WASHINGTON—Despite more than a year’s worth of predictions that the Federal Reserve is on the verge of raising interest rates, a new report shows a declining interest rate environment for deposit accounts.
The same study also shows CUs offer the most attractive deposit rates from brick-and-mortar FIs.
WalletHub’s Q2 Banking Landscape Report Rates reveals that checking and savings accounts fell 6.03% and 11.52%, respectively, during the second quarter of the year.
The report shows that while inferior to online-only savings accounts, which dominate the higher rates, credit union products continue to offer “market-leading interest rates” among branch-based institutions, “providing nearly 2.5 times as much value as regional banks and more than 5.5 times the value of national banks,” WalletHub stated.
The study, which analyzed the rates, fees and features associated with more than 2,000 checking and savings accounts, money market accounts and CDs from banks and credit unions across the country, also found that despite rising 3.44% on average during Q2, CD rates aren’t worth moving excess liquidity into.
“The average two-year CD offers a lower yield than your run-of-the-mill online savings account these days,” WalletHub stated.
Other report highlights:
- Personal online-only savings accounts provide the market’s highest interest rates – offering 61% greater returns than the runner-up, personal online checking accounts.
- Checking accounts offer the highest interest rates available through brick-and-mortar banking institutions, providing 78% higher distributions than branch-based savings accounts.
- The minimum balance required to avoid a monthly fee increased significantly for both checking accounts (11.76%) and savings accounts (9.07%) during Q2.
- Business checking accounts are 147% more expensive than personal online checking accounts, providing 80% lower interest rates and 50% fewer features.
- Student checking accounts – which have the lowest fees on the deposit market – are 71% less expensive than their cheapest general-consumer counterparts. Lower fees come at a cost, however, as the interest rates offered to students are 74% lower than those available to the general consumer population.