Small Banks Killing Big Banks On Savings Rates

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Banks you never heard of are offering staggeringly high rates compared to big conventional ones

Nov. 14, 2017 (Foster City, CA) — In the battle for depositors’ business, online banks have upped the ante and consumers can score big time – if they choose the right depository.

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Get the entire 10-part series on Timeless Reading in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.’s America’s Best Rates, 3Q 2017 survey, which found average rates on savings and money market accounts rose for the second consecutive quarter, saw an all-out rate war between banks to lure customers. The survey reveals the winning and losing banks and underlines that consumers who pick the right bank can rack up.

“Our goal is to provide consumers with the information they need to be on the winning side,” says Richard Barrington, Senior Financial Analyst for

Barrington says the “real action” is at the top of the charts in each category where several banks have broken away from the pack in an apparent effort to outdo each other by offering significantly higher rates. The result being a widening gap between the highest and the lowest savings and money market accounts available. Incredibly, a customer picking the highest-yielding savings account in the survey can now earn $129.57 for every dollar of interest earned in one of the lowest-yielding accounts.

“This widening gap between savings accounts means making the right choice is more important than ever,” says Barrington. “Unfortunately, the bottom tiers of the rate tables are dominated by large banks, which means too many consumers are passively accepting substandard rates.”

So what’s the best bank for savings account depositors? Salem Five Direct offered the top-yielding savings account during the quarter, with a rate of 1.30 percent. How about the best bank for money markets? Able Banking had the top rate, also at 1.30 percent.

Best Rates For Savings & Deposits

The MoneyRates survey found that online accounts have a distinct advantage over traditional branch-based accounts: online savings accounts earn an average $9.35 in interest for every $1 earned in a traditional account; and for money market accounts, the average online account earns $5.42 worth of interest for every dollar earned in a conventional bank account.

“Some banks have been able to maintain huge customer bases despite continuing to offer next to nothing in the way of savings and money market rates,” says Barrington. “So, when we talk about the winners and the losers in the rate wars, we aren’t so much talking about the banks themselves as their customers.”

Survey highlights include:

  • Small banks beat out big banks. On average, smaller banks tend to offer a rate advantage over their larger counterparts, and savings accounts are generally beating money market accounts.
  • The 2016 survey’s top-yielding savings account rate was 1.10 percent. That would not have been good enough to crack the top ten this quarter. Significantly, all the savings accounts in the top ten raised their rates by more than 10 basis points in the latest quarter.
  • While deposit rates remain relatively low, the huge disparity between the highest and lowest rates means that most consumers have an opportunity to significantly improve how much interest their bank accounts are earning.

The America’s Best Rates survey is based on the index of 100 banks, representing a cross-section of the industry which includes 50 of the largest retail deposit institutions, plus 25 medium-sized banks and 25 small banks. The America’s Best Rates survey is different from many other rate surveys because it measures average rates throughout the quarter rather than just a single snapshot in time, so it recognizes the banks that consistently offer competitive rates.

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