consistent competitive player in the savings space and it can and does frequently adjust CD rates. At the time of this publication, their 1-year CD rate stands at 2.85%. Live Oak does not enable an account holder to have over $250,000 in total in their CDs, and you should not be exceeding FDIC limits with a small North Carolina bank anyway.

5. Sallie Mae Bank - 2.85% 1-Year CD, $2,500 Minimum

Sallie Mae Bank has an old interface and you will see a spinning wheel when you try to open a Certificate of Deposit there. But, its rate is 2.85% on a 1-year CD and it is likely that they will still be among the most competitive rates when it comes time to renew.

Check out the best 1-year CD rates here and see long-term CD rates here and special rate CDs here.

Have a great month.

It has been many years since I co-founded BestCashCow, and I have heard just about every excuse possible for keeping your cash in low interest earning savings and money market accounts, checking accounts and CDs.

However, there is a new refrain that I am hearing and it is actually really irking me. It goes something like this.

“Well, I have been meaning to move my cash out of Wells Fargo but I haven’t gotten around to it and I am sure that if rates are going up, they will have to become competitive soon so I am just going to leave it there.”

The only part of this quote that is even remotely correct is that rates are, in fact, going up. The reality is that the large money center banks are currently flush with cash from other funding operations, and from others taking the same wait-and-see approach. Today, the big banks are able to raise more money than ever before through capital markets to fund their lending operations, and they now have more money in deposits than they have ever had before.

These banks are counting on being able to successfully sell the pitch that they are delivering a better service and therefore customers should be willing to continue to accept zero interest rates for the service. My personal view is that this pitch may continue to be compelling for depositors of small amounts. For those holding $15,000 in a deposit account at Chase you gain access to their ATM network, their branch network, notaries and maybe safe deposit boxes, and even then you really need to require these services to justify forgoing over $400 in interest annually.

But, anyone holding over the bare minimum for the services that they need from a money center bank is not adopting best practices in relation to their finances.

There are banks and credit unions where you live and online banks that compete for your savings. In fact, there are local banks, credit unions, online banks that are competing for your checking by offering far better rates and often times the same services. Seek them out now.