Online-Based Bank Account Rates Again Outpace Traditional Account Rates in 3Q

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While rates remained flat for savings and money market accounts in the third quarter, online-based accounts maintained a striking advantage over their branch-based counterparts.

There are exceptions, but on average, online accounts have repeatedly offered a rate advantage over traditional, branch-based accounts, turning the cost advantage of not having to support a branch system into higher interest rates.

As a group, online-based bank accounts offered roughly five times the interest of traditional, branch-based accounts in the third quarter, according to the latest America’s Best Rates survey by personal finance website MoneyRates.com.

While overall rates for savings accounts and money market accounts remained near historic lows throughout the quarter, the online account categories posted average annual percentage yields (APYs) well above the overall survey averages. The average APY for an online-based savings account was 0.533 percent, compared with the overall savings account average of 0.180 percent. The average online-based money market account paid 0.552 percent, compared with 0.169 percent for the overall money market category.

The online rates stand in even starker contrast to the average rates for branch-based accounts. Branch-based accounts paid an average of 0.096 percent in the savings account category and 0.117 percent in the money market group.

Richard Barrington, CFA, senior financial analyst for MoneyRates.com, says that while the rate differences between the online and traditional categories may be striking, they shouldn’t be surprising.

“We’ve seen this consistently,” Barrington says. “There are exceptions, but on average, online accounts have repeatedly offered a rate advantage over traditional, branch-based accounts. Online banks are taking the cost advantage of not having to support a branch system, and turning that advantage into higher interest rates for their customers.”

The list of top accounts in the survey, which comprised a number of both online and traditional products, highlighted numerous opportunities to earn several times the interest the average national rates offer. Rates of more than 0.90 percent APY took the top spot in both the savings and money market categories, and the banks on the list of top-10 savings accounts all paid 0.80 percent or more.

“This is an opportunity for consumers to earn five times more interest on their savings accounts,” Barrington says. “That makes it well worth shopping around for the best rates, rather than settling for a very low average rate.”

Here are the top 10 banks for savings account rates and their average APYs in the third-quarter America’s Best Rates survey:

1. Synchrony Bank – 0.950 percent
2. Doral Bank – 0.935 percent
3. GE Capital Bank – 0.930 percent
4. (tie) Barclays Bank – 0.900 percent
4. (tie) CIT Bank – 0.900 percent
6. Ally Bank – 0.878 percent
7. (tie) Capital One Bank – 0.850 percent
7. (tie) Discover Bank – 0.850 percent
9. (tie) American Express – 0.800 percent
9. (tie) Sallie Mae Bank – 0.800 percent

Here are the top 10 banks for money market account rates and their average APYs in the third-quarter America’s Best Rates survey:

1. Doral Bank – 0.945 percent
2. (tie) Sallie Mae Bank – 0.900 percent
2. (tie) Santander Bank – 0.900 percent
4. (tie) Ally Bank – 0.850 percent
4. (tie) Mutual of Omaha Bank – 0.850 percent
4. (tie) Synchrony Bank – 0.850 percent
7. Discover Bank – 0.700 percent
8. Nationwide Bank – 0.670 percent
9. EverBank – 0.610 percent
10. OneWest Bank – 0.500 percent

For more details on this survey, please see the full feature at http://www.money-rates.com/research-center/americas-best-rates/

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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