As recently as last year, online high-yield savings accounts offered interest rates of 2% or higher. But now, you'll be lucky to find half that rate, as some of the most popular accounts have dropped interest rates below 1% to "all-time lows," according to Ken Tumin at DepositAccounts.com, a website that tracks savings rates.
Barclays and Marcus by Goldman Sachs cut savings rates to 0.8%, while Synchrony Bank's new rate is 0.75%, the lowest all three banks have ever offered, Tumin says. Capital One's savings account rate also fell from 1% to 0.8% this week.
That's still higher than the 0.06% national savings rate average, according to the FDIC, but a significant drop from the 2% to 2.5% APRs offered just a year ago.
While high-yield rates are variable and can change at any time, it's unlikely savers will see higher rates before the end of 2020. With the economy still in coronavirus-induced turmoil, the Federal Reserve is holding its benchmark interest rate near zero, which is what banks base their rates on.
In fact, savers will be hard-pressed to find much better rates anywhere for the time being. With rates falling, a financial product with a "rate guarantee," such as a certificate of deposit (CD), is a saver's best bet, Tumin says. But those are also hard to come by in the current environment, he adds. Most nationally available CDs have also fallen below 2% yields, with many short-term CDs now below 1%.
That said, a local credit union might be able to offer a better deal if you meet their requirements. Otherwise, savers will have to wait for the economy to rebound before they can expect higher interest payouts on their savings.
- RIP high-yield savings accounts—rates are half of what they were last year and could keep dropping
- High-yield cash management accounts are cutting their interest rates
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