Money Market Account Rates Hit New Low in Third Quarter of 2013

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After rising slightly in the second quarter, deposit rates gave up much of these advances in the third quarter, sending money market account rates to an all-time low according to MoneyRates.com's latest survey. But some accounts still offered up to six times the interest of the average performers.

The decline represents a fading of economic optimism in the third quarter. Concern over the looming budget and debt ceiling standoffs, coupled with the unknowns surrounding the health care act, led to a general climate of uncertainty.

After showing signs of life in the previous three months, the yields on deposit accounts again turned cold in the third quarter of 2013, according to the latest America’s Best Rates survey by MoneyRates.com. Money market account rates fell to a new low and savings account rates dropped to within 2 basis points of their previous worst. Despite this, the top-performing accounts in the survey offered rates up to six times the overall averages.

The average annual percentage yield (APY) for money market accounts fell to 0.161 percent, down more than a basis point from the previous quarter. The average rate for savings accounts fared only slightly better, dropping to 0.185 percent from the previous quarter’s 0.192 percent.

These drops are a likely result of continued economic uncertainty, says Richard Barrington, CFA, senior financial analyst for MoneyRates.com.

“The decline represents a fading of economic optimism in the third quarter,” says Barrington. “Concern over the looming budget and debt ceiling standoffs, coupled with all the unknowns surrounding the implementation of the health care act, led to a general climate of uncertainty. Uncertainty is bad for business.”

Still, the accounts offering the highest rates in the survey continued to post APYs of slightly less than 1 percent, or roughly five times the average savings account rate surveyed and about six times the average money market account rate surveyed. These differences underline the importance of comparing rates among banks, says Barrington.

“Rates in general may not seem very exciting, but there’s still something to be gained by shopping around,” says Barrington. “If I have the choice between $1 at the end of the year or $5, why wouldn’t I choose $5?”

According to the survey’s figures, consumers who wish to earn more on their savings may want to start their search at online-based banks. Online banks paid an average of 0.569 percent on savings accounts, compared to the traditional-bank average of 0.123 percent. The gap between online bank rates and traditional bank rates was similar among the money market accounts surveyed.

Here are the top banks for savings account rates in the third-quarter 2013 America’s Best Rates survey:

1.    Doral Bank – 0.950 percent
2.    Barclays Bank – 0.900 percent
2.    GE Capital Bank – 0.900 percent
4.    American Express Bank – 0.850 percent
4.    FNBO Direct – 0.850 percent
4.    Mutual of Omaha Bank – 0.850 percent
7.    Sallie Mae Bank – 0.847 percent
8.    Ally Bank – 0.840 percent
9.    CIT Bank – 0.800 percent
9.    Discover Bank – 0.800 percent
9.    GE Capital Retail Bank – 0.800 percent

Here are the top banks for money market account rates in the third-quarter 2013 America’s Best Rates survey:

1.    Doral Bank – 0.945 percent
2.    Sallie Mae Bank – 0.900 percent
3.    Mutual of Omaha Bank – 0.850 percent
4.    Ally Bank – 0.840 percent
5.    GE Capital Retail Bank – 0.800 percent
6.    Nationwide Bank – 0.760 percent
7.    Discover Bank – 0.700 percent
8.    EverBank – 0.612 percent
9.    OneWest Bank – 0.500 percent
10.    Zions Bank – 0.481 percent

For the full analysis, please see “America’s Best Rates 2013 Q3: Deposit rates suffer a relapse.

Methodology
America’s Best Rates are calculated from savings account rates and money market account rates recorded in the MoneyRates Index throughout the previous quarter. The MoneyRates Index is a composite of 100 banks, including the 50 largest U.S. banks by deposit amount, plus 50 smaller banks. This sampling was constructed to be broadly representative of the general banking environment.

About MoneyRates.com
MoneyRates.com has been a leading source of information on bank rates, personal finance, savings accounts and investing since 1999. The site seeks to provide the highest rates on CDs, money market accounts and high-yield savings accounts. MoneyRates.com is owned and operated by QuinStreet, Inc. (NASDAQ: QNST), one of the largest Internet marketing and media companies in the world. QuinStreet is committed to providing consumers and businesses with the information they need to find, research and select the products, services and brands that best meet their needs. The company is a leader in visitor-friendly marketing practices. For more information, please visit QuinStreet.com.

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