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7 Foods That Are Getting More Expensive in 2018

Editorial Note: The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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The new year can bring a tightening of budgets after the holidays, so the last thing many consumers want to hear is that food staples may cost more.

But retail food prices are forecasted in 2018 to rise between 1 percent to 2 percent, according to the U.S. Department of Agriculture.

Be prepared to see a possible difference on your grocery receipts and restaurant bills for these items:

  • Eggs: Expected to increase 4 percent to 5 percent in 2018, following a drop in 2017 and 2016.
  • Cereal and bakery products: Expected to increase 3 percent to 4 percent.
  • Fresh fruit: Expected to increase 3 percent to 4 percent.
  • Dairy products: Expected to increase 1.5 percent to 2.5 percent.
  • Beef and veal: Expected to increase 1.5 to 2.5 percent in 2018, following a drop in 2017.
  • Pork: Expected to increase 0.75 percent to 1.75 percent.
  • Poultry: Expected to increase 0.25 percent to 1.25 percent, potentially impacting popular bar fare like chicken wings.

The price increases can be particularly alarming considering an average family spends approximately 6.6 percent of their household income on food and 43 percent of those expenditures on food away from the home, according to the U.S. Department of Agriculture. Rising food prices can affect families from all demographics but especially those in low-income situations.

Why food prices rise

There are many reasons behind price changes that may not seem obvious.

“The biggest drivers of rapid increases in prices tends to be weather-related events,” says Greg Colson, associate professor of agriculture and applied economics at the University of Georgia. “So it’s droughts, it’s floods, particularly droughts recently, that tend to drive very rapid increases.”

Another important thing to note is that food prices on average, including the price of eggs and poultry, actually dropped back in 2016, by an average of 1.3 percent. Also in 2016, retail egg prices declined 21.1 percent as egg-laying flocks recovered from the Highly Pathogenic Avian Influenza (HPAI) outbreak.

The number of animals in both dairy and poultry sectors also increased, leading to decreasing prices in 2016. These trends continued into 2017, which makes the rising food prices of 2018 seem surprising. But it may just be the market leveling out.

“There’s a seasonality, a cycle to all this, it’s tough (to forecast) because in general forecasting we’re looking at averages, or we’ve got trends or cycles, it’s easy, but forecasting shocks is very hard,” says Colson. “Nor can you predict, is it going to be a minor or a major drought next year?”

When experts forecast prices, they look at averages and use trends or cycles, but forecasting shocks is tough to do, Colson said. Experts can’t predict if there will be a drought next year, and if there is a drought, they also can’t predict how severe it would be.

Food-at-home prices are typically more volatile than food-away-from-home prices, according to the USDA, because the cost of dining out reflects more than the price of food. In fact, food-away-from-home prices rose an average of 2.6 percent in 2016, while food-at-home prices fell 1.3 percent — the first time such prices have declined since 1967. While eating at home has long been considered a more affordable choice, that was especially true in 2016.

Costs associated with food service, wages and benefits have been increasing and are potentially partially responsible for the percentage differences in rising costs. For example, when Dunkin’ Donuts’ store prices rose in 2016, Dunkin’ CEO Nigel Travis told investors this was due more to changes in minimum wage requirements than commodity pricing.

How outside factors affect food prices

Being aware of what and how external factors affect food prices can help you make sense of how and when you’ll see these changes.

For example, fuel prices and commodity costs can affect what you see on the price tag. Lower fuel prices don’t just affect your gas tank, they also make food prices lower, as transportation costs for commodity goods as well as for distribution make it cheaper for producers. And in 2017, the USDA said there were more egg-laying birds, which helped drive down the cost of eggs.

“There’s a lot of moving parts,” Colson says. “And so even if there’s no magical events in the U.S. if there’s positive/negative shocks elsewhere around the world, it can leave a big impact on the market.”

In the third quarter of 2017, spending at restaurants and other eateries increased 2 percent from the same time last year, according to NDP Group, a market research company. NDP Group attributed most of that increase to rising menu prices.

Although food prices are expected to rise in 2018 because of numerous variables, there’s no need to panic when planning out the monthly grocery budget. Due to the deflation in 2016 and the first half of 2017, 2018 prices are expected to stay below 2015 prices, according to the USDA.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Mara Weissinger
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Mara Weissinger is a writer at MagnifyMoney. You can email Mara here

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The Supreme Court Made it Much Harder to Sue Your Employer as a Group

Editorial Note: The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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This week’s U.S. Supreme Court decision holding that private-sector employees may no longer unite to bring class or collective actions against an employer has shaken the historical ground that workers’ rights stand on.

Some of the nation’s 126 million private-sector workers fear what they see as a reversion to 1920’s and ‘30s “yellow dog” contracts that offered take-it-or-leave-it arbitration agreements during one of our nation’s toughest times for the working class.

Differing views on decision

The decision came on Monday, the vote 5-4, with Justice Neil Gorsuch, who joined the Supreme Court last year, writing for the majority.

While some view the decision as a victory for employers, others see it as a further weakening of the ability to fight for fair employment standards in an economic climate where many Americans are living paycheck to paycheck.

In her dissent, Justice Ruth Bader Ginsburg called the decision “egregiously wrong.”

This ruling comes a year after the 10 largest settlements in employment-related categories reached a record high $2.72 billion, according to the 14th annual edition of the Workplace Class Action Litigation Report by Seyfarth Shaw LLP, a Chicago-based law firm. The aggregate settlements of the top 10 are almost $1 billion more than they were in 2016, despite 2017 being a more favorable year overall for employer rather than employee victories, the 2018 report notes.

“I think it’s going to potentially reduce a lot of very costly litigation for employers,” said

Suzanne Boy, an employment law attorney with Henderson Franklin Attorneys at Law in Fort Myers, Fla. “While it certainly does not erase the employees right to bring a claim, it just limits the potential for them to bring them as a group essentially.”

Attorney Benjamin Yormak, who represents employees and is a board-certified expert in labor and employment law, noted that the point of a class or collective action is to streamline the litigation for consistency in the results and to save on costs.

“But the ruling from the Supreme Court does the exact opposite,” said Yormak, an attorney based in Bonita Springs, Fla., who often represents employees with wage and hour disputes.

While Yormak said he believes wage and hour litigation will be the hardest hit, other workplace conditions could become more difficult to fight as well.

Some members of Congress and candidates for office voiced their concerns this week on social media.

What’s changed?

The Federal Arbitration Act, enacted in 1925, specifies that agreed-upon individual arbitration contracts must be enforced, unless that agreement violates another federal law, which, according to those on the dissenting side, is the National Labor Relations Act, which was enacted 10 years later.

The NLRA provides “the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.”

In what Yormak calls an “epic case,” the problem is that the NLRA and the FAA “are not in harmony with one another on this issue.”

Both sides were looking for direction from the Supreme Court, but the outcome was not what he and employees such as those he represents had hoped for, Yomak says.

Who’s affected by the ruling?

Expect a dramatic increase in the number of employers who require arbitration agreements to be signed by their employees, both Boy and Yomak said.

The Economic Policy Institute, a Washington, D.C., nonprofit think tank, notes: “For over eighty years, the National Labor Relations Act has guaranteed workers’ right to stand together for ‘mutual aid and protection’ when seeking to improve their wages and working conditions. However, today’s decision clears the way for employers to require workers to waive that right as a condition of employment.”

According to the EPI, 56.2 percent of private sector employees are already subject to arbitration proceedings that are laid out by their employer, and of those employers, 30 percent include a class-action waiver.

With this new ruling and the number of employers who require such agreements projected to rise sharply, the ways they might implement them could be less-than-transparent, such as the blanket take-it-or-leave-it policies emailed to employees that sparked the three cases that were consolidated by the Court and that served as the basis for the decision.

What you can do

The EPI is asking Congress to ban mandatory arbitration agreements and class and collective action waivers.

“Workers depend on collective and class actions to combat race and sex discrimination and enforce wage and hour standards,”Celine McNicholas, Director of Labor Law and Policy for the EPI said in a statement. “It is essential to both our democracy and a fair economy that workers have the right to engage in collective action.”

For employees, attorneys recommend having awareness and taking a few steps, such as these:

  • Watch out for class-action waiver. “If an employee is presented with an arbitration agreement, he or she should certainly look closely as to whether or not one of these waivers is in there, because they may not be,” said Boy. She adds that if an employee refuses to sign it, an employer can rescind the job offer.
  • Find out the financial ramifications. Boy advises employees to look at the ramifications from a cost perspective, such as how the cost shifting is defined and if it’s split in half between employer and employee.
  • Pay attention to other provisions. Determine if there is a jury trial waiver or what kind of confidentiality is included in the arbitration agreement.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Kat Khoury
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Kat Khoury is a writer at MagnifyMoney. You can email Kat here

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An In-Depth Review of Discover’s Banking Products

Editorial Note: The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Year Established1911
Total Assets$98.7B
LEARN MORE on Discover Bank’s secure website
Discover Bank, which originally was introduced as a credit card via Sears-owned Greenwood Trust Company, first came on the market in 1985. Since then, Discover has gone on to become one of the largest credit card issuer in the U.S., known for their customer loyalty. Discover Bank, which runs completely as an online bank, has made strides over the past decade to compete in the financial sector by offering an array of financial products that go beyond credit cards.

Discover Bank offers competitive rates on their banking products, which include CDs, savings, checking, and money market accounts, which also boast perks like no monthly fees. However in recent years, many online banks have begun offering similar, if not better, rates for their deposit products.

In this article we’ll take an in-depth look at Discover Bank’s products. We’ll cover account features, rates and anything else you might need to know to make the most informed decision on your financial needs. Most of our research was conducted by analyzing rates from Depositaccounts.com, which is another LendingTree-owned site.
Discover Bank’s Most Popular Accounts

APY

Account Type

Account Name

Compare Rates from Similar Accounts

1.55%

Savings

Discover Bank Online Savings

2.10%

CD Rates

Discover Bank 12 Month CD

2.35%

CD Rates

Discover Bank 3 Year CD

2.60%

CD Rates

Discover Bank 5 Year CD

All rates listed below are as of 5/25/2018

Discover Bank’s CD Rates

A minimum deposit of $2,500 gives you competitive CD rates among online banks, but higher rates can be found.

Term

APY

3 Months

0.35%

6 Months

0.65%

9 Months

0.70%

12 Months

2.10%

18 Months

2.15%

24 Months

2.20%

30 Months

2.20%

3 Years

2.35%

4 Years

2.50%

5 Years

2.60%

7 Years

2.65%

10 Years

2.70%

  • Minimum opening deposit: $2,500
  • Early withdrawal penalty:
    • For CDs that are less than one year, the penalty will be worth 3 months of simple interest.
    • For 1-3 year CDs, the penalty is 6 months of simple interest.
    • For a 4 year CD, the penalty is 9 months of simple interest.
    • For a 5 year CD, the penalty is 18 months of simple interest.
    • For 7-10 year CDs, the penalty is 24 months of simple interest.

Discover Bank offers certificates of deposits with terms ranging from three months to 10 years. Interest is compounded daily and is deposited every month. As with most CD rates, the longer the term of the CD, the higher the rate you will receive. To make sure you lock in the highest possible rate for your CD, make sure you fund your account within ten days of application.

There are early withdrawal penalties for taking your money out before the end of the term. The penalty amount varies depending on how far you are into your CDs term.

While there are penalties for withdrawing your money early, you do have the option to withdraw any interest earned on your CD to a Discover bank account without penalty. This money can also be left in your CD to compound throughout the life of your CD. Account holders receive notice of CD maturity 30 days prior to the end of the term. Once a term has ended, account holders have a 9-day grace period to make a change to their CD before incurring penalties. If no action is taken, Discover CDs will automatically renew at the same rate and term.

You can open a Discover CD online or by phone. The only eligibility requirements come in the form the $2,500 minimum deposit, which can be paid via phone, check or an online transfer from your bank. Discover provides the option of opening your CD in the form of a Trust, Guardian, Estate or Custodial account, but in order to do so, you must call one of their Banking Specialists.

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How Discover Bank’s CD rates compare

Overall, Discover Bank CD rates are competitive. They certainly beat out most of the major banks by far when it comes to APY. However, if you do some digging, there are better rates out there for CDs, both in terms of minimum deposit and interest rate earned.

Discover’s minimum deposit of $2,500 is the biggest downside to this product. While it’s not common for banks to offer no-fee withdrawals on CDs, there are some out there. To find the most competitive CD rates on the market right now, check out our Best CD Rates page.

Discover Online Savings account

A completely fee-free online savings account, with no minimum balance requirements, and competitive interest rates.

APY

Minimum Balance Amount

1.60%

$0

  • Minimum opening deposit: $0
  • Monthly account maintenance fee: $0
  • ATM fee: None as long you use an ATM within Discover’s network.
  • ATM fee refund: None.
  • Overdraft fee: None.

There is no minimum balance to open a Discover Online Savings account, nor do they charge any monthly maintenance fees. While account holders do not have the ability to withdraw money from their savings account via an ATM, they are able to access and manage their savings account via Discover’s online banking and mobile app.

The online banking and mobile app lets users deposit and transfer money to both Discover Bank and non-Discover bank accounts. However, you’ll get hit with a $30 fee for an outgoing wire transfer, as well as a $15 charge per item for exceeding the Federal Reserve’s Regulation D limitation of six withdrawals or transfers in one calendar month. Overdrafting your online savings account results in a $30 fee, which you can avoid by signing up for overdraft protection.

Currently, you can earn a competitive interest rate of 1.55% APY on a Discover Online Savings account. This is compounded daily and deposited into your savings account every month. As soon as you deposit money in your account, you’ll begin earning interest.

This is a solid savings account for anyone who already has a checking account with Discover, has a substantial amount of savings, or wants to earn a competitive interest rate on their savings account. It stands out for being fee-free and requiring no minimum balance or deposit, but falls short when compared with all the current interest rates out there.

There are no eligibility requirements to open a Discover Online Savings account since they do not require an initial minimum deposit or any minimum balance. Opening an account can be done online or by phone.

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How Discover Bank’s savings account compares

Compared with other online savings accounts, Discover Bank does not have the best offerings. That’s not to say it’s bad. Next to what major banks are currently offering, this account is a major win. However, with a little research, you can find better interest rates out there that don’t charge fees or have minimum balance requirements.

To see what other rates and offers are out there that fit your savings goals check out our Best Online Savings Account Guide.

Discover Bank’s CashBack Checking Account

If you use your debit card often, Discover CashBack Checking offers no monthly fees and pays decent cashback rewards.
  • Monthly account maintenance fee: None.
  • ATM fee: None as long as the ATM is within Discover’s network.
  • ATM fee refund: None.
  • Overdraft fee: None.

Discover Bank’s CashBack Checking account is appealing because it carries very few fees — that means no monthly maintenance fee, no minimum balance requirements and no fees for check ordering or debit card replacement.

They offer free online and mobile banking options like bill-pay, wire transfers and account management.

One of the account’s main selling points is the cashback reward, which pays 1.00% on debit card transactions up to $3,000 on purchases each month. In other words, if you spend up to $3,000 in a month you receive $30 cash back. This 1.00% return is not an interest rate, but rather a cashback reward. There are no qualifications to earn the cashback rewards — when you spend with your debit card, you’re earning rewards. These rewards can be redeemed as a credit to your checking account or transferred to a Discover CashBack Bonus card account.

Discover recently partnered with AllPoint and MoneyPass to increase their in-network ATM locations by 60,000+. While Discover does not charge ATM fees for going out-of-network, they do not reimburse ATM fees incurred by third-party ATMs.

One of the few fees you’ll find is an overdraft fee. Their overdraft fee is $30 per transaction, which is on par with other financial institutions. You can avoid an overdraft fee by opting in to overdraft protection, which requires account holders to link their checking account with a Discover savings account.

Since Discover Bank is considered an online bank, you must open your account online via their website or by phone. There are no minimum deposit requirements, nor do they require account holders to keep a minimum balance. Once you open your account, you’ll receive your debit card within 10 business days. Discover offers free checks for their CashBack Checking Account, although you must request them.

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How Discover Bank’s checking account compares

Discover Bank’s CashBack Checking stacks up against other banks when it comes to offering a no-fee checking account. While they do boast a large ATM network, in part to their partnerships, they still do not reimburse out-of-network ATM fees. When it comes to rewards, their cashback reward is decent.

There are better cashback rewards programs out there, as well as, accounts that don’t require you to spend money to make money. If you spend a significant amount money via your debit card every month, this rewards program might make sense. If not, there are other banks that currently offer better rates on checking accounts for less effort on your end.

Discover Bank’s Money Market Account

Good withdrawal options, but with a high minimum balance requirement and interest rates that don’t stack up.

APY

Minimum Balance Amount

1.45%

Less than $100,000

1.50%

Greater than $100,000

  • Minimum opening deposit: $2,500
  • Monthly account maintenance fee: None
  • ATM fee: None, but only if you use an ATM within Discover Bank’s network.
  • ATM fee refund: None.
  • Overdraft fee: None.

Opening a money market account with Discover Bank requires a minimum initial deposit of $2,500. While their money market accounts don’t charge any monthly maintenance fees, account holders must maintain a minimum balance of $2,500 to avoid a $10 fee. They don’t even beat out Discover’s saving account rates.

There are a few account features worth noting, starting with the withdrawal options. Unlike the Discover Online Savings account, account holders will receive checks and a free debit card. Your debit card can be used to withdraw money via ATMs and at stores.

Discover Bank does not charge ATM fees, however if you use an out-of-network ATM they will not reimburse the fee. It’s important to note, that your money market account is subject to the same Federal Reserve regulations limiting transfer and withdrawals to six per month. If you exceed the six withdrawals you’ll be charged a $15 fee per item; however this does not apply to withdrawals from ATMs or via official check that is mailed to you. Discover Money Market accounts also give you the ability to sign up for online bill pay, as well as, overdraft protection.

The only eligibility requirements to open a Discover Money Market account is an initial minimum deposit of $2,500. You can open an account either online or by calling one of their Banking Specialists. To fund your account, you have the option of an online transfer, direct deposit or check, which can be mailed or deposited via Discover Bank’s Mobile Check Deposit app.

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How Discover Bank’s money market account compares

Looking at the overall market offerings, Discover Bank Money Market accounts do not stack up. Their competitive account features like a large ATM network, free checks and a debit card are nice, but their rates do not compete.

You can find other banks offering lower deposit requirements, as well as better rates. To see how this account compares, check out MagnifyMoney’s Best Money Market Rates guide.

Discover IRA CD rates

Competitive rates with a higher-than-average minimum deposit for both traditional and Roth options.

Term

APY

3 Months

0.35%

6 Months

0.65%

9 Months

0.70%

12 Months

1.90%

18 Months

1.95%

24 Months

2.00%

30 Months

2.00%

3 Years

2.05%

4 Years

2.10%

5 Years

2.45%

7 Years

2.45%

10 Years

2.45%

  • Minimum opening deposit: $2,500
  • Early withdrawal penalty:
    • For CDs that are less than one year, the penalty will be worth 3 months of simple interest.
    • For 1-3 year CDs, the penalty is 6 months of simple interest.
    • For a 4 year CD, the penalty is 9 months of simple interest.
    • For a 5 year CD, the penalty is 18 months of simple interest.
    • For 7-10 year CDs, the penalty is 24 months of simple interest.

Similar to other Discover Bank CD products, the minimum deposit to open an IRA CD is $2,500. This is also the minimum balance required to earn your interest rate. They offer both Traditional and Roth IRA CD options, with interest rates that vary depending on the CD term you choose. Terms can be as short as 3 months to up to 10 years. Their early withdrawal penalties remain the same for both IRA and non-IRA CDs.

An IRA CD is a worthwhile investment if you aren’t touching your savings and want to earn a higher APY than what’s being offered for your savings account. IRA CDs make the most sense if you’re looking for a long-term investment. While they don’t pay crazy high returns, if you have extra capital, it’s a good investment vehicle to have in your portfolio.

Opening an IRA CD account with Discover Bank can be done by phone or online, and requires an initial minimum deposit of $2,500. Funding your account can be done by phone, via check or via a bank-to-bank transfer from an existing IRA. Discover also allows account holders to initiate a direct or indirect rollover from an existing IRA.

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How Discover Bank’s IRA CD compares

Compared with other IRA CD’s out there, Discover Bank’s rates fall somewhere in the middle. The minimum deposit is higher than other offerings out there and the rates are competitive, but not high enough to be the best on the market.

Overall review of Discover Bank’s deposit products

Discover has created a suite of banking products that can compete in today’s market. Their online and mobile banking has all the necessary features to access and manage your account, and they boast a large ATM network that limits, but does not completely remove, ATM fees from your life.

Compared with the traditional big banks, Discover Bank has them beat when it comes to rates and offerings. However, if you take the entire market into consideration, adding in online banks, community banks and credit unions, Discover banking products fall somewhere in the middle.

Based on the fact that all of the reviewed products above do not have monthly maintenance fees attached to them and pay some form of interest or cash back, means you aren’t going to be wrong by opening an account. However, if you’re looking for the best of the best, Discover Bank is not quite there yet.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Jackson Wise
Jackson Wise |

Jackson Wise is a writer at MagnifyMoney. You can email Jackson here

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Earning Interest

Best Money Market Rates & Accounts – May 2018

Editorial Note: The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Updated May 24, 2018

Traditional banks are paying very low interest rates on money market accounts. For example, BB&T pays between 0.01% and 0.04% APY. Fortunately, you do not need to settle for such ridiculously low rates. You can easily find the best money market rates at internet banks paying 1.50% or more. If you put $50,000 into BB&T’s account at 0.04%, you will only earn $20 of interest over one year. That same money in an account paying 1.50% would earn you $750 of interest. And you can typically open and fund an online money market account in less than 10 minutes. Also, the differences between savings accounts and money market accounts are narrowing because rates on money market account are increasing each year. You can currently earn the same top rate with a savings account from one bank and a money market account from another.

MagnifyMoney searches over 12,000 banks and credit unions to find the money market accounts paying the highest interest rates. Competition has been increasing and there is a pricing war. As a result, this month there are a lot of new names on the list (many of which you probably will not recognize). Here are the best rates for May 2018:

1. Highest Rate: CIT Bank – 1.85% APY, $100 minimum balance amount

Money Market Account from CIT Bank CIT Bank recently launched a money market account with a 1.85% APY. You only need $100 to open the account and start earning the APY, and they don’t charge any monthly maintenance fees. If you appreciate the option to write checks with your money market account, or use a debit or ATM card to withdraw funds, this account may not be for you. You can fund the account with ACH, mobile check deposit, or by mailing a check directly to the bank. Accessing funds can be easily done through their online banking platform or mobile banking app. Just keep in mind that due to federal regulations, you’re not able to conduct more than six transactions in a statement cycle. CIT Bank will charge a $10 fee for each additional transaction. While CIT is a thriving bank, you can be assured that your funds are protected by the FDIC up to the legal limit.

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Member FDIC

2. Top Rate: UFB Direct – 1.60% APY, $5,000 minimum balance to avoid a monthly fee

High Yield Money Market Account from UFB Direct
UFB Direct is a division of BofI Federal Bank, a federally chartered, publicly traded and FDIC-insured bank based in San Diego. In recent months, UFB Direct has become increasingly aggressive with high rates targeting big balances. The APY of 1.60% is an outstanding rate. However, there is one catch. You need to keep at least $5,000 in the account in order to avoid a monthly maintenance fee of $10.00. You will get a Visa debit card and have access to limited check writing. We think this is the best option for people with big balances that they want to keep in a money market account.

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3. Top Rate: Capital One – 1.60% APY, $10,000 minimum balance to earn APY

360 Money Market from Capital OneYou may think of credit cards when you think of Capital One, but don’t overlook their deposit accounts. While they don’t require a minimum deposit amount to open the account, you will have to maintain a balance of $10,000 or more to earn their 1.60% APY. If your balance is less than that, you’ll earn an APY of 0.85%. They don’t impose any monthly fees, and while they don’t offer checks, they do provide you with an ATM card that you can use to withdraw up to $1,000 per day. You can make an unlimited amount of withdrawals from an ATM per month, but remember that you’re limited to making only six transfers per cycle due to Federal Law. However, Capital One will close the account if you go over six transfers three times within a 12-month period. This is an online-only account, so you can’t go to a branch to open or maintain the account. Fortunately, they make banking-on-the-go easy with their Mobile Banking app.

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4. High Rate: Nationwide Bank – 1.55% APY, $10,000 minimum balance

Money Market Account from Nationwide BankWhen you think of Nationwide, you probably think about insurance. However, they offer more than just auto and home insurance. With $1,000 to open their money market account, you can automatically earn an APY (Annual Percentage Yield) of 1.15%. However, in order to earn their 1.55% APY, you’ll have to have a balance of $10,000 or more. They do charge a monthly maintenance fee of $8, but will waive the fee if you maintain a minimum of $1,000 daily. They do have check-writing capabilities as well as an ATM card. The first two ATM transaction made from a non-Nationwide Bank ATM is free per statement cycle, but they’ll charge $1.50 per additional ATM transaction made at a non-Nationwide Bank ATM. Transactions are limited to six per statement cycle and a $5 fee is charged per each additional transaction. They offer online banking and a mobile app that has a remote deposit feature to make your digital banking experience easier.

on Nationwide Bank’s secure website

5. Favorite Online Package: Ally – 0.90% APY, no minimum deposit, and link to free checking

Online Savings Account from Ally BankAlly Bank is a very popular internet-only bank. If you keep a daily balance of $5,000 or less, you will earn the 0.90% APY. If you’re able to keep a minimum daily balance of $25,000 the APY increases to 1.00%. Although the interest rate on the money market account is not the highest, Ally does offer a very competitive overall package – particularly if you link the account to an Ally checking account. The checking account has no minimum balance and no monthly fee. You can link your money market account to your checking account to provide overdraft protection. Money would be transferred to your checking account with no transaction fee if you ever made a mistake. You would be able to access your money market account with your Ally ATM card, which has free AllPoint access and up to $10 of non-Ally ATM fees reimbursed every month. This money market account is a nice way to provide yourself with overdraft protection while earning interest. If you don’t need check-writing capabilities on your savings, you would still be better off with Ally’s savings account.

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Member FDIC

6. Highest Overall Rate: Bank7 – 1.80% APY, $5,000 minimum balance, checks and ATM access available

Bank7
Bank7, established in 1901, originated in Oklahoma, but has been expanding its reach to Kansas, Texas, and now online. In addition to their original banking products, they have created accounts that specifically suit the needs of online consumers. One of those accounts is their High Rate Online Money Market. This account requires $5,000 to open and awards accountholders with a 1.80% APY. The account comes with check writing capabilities as well as the option to get a Visa debit card, which will provide you free access to Bank7 ATMs as well as to Allpoint Network ATMs. One downside to this account is that if the balance falls below $5,000, you’ll be hit with a $15 charge each month your balance falls below that amount. In addition to their online banking platform, they also have a mobile app.

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on Bank7’s secure website

Member FDIC

7. Highest Overall Rate: EBSB Direct – 1.80% APY, $10,000 minimum balance, checks and ATM access available

EBSB Direct
East Boston Savings Bank, or EBSB Direct, is a fairly large bank located in Massachusetts. They have over $5 billion in assets and have only been around since 1991. Currently, they’re offering a 1.80% APY on their money market account. While you’ll only need $2,500 to open the account, you’ll have to have a minimum balance amount of $10,000 to earn the APY. If you have a balance between $10 and $10,000, you’ll earn an APY of 0.50%. While this account does come with Visa debit card and checks, they do charge a monthly maintenance fee of $8 if you’re not able to maintain a minimum daily balance amount of $2,500 during the statement cycle. You’ll be limited to six transfers per statement cycle per Regulation D and if you exceed that amount of transfer, EBSB Direct will charge $15 per additional transfer. While they offer online banking, they don’t currently have a mobile banking app.

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8. High Rate: ableBanking – 1.70% APY, $250 minimum balance, but no check-writing

Money Market Savings from ableBankingableBanking is a division of Northeast Bancorp, a community bank headquartered in Maine since 1872. The bank has over $1 billion in assets, and your deposit would be FDIC insured up to the legal limit. At 1.70% APY, this is the highest money market rate that we have been able to find (from a bank) in the country. There is a minimum deposit of $250, no monthly fee and you do not need to be a resident of Maine (any US resident can open an account). Unfortunately, the account does not come with check-writing privileges and there is no ATM access. You can deposit and access your funds via ACH (electronic transfer), which can take a couple of days. Just remember: there is a limit of 6 withdrawals per calendar month. When we called to ask questions about the account, we could reach a customer service representative very quickly. This is a good option from a small bank with a great high rate.

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9. High Rate: BankPurely – 1.70% APY, $25,000 minimum balance, ATM access

BankPurely
BankPurely, a division of Flushing Bank, currently offers a 1.70% APY on their money market account. You’ll have to either deposit a minimum amount of $25,000 or grow your balance to that amount in order to earn interest. If you’re not able to deposit that amount, you may want to go with ableBanking since they have the same rate for a lower deposit amount. However, BankPurely does provide an ATM card, which gives you access to surcharge-free ATMs within the Allpoint Network. Just keep in mind that you’ll be limited to withdrawing $1,000 per business day. Per Federal law, you’ll also be restricted to making six transfers per month. You’ll have access to online banking as well as to their mobile banking app to manage your account. Plus, if you open an account with BankPurely, they’ll plant a tree.

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Member FDIC

10. Top Choice: Sallie Mae – 1.65% APY, no minimum balance and checks available

Money Market from Sallie Mae BankIf you have student loan debt, you probably are not very excited to see Sallie Mae at the top of this list. However, many people are unaware that Sallie Mae also operates an internet-only FDIC-insured bank with some of the best interest rates in the country. You can earn 1.65% APY, compounded daily and paid monthly. There is no minimum balance and no monthly maintenance fees. You will have check-writing capabilities (although the standard money market limit of six per month applies to this account). The easiest (and best) way to fund and access your funds is via electronic transfer from your existing checking account. If you want a simple account with no fees and check access – this is a good bet. Sallie Mae has just recently increased the APY (it was previously 1.55%), making this one the best rates in the country.

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11. High Rate: Self-Help Credit Union – up to 1.44% APY, $500 minimum deposit and minimum balance

Money Market from Self-Help Credit UnionSelf-Help is a credit union that anyone can join. If you don’t live, work or worship in one of their eligible counties, you can join by donating $5 to the Center for Community Self-Help. The contribution is tax deductible and will make you eligible for credit union membership. (You can learn more about how to join the credit union here.) At a credit union, your funds are insured up to $250,000 – but it is by the NCUA instead of the FDIC. The money market offers an APY of 1.42% on balances from $500 to $500,000. Even better – you can earn 1.42% APY on balances above $500,000. However, you need to deposit at least $500 and the balance during the month cannot go below $500 – otherwise you will be charged a monthly maintenance fee. You are allowed 6 free withdrawals or transfers from the account each month (including checks).

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Special Mention: Great Rate for Small Deposits: Premier Members Credit Union – 4.00% APY up to $2k

Premier Members Credit Union

Premier Members Credit Union is open to anyone willing to make a $5 donation Impact on Education, a charity for the Boulder Valley School District. This credit union is currently offering an incredible rate of 4.00% with only $5 to open the account. You can earn this APY on balances up to $2,000. Amazingly, even if you grow the balance up to $5,000, you’ll earn 2.49% APY. As the balance increases, the APY decreases to the following:

  • $5,000.01-$10,000: 2.49%-1.62%
  • $10,000.01-$50,000: 1.62%-0.72%
  • $50,000.01-$100,000: 0.72%-0.56%
  • $100,000.01-$250,000: 0.56%-0.44%
  • $250,000.01+: 0.44%-0.30%

Premier Members Credit Union rewards low balance savers by placing the highest rate with the lowest deposit, but if the balance grows they start using a reverse tier system where they blend the APY as the balance grows. Checks are available with this account, but you can only make six withdrawals per month. Each additional withdrawal will be assessed a $10 fee.

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3 Questions To Ask Before Opening A Money Market Account

1. Should I open a savings account or a money market account?

Many years ago, money market accounts were higher risk and paid higher returns. The financial crisis of 2008 changed all of that. Money market accounts are now FDIC-insured up to the legal maximum ($250,000 per institution per individual). Interest rates are now very similar – and there is no material difference. In other words – choose whichever account you want.

In general, you tend to get slightly lower interest rates on money market accounts because you have check-writing capabilities. The best savings accounts pay at least 1.50% APY – very similar to the rates on this page. But at Ally, for example, you can get 1.35% APY on a savings account (no check-writing) and 0.90% on the money market account (with check writing).   

We have written a full explanation of the difference between money market and savings accounts here.

2. Am I willing to make a longer term commitment? 

Savings accounts and money market accounts pay much lower interest rates than CDs. Right now you can easily get a 1-year CD paying 1.85% APY (with only a $2,000 minimum). You can find the best CD rates here. If you build a CD ladder, you can take advantage of 5-year rates that are now as high as 3.00%.

Money market accounts are great places to keep money that you might need immediately. But the interest rate on a money market account can change right away, at the bank’s discretion. To lock in a higher interest rate, you should consider a CD. If you need to get access to your CD early, would forfeit interest (typically from 3-6 months). In most circumstances, putting more of your money into CDs can really help boost your returns.

3. Is a money market account the same as a money market fund? 

No, money market accounts (offered by FDIC-insured banks) are not the same as money market funds (most likely sold by your broker). In fact, we really don’t know why people even buy money market funds in the current environment.

For example, Vanguard offers the Prime Money Market Fund. Like other money market funds, this one “invests in short-term, high-quality securities.” Its objective is to keep the fund trading at $1 and generate a decent return. Right now that return is 1.00% – a bit lower than the returns you see from the money market accounts listed in this article. However, money market funds do not have FDIC insurance.

Most people compare the return of a money market fund (sold by their broker) to the interest rate paid by a traditional bank (0.03%, sold by their local bank teller). As a result, they are willing to take the risk of a money market fund. However, as you can see from the best money market accounts in this article, you can get FDIC insurance and beat the return of most funds. Why earn 1.00% with no FDIC-insurance when you can easily earn 1.60% and have FDIC insurance.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Nick Clements
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Nick Clements is a writer at MagnifyMoney. You can email Nick at nick@magnifymoney.com

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College Students and Recent Grads

Understanding Student Loan Interest Rates

Editorial Note: The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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Looking into student loans to pay for college or graduate school? Before you take on debt, it’s important to understand how the interest on student loans work, so you can make smart decisions before you borrow and when it comes time to repay the debt.

Understanding how student loan interest works

When you take out a student loan, the lender charges interest as a fee for borrowing the money. Interest on student loans isn’t a flat fee. Instead, interest on student loans is expressed as a percentage of the unpaid loan amount. Right now, federal direct unsubsidized loans for undergraduates carry a 4.45% annual interest rate (but they’re about to go up for the 2018-19 school year). That means the lender charges 4.45% of the unpaid loan balance per year.

When interest on a student loan goes unpaid, the balance of the loan grows over time. For example, during college many students “defer” student loan payments. In general, during deferment, the bank continues to charge interest, so the balance grows over time. A student who borrows $5,000 at a 4.45% interest rate at the start of his freshman year of college will owe $5,974 four years later when he starts making payments. Generally, any unpaid interest is added to the principal balance once the loan enters the repayment period.

Even though interest rates on student loans are expressed as an annualized interest rate (such as 4.45% per year), interest on federal student loans is determined by a daily interest rate. A 4.45% annual interest rate translates to a 0.0122% daily interest rate.

Once you start making standard monthly payments on the loan, the balance of the loan and dollar amount of interest being charged each day drops. For example, on a 10-year repayment plan, the $5,000 loan that grew to $5,974 loan from the previous example will have a $61.77 monthly payment.

After making the first payment, the balance will fall by $39.62 to $5,934 — the other $22.15 goes toward paying interest. By contrast, with the last payment, $61.27 goes toward balance reduction, and just $0.23 goes towards paying interest.

Many people have heard stories of student loan borrowers who have faithfully made regular payments for decades but have barely made a dent in their balance or owe more money today than when they graduated from college. This doesn’t happen when borrowers make payments based on standard repayment plans. However, it can happen when federal loan borrowers opt for income-driven repayment plans. Under these plans, the monthly payment is based on a person’s income, not on a repayment schedule. That means that the required monthly payment could be less than the amount of interest that the lender charges on the loan. In that case, the balance of the loan grows over time, and the amount of interest charged grows, too.

Variable vs. fixed interest rates

All federal student loans disbursed since July 1, 2006, have fixed interest rates, meaning the interest rate will never change. By contrast, some private lenders offer variable-rate loans. Variable-rate loans are loans where the interest rate may change over time. In general, variable interest rates are set based on an index rate such as the LIBOR (London Interbank Offered Rates). When the LIBOR increases, the variable interest rate on a student loan increases. When it decreases, the interest rate on a student loan decreases. The interest rate on a variable-rate loan could change as often as once a month.

As the interest rate on a variable-rate loan changes, the minimum monthly payment changes, too. A higher interest rate will mean a higher monthly payment, and a lower interest rate will mean a lower monthly payment.

Some variable-rate loans will have maximum interest rates. That means, no matter how high the index rate goes, the lender will not charge more than the maximum rate.

The primary advantage of fixed-rate loans are that borrowers will know exactly how much they owe each month, which makes it easy to budget for. However, most private lenders set higher interest rates for fixed-rate student loans compared with variable-rate loans. That means that borrowers could end up paying more in interest over time.

The lower starting interest rates mean that some people may save money by opting for a variable-rate loan. But variable-rate student loans are riskier than fixed-rate loans. The changing interest rates could mean that borrowers have to make large monthly payments and pay more in interest over the life of a loan.

When should borrowers choose a fixed-rate student loan?

No wiggle room in budget: Fixed-rate student loans are an ideal choice if you don’t have a ton of wiggle room in your budget. You may pay a bit more — but you might not — and you don’t have to worry about your monthly payment increasing.

Long repayment periods: Fixed-rate loans also tend to make sense if your repayment plan will last several years. By contrast, variable rate loans are riskier when you face longer repayment periods. Longer repayments mean that you’ll face a higher risk that the rate will increase significantly from where you first took out the loan.

Small rate difference between fixed- and variable-rate loans: Variable-rate loans often have lower prices, but you get that lower price by taking on more risk. If the interest rate you’ll pay on a fixed-rate loan is just a tiny bit more than the interest rate on a variable-rate loan, the peace of mind is probably well worth the financial cost. Plus, if interest rates fall, you may be able to refinance to a lower, fixed rate in the future.

When should borrowers choose variable-rate student loans?

Expect rapid loan payoff: Borrowers who plan to aggressively pay back loans (and cut years off of standard repayment plans) can take advantage of lower interest rates in the early years of the loan. Even if interest rates rise over time, people who aggressively pay back loans in the early years will save enough in interest to compensate for the higher rate in the later years.

Rate difference between fixed- and variable-rate loans: Most of the time, variable-rate loans are less than 1% cheaper than fixed-rate loans. This offers some savings. But depending on your borrower qualifications (credit score, debt-to-income ratio, etc.), you may qualify for a much better variable-rate loan. If you personally qualify for a much lower rate on a variable rate loan (compared with a similar fixed-rate loan), you can expect to save a lot of cash over the life of a loan, even when student loan interest rates start to rise.

Federal student loan interest rates

Congress sets interest rates on federal student loans. Once you borrow the money, the interest rate on the loan will not change because federal student loans have fixed interest rates, but not all federal student loans have the same interest rates. For example, direct unsubsidized and subsidized loans for undergraduates carry a 4.45% interest rate for the 2017-18 school year. The same loan for graduate or professional students is 6%. PLUS loans, which are available for parents and graduate students, have a 7% interest rate. For federal student loans disbursed between July 1, 2018 and June 30, 2019, rates are as follows: 5% for undergraduate loans, 6.6% for graduate and professional unsubsidized loans and 7.6% for PLUS loans borrowed by parents or graduate and professional students.

How does interest work during deferment?

Many students defer payment on their student loans while they are studying or for select other reasons, such as unemployment or active-duty military service, if their loans offer such flexibility (some private loans and all federal loans do).

During deferment and the grace period following graduation, you will not make payments on your student loans, but interest continues to accrue on the loan. Interest that accrues during deferment is added to the balance of the loan, so your principal loan balance grows during deferment.

However, the U.S. Department of Education helps reduce the burden of interest by paying interest on subsidized loans while the borrower is enrolled in school at least halftime, during deferment and during the grace period that follows graduation. Subsidized loans include direct subsidized loans, federal Perkins loans and the subsidized portions of direct consolidation loans and FFEL consolidation loans.

It’s important to note that deferment is not the same as forbearance. Forbearance is a period of reduced or suspended payments a lender may grant to a borrower going through financial hardship. During forbearance, interest continues to accumulate and will capitalize (be added to the principal balance).

Current interest rates and fees on federal student loans

The table below shows the interest rates and fees on federal student loans for the 2018-19 school year. It’s important to note that some loans have a loan fee. These fees are a percentage of the principal balance, taken from the disbursement and paid to the bank. For example, a $5,000 loan will actually be a $4,946.70 disbursement to you (assuming the 1.066% loan fee).

Federal loan type

Borrower type

Interest rate

Loan fee

Does interest accrue during deferment?

Direct unsubsidized

Undergraduate

4.45% (for loans disbursed between July 1, 2017 and June 30, 2018)

5% (for loans disbursed between July 1, 2018 and June 30, 2019)

1.066%

Yes.

Direct unsubsidized

Graduate or professional students

6% (2017-18)

6.60% (2018-19)

1.066%

Yes.

Direct subsidized

Undergraduate

4.45% (2017-18)

5% (2018-19)

1.066%

No.

Direct consolidation

Past borrowers

Weighted average interest rate of all loans being consolidated, rounded up to the nearest one-eighth of one percent.

None.

Generally yes. The subsidized portions of the loan do not accrue interest during deferment.

PLUS

Parents, graduate students and professional students

7% (2017-18)

7.6% (2018-19)

4.264%

Yes.

Private student loan interest rates

Private student loans can be a double-edged sword for students and their parents. The private student loan marketplace allows a greater level of borrowing, and some people find better interest rates in the private loan marketplace. However, private student loans generally do not offer the safeguards of federal student loans.

For example, many private loans don’t offer forbearance or deferment (except in-school deferment), and they may have very high student loan interest rates. Unlike federal student loans, most private student loans don’t have income-driven repayment plans, and the interest rates on private student loans aren’t set by legislation. Instead, interest rates on private loans are determined by a variety of factors:

  • Your credit score (or the score of a cosigner)
  • Your income (or the income of a cosigner)
  • Employment status
  • The length of repayment
  • Fixed- or variable-rate terms
  • Rates charged by other lenders

Many private lenders require a cosigner (someone who promises to make payments if you can’t) if you don’t have a high enough income or credit score to qualify for the loan.

Interest rates on private student loans have a much greater variety than federal student loans. For example, some student loan refinancing companies offer interest rates as low as 2.57%. However, some lenders charge interest rates that exceed credit card interest rates.

Borrowers who are considering private student loans should research the costs and have a plan to make the required monthly payment once they graduate.

Student loan interest rate vs. APR

When it comes to student loan borrowing, borrowers should understand both the interest rate and the APR (annualized percentage rate) on a loan. The Federal Truth in Lending Act requires lenders to disclose a loan’s APR. APR measures the annualized cost of all finance charges (including interest and transaction fees) if you make all your payments on time. By contrast, the interest rate on a loan is simply the annual cost of borrowing the money, and does not include other fees.

When you pay off student loans early, you will reduce the total interest you pay on the loan. However, finance charges (such as loan fees or origination fees) are not reduced by paying off the loan early.

Lowering your student loan rates

When it comes to any type of borrowing, paying less in interest means you’ll have more money to put elsewhere. Student loan borrowers should consider methods for reducing the interest rate on their loan, and methods to pay less interest overall. These are just a few options to consider.

Lowering your student loan interest rates

Fill out FAFSA: If you’re a traditional student (generally under 24 years old with limited work/life experience), federal student loans likely offer the lowest possible interest rates on student loans. To qualify for federal aid, you and your parents must fill out the FAFSA (Free Application for Federal Student Aid). The FAFSA may also be required for merit-based aid at your university.

Get a cosigner: Borrowers in the private marketplace may find that a cosigner helps them qualify for a reduced rate. Its common for grandparents or parents to cosign private student loans, but cosigners must exercise caution. If a borrower can’t make their monthly payments, the cosigner has to step up and make the payments, otherwise both borrowers’ credit scores will suffer from the impact of missed payments.

Refinance: Following graduation, borrowers (especially those with high incomes or good credit scores) may be able to reduce their student loan interest rates by refinancing with private loans. However, borrowers must be careful when refinancing. Private lenders generally do not offer income-driven repayment plans or other safeguards that can help borrowers who experience unemployment, underemployment or low incomes. Plus, debts that are refinanced with private lenders will not qualify for federal student loan forgiveness programs.

Enroll in automatic payments: Many private lenders offer borrowers a rate discount when the borrower sets up automatic monthly payments.

Reducing total interest paid

Reducing interest rates aren’t the only way to free up cash. Borrowers may also use other methods to reduce the total amount of interest they put toward loans.

Borrow as little as possible: The less you borrow during school, the less interest that will accrue on the loans. Students may be able to minimize borrowing during school by working, applying for scholarships and grants, and using savings. This may sound obvious, but it’s important to point out, because the amount you’re approved to borrow may exceed what you need, resulting in unnecessary debt and, as a result, unnecessary interest payments. Budget carefully and borrow only what you need.

Pay more than the minimum: The more money you put toward your loans each month, the faster you’ll pay them off. Extra principal payments are especially helpful in the early life of the loan when a large portion of the standard payment goes to interest. When you put extra money toward your loan, be sure that the additional payment goes toward repaying the principal. The Consumer Financial Protection Bureau offers guidance on how borrowers can make sure their lender processes their payments correctly.

Combine income-driven repayment with student loan forgiveness: A lot of times, income driven repayment plans reduce monthly payments only to have the loan balance grow over time. However, if you qualify for a student loan forgiveness program, the lower payment is a huge advantage. Not only will you reduce your cash outflow during the repayment phase, once you complete the requirements for loan forgiveness, you may qualify for forgiveness without any incurring tax penalties. (However, some loan forgiveness requires you to pay income taxes on the forgiven amount.) Different loan forgiveness programs have different requirements, so be sure you qualify before planning to use this strategy.

Pay interest during school: Many students are cash-strapped during their studies, but putting money toward interest may go a long way toward keeping loans at a manageable level. Making interest-only payments during college allows students to keep loans at a set level instead of allowing the lender charge interest on interest once the loan enters repayment and unpaid interest is capitalized (added to the principal loan balance).

Refinance to a shorter term: Borrowers who have sufficient cash flow can reduce their total interest payment by refinancing their loans to a shorter term. Sometimes a shorter term means a better interest rate. But, even without a lower rate, a faster repayment means that less money goes to interest overall. For example, a borrower with a $10,000 loan at 3.5% will pay $1,866.21 in interest over the life of a 10-year loan. If that borrower refinances to a five-year loan (also at 3.5%) the total interest is cut in half to just $915.03.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Hannah Rounds
Hannah Rounds |

Hannah Rounds is a writer at MagnifyMoney. You can email Hannah here

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Reviews

Synchrony Bank Review: CD, Savings Account, Money Market, and IRA Rates

Editorial Note: The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

synchrony bank review
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Synchrony Bank is a relative newcomer to the banking scene, having opened up right around the same time as the World Wide Web was being developed in the late 1980s. Today, it’s one of the largest online-only banks around, offering a range of products including high-interest savings accounts, CDs, money market accounts, and IRAs.

Big banks can have notoriously high fees and low rates, so since Synchrony is a smaller, online bank, we put them to the test. In general, they offered very high rates on their savings and CD accounts, but their money market accounts are a little behind in the rate department. Read on to find out the specific details. This will help you decide whether or not this bank is right for you.

Synchrony Bank CD rates

You might need a higher-than-average minimum deposit for these CDs, but you’ll earn a very good interest rate.

Term

APY

3-months

0.75%

6-months

1.00%

9-months

1.25%

12-months

2.25%

14-months

2.35%

18-months

2.15%

24-months

2.45%

36-months

2.55%

48-months

2.65%

60-months

2.85%

As of 5/22/2018

  • Minimum opening deposit: $2,000
  • Minimum balance to earn APY: $2,000
  • Early withdrawal penalty: For CDs of 12 months or less, you’ll pay 90 days’ worth of interest. For CDs of between 12 months up to 48 months, you’ll pay 180 days’ worth of interest. For CDs over 48 months, you’ll pay 365 days’ worth of interest.

You’ll need to come to the table with a fairly hefty minimum deposit of $2,000 to open a CD at Synchrony. But, once you have it, this bank offers a fair amount of flexibility in how you are paid your dividends. You can elect to roll them over in the CD account, or have them paid out to you directly in the form of a check or an electronic deposit into another Synchrony, or other external, bank account.

Once your CD completes its term, you also have a few options. Your CD will automatically roll over into another CD of the same term length, but you’ll get a 10-day grace period to make any changes. During this grace period, you can withdraw the cash, add more cash, and/or open up a new CD with a different term length.

How to open a CD account with Synchrony

You can easily open up a CD account with Synchrony Bank online. You’ll need to provide some basic identifying information, such as your Social Security number and date of birth (this is required of all banks in order to comply with the USA PATRIOT Act). You’ll also need to provide a government-issued ID, such as a driver’s license.

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How Synchrony Bank’s CD rates compare

While Synchrony doesn’t currently offer the highest rates, they’re still consistently among the top of the pack for the current highest CD rates. Specifically, their 12-month and 60-month CDs are among some of the best offerings out there right now.

The early-withdrawal penalties at Synchrony Bank are also right on par with many of their competitors. You can rest assured that you won’t be paying inordinately high fees should you need to withdraw your cash early.

Synchrony Bank savings account

Synchrony charges no fees and offers a very high interest rate to boot.

APY

Minimum Balance Amount

1.65%

$0

As of 5/1/2018.

  • Minimum opening deposit: $0
  • Monthly account maintenance fee: $0
  • ATM fee: None; however, the ATM’s owner may charge a separate surcharge fee in order to withdraw cash.
  • ATM fee refund: Synchrony will refund up to $5 per month in ATM surcharge fees.
  • Overdraft fee: None.

This is one of the most accessible high-interest savings accounts for people looking for low fees and low minimum balance requirements. While most banks charge an overdraft fee if you overdraw your account, Synchrony Bank does something different: They may not honor the withdrawal, meaning that you won’t incur an overdraft fee.

Watch out, though: you’re limited to six withdrawals and transfers per month as per Federal Regulation D (not including ATM withdrawals). If you go over that amount, Synchrony Bank reserves the right to close your account for you for “misuse.”

How to open a savings account with Synchrony

You can easily open up a savings account with Synchrony Bank online. You’ll need to provide some basic identifying information, such as your Social Security number and date of birth (this is required of all banks in order to comply with the USA PATRIOT Act). You’ll also need to provide a government-issued ID, such as a driver’s license. Finally, by signing up for an account, you authorize Synchrony to run your application through ChexSystems, which checks to see if you have any negative standings with other financial institutions.

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Member FDIC

How Synchrony Bank’s savings account compares

Synchrony currently has one of the best online savings accounts. For people looking for a no-minimum-balance account, or those looking to grow a small savings account balance into a larger one, you can’t go wrong with this account.

Synchrony Bank money market account

Synchrony’s money market account doesn’t offer very high interest rates, but does give you the power to write checks.

APY

Minimum Balance Amount

1.05%

$0

As of 5/1/2018.

  • Minimum opening deposit: $0
  • Monthly account maintenance fee: $0
  • ATM fee: None; however, the ATM’s owner may charge a separate surcharge fee in order to withdraw cash.
  • ATM fee refund: Synchrony Bank will refund up to $5 per month in ATM surcharge fees.
  • Overdraft fee: None.

Money market accounts technically work a little differently than savings accounts. But for you, the consumer, Synchrony Bank’s money market and savings accounts essentially operate the same way. One big difference is that the money market account offers a lower interest rate than their savings account. One other important difference is that you can actually request and write checks using your money market account, whereas the savings account doesn’t come with this option.

Otherwise, you can still expect the same withdrawal limits dictated by Federal Regulation D. You’re stuck with six transactions (minus ATM withdrawals) per month, lest the bank close your account for “misuse.” You’ll also incur few, if any, fees with this account. Given that these two accounts are so similar, we recommend going with the regular savings account, because that one offers a truly exceptional interest rate with the same terms of this money market account.

How to get Synchrony Bank’s money market account

You can easily open up a money market account with Synchrony Bank online. You’ll need to provide some basic identifying information, such as your Social Security number and date of birth (this is required of all banks in order to comply with the USA PATRIOT Act). You’ll also need to provide a government-issued ID, such as a driver’s license.

LEARN MORE Secured

on Synchrony Bank’s secure website

Member FDIC

How Synchrony’s money market account compares

Synchrony Bank offers exceptional rates on their savings accounts and CDs. However, their money market account is a little underwhelming in the interest rate department. If you’re looking for the best money market account rates, you can easily find better accounts at other banks and credit unions.

However, Synchrony Bank still does stand out in the fee department. This account — like Synchrony’s savings account — comes with very little fees attached.

Synchrony Bank IRA rates

These IRA CDs are virtually identical to Synchrony’s regular CDs — and still, the fairly high minimum deposit requirements may exclude some savers.

Term

APY

3-months

0.75%

6-months

1.00%

9-months

1.25%

12-months

2.25%

18-months

2.15%

24-months

2.45%

36-months

2.55%

48-months

2.65%

60-months

2.85%

As of 5/22/2018.

  • Minimum opening deposit: $2,000
  • Minimum balance to earn APY: $2,000
  • Early withdrawal penalty: For CDs of 12 months or less, you’ll pay 90 days’ worth of interest. For CDs of between 12 months up to 48 months, you’ll pay 180 days’ worth of interest. For CDs over 48 months, you’ll pay 365 days’ worth of interest.

These IRA CDs work just like Synchrony Bank’s regular CDs, with one exception: they play by the rules of IRA accounts. That means you can open them up within a Roth or traditional IRA, complete with all of the rules governing these two accounts.

Just like Synchrony’s regular CDs, these IRA CDs come with some fairly high minimum deposit requirements. This will exclude some people who can’t come to the table with a full $2,000 — but for those folks, Synchrony Bank has another option: the IRA money market account (discussed below).

If you need to withdraw your money early (if you decide to move it to another company to invest in the stock market, for example), you’ll still face an early withdrawal penalty. However, if you are at the age where you need to take required minimum distributions from CD money held in a traditional IRA, Synchrony Bank will waive the early withdrawal penalty.

How to open an IRA CD with Synchrony

You can easily open up an IRA CD account with Synchrony Bank online. You’ll need to provide some basic identifying information, such as your Social Security number and date of birth (this is required of all banks in order to comply with the USA PATRIOT Act). You’ll also need to provide a government-issued ID, such as a driver’s license.

LEARN MORE Secured

on Synchrony Bank’s secure website

Member FDIC

How Synchrony Bank’s IRA CD rates compare

Synchrony’s IRA CDs are again very close to being the top IRA CD rates around. However, there are a few banks offering higher rates on IRA CDs, so if this is your preferred retirement savings option, it may pay to shop around.

Synchrony’s IRA money market account

This money market account — like Synchrony’s regular money market account — doesn’t offer very high rates.

APY

Minimum Balance Amount

1.05%

$0

As of 5/1/2018.

  • Minimum opening deposit: $250
  • Monthly account maintenance fee: $0
  • ATM fee: None; however, the ATM’s owner may charge a separate surcharge fee in order to withdraw cash.
  • ATM fee refund: Synchrony Bank will refund up to $5 per month in ATM surcharge fees.
  • Overdraft fee: None.

If you need a bit more flexibility in your retirement savings or can’t afford the minimum deposit requirement of Synchrony’s IRA CDs, you might want to consider their IRA money market account.

You can deposit or withdraw cash at any time, however you’re still subject to Federal Regulation D that limits you to six transactions per month. Since this is an IRA account, you’ll also need to stick to the rules of whichever IRA you choose — Roth or traditional — lest you end up paying a tax penalty at the end of the year.

However, in return for this flexibility and low cash requirement to open an account, you’ll pay for it with lower interest rates. You can earn much higher rates on your retirement savings with Synchrony Bank’s IRA CDs, or even with an IRA savings or money market account at another bank entirely. In fact, many of the best money market accounts out there also offer you the ability to open them as an IRA.

How to open an IRA money market account with Synchrony

You can easily open up an IRA money market account with Synchrony Bank online. You’ll need to provide some basic identifying information, such as your Social Security number and date of birth (this is required of all banks in order to comply with the USA PATRIOT Act). You’ll also need to provide a government-issued ID, such as a driver’s license.

LEARN MORE Secured

on Synchrony Bank’s secure website

Member FDIC

Overall review of Synchrony’s banking products

We really like Synchrony Bank for their low-fee, high-yielding savings products, especially their savings account and CDs. These accounts are among the top contenders for highest interest rates available.

However, Synchrony’s money market account falls a bit short in the interest rate department. Once upon a time, money market accounts offered higher interest rates than savings accounts, but today that’s often not true — and Synchrony Bank is no exception.

On the whole, however, Synchrony is a great option for people looking for high interest rates on their savings — just skip their money market account.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Lindsay VanSomeren
Lindsay VanSomeren |

Lindsay VanSomeren is a writer at MagnifyMoney. You can email Lindsay here

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Advertiser Disclosure

Earning Interest

The Best CD Rates – May 2018

Any opinions, analyses, reviews or recommendations expressed in this articles are those of the author's alone, and have not been reviewed, approved or otherwise endorsed by any lender or provider of the products listed.

The Best CD Rates
iStock

Updated May 22, 2018

If you are looking for a better yield on your savings, a high rate CD (certificate of deposit) offered by an online bank could be a good option. Internet-only banks offer much better interest rates than traditional banks. For example, a 12-month CD at Bank of America would require a $10,000 minimum deposit and would pay only 0.07%. At an online bank, you could earn 2.25% with no minimum deposit. (If you would rather get a savings account or money market with no time restriction, look at the best savings accounts or best money market accounts).

The Best CD Rates in May 2018

This list is updated monthly, and competition continues to intensify. Here are the accounts with some of the best CD rates:

Term

Institution

APY

Minimum Deposit Amount

1 year

Synchrony Bank

2.25%

$2,000

2 years

Colorado Federal Savings Bank

2.51%

$5,000

3 years

MainStreet Bank

2.70%

$500

5 years

American Bank

3.00%

$500

See a full list of the best CD rates below.

  • 3 months – 5 years: Synchrony Bank – 0.75% APY – 2.85% APY; $2,000 minimum deposit

Synchrony Bank
Synchrony used to be a part of GE, and now has an online bank that pays competitive rates. The online deposits are used to fund their store credit card portfolio – and the company is publicly traded. Your deposit will be insured up to the FDIC limit. In a rising rate environment, this is a great way to get a high interest rate without locking yourself into a long term.

  • 12-months: 2.25% APY
  • 24-months: 2.45% APY
  • 36-months: 2.55% APY
  • 60-months: 2.85% APY

LEARN MORE Secured

on Synchrony Bank’s secure website

Member FDIC

  • 1 year – 5 years: Barclays Bank – 2.20% – 2.80% APY, no minimum deposit

12 Month Online CD from Barclays Barclays is one of the oldest banks in the world. Although they’re based in London, they do have a U.S. presence and offer competitive rates on their CDs and savings account. Currently, they’re offering some of the highest CD rates in the market, and they have an edge over the rest of the institutions on this list: they don’t require a minimum balance to earn the APY or open an account. Deposit as little or as much as you’d like into a term of your choice and you can start earning interest as long as the account is funded within 14 days of opening the CD. Additionally, your funds are insured through the FDIC.

  • 1-year: 2.20% APY
  • 2-year: 2.30% APY
  • 3-year: 2.35% APY
  • 5-year: 2.80% APY

LEARN MORE Secured

on Barclays’s secure website

Member FDIC

  • 6 months – 6 years: Goldman Sachs Bank USA – 0.60% APY – 2.85% APY; $500 minimum deposit

Goldman Sachs Bank USA
Our advertiser Marcus by Goldman Sachs is the online consumer bank of Goldman Sachs Bank USA (the large investment bank). Your funds are FDIC insured, and Goldman offers very competitive rates. Even better: there is only a $500 minimum deposit. So, if you don’t have enough money to meet the minimum deposit of the other banks on this list, or you are looking for another bank for your savings, GS is a good option. It also doesn’t hurt that they also offer some of the best CD rates in the market today. You can currently earn an outstanding 2.20% APY by only committing to a 12-month term. Here are their other rates:

  • 2-year: 2.30% APY
  • 3-year: 2.35% APY
  • 5-year: 2.80% APY
  • 6-year: 2.85% APY

LEARN MORE Secured

on Goldman Sachs Bank USA’s secure website

Member FDIC

  • 3 months – 5 years: Ally Bank – 1.00% APY – 2.60% APY; $0 minimum deposit (higher APY with higher deposit)

Ally Bank
Ally is one of the largest internet-only banks in the country. Ally’s former advertising campaign made it very clear: no branches = higher rates. And Ally has consistently paid some of the highest rates in the country across savings accounts, money market accounts and CDs. For savers with fewer funds, Ally is unique. There is no minimum deposit to open a CD. However, if you have more money, you can earn a higher APY. If you have more than $25,000 to deposit, you can earn between 1.50% APY and 2.60% APY. And one of our favorite features of Ally: they often (although not always) offer preferential rates on renewal. Far too often banks give the biggest bonuses to new customers, but Ally has done a good job of rewarding its existing customers. All deposits at Ally are FDIC insured up to the legal limit.

  • 12-months: 2.10% APY (less than $5k); 2.15% APY ($5k minimum deposit) and 2.25% APY ($25k minimum deposit)
  • 18-months: 2.15% APY (less than $5k); 2.20% APY ($5k minimum deposit) and 2.30% APY ($25k minimum deposit)
  • 3-year: 2.40% APY (less than $5k); 2.45% APY ($5k minimum deposit) and 2.50% APY ($25k minimum deposit)
  • 5-year: 2.40% APY (less than $5k); 2.50% APY ($5k minimum deposit) and 2.60% APY ($25k minimum deposit)

LEARN MORE Secured

on Ally Bank’s secure website

Member FDIC

  • 12-Month CD: Capital One – 2.25% APY, No minimum deposit

12 Month 360 CD from Capital OneCapital One is famous for its credit card business. It is now getting aggressive with CD rates. There is no minimum deposit, which make these CDs comparable to Barclays’ CDs. Capital One CDs are FDIC insured, up to the federal maximum. And you get the comfort of depositing your money with a very large, publicly traded bank. Here are their other rates:

  • 18-month: 2.30% APY
  • 2-year: 2.35% APY
  • 3-year: 2.40% APY
  • 5-year: 2.80% APY

LEARN MORE Secured

on Capital One’s secure website

Member FDIC

  • 1-Year CD from a Credit Union: PenFed Credit Union – 2.12% APY, $1,000 minimum deposit

12 Month Money Market Certificate from PenFed Credit UnionPenFed is a credit union that offers very competitive interest rates. You need to join the credit union in order to benefit from their products. If you have a military or government affiliation, it is free to join. Otherwise, you would need to join an organization like Voices for America’s Troops, which costs $17.00. Once you are a member, you can open PenFed products (including this certificate) online. Your deposit would be insured by the NCUA, which is the National Credit Union Administration. There is a $1,000 minimum deposit for the one-year certificate.

LEARN MORE Secured

on PenFed Credit Union’s secure website

NCUA Insured

  • 2-Year CD: Colorado Federal Savings Bank – 2.51% APY, $5,000 minimum deposit

24 Month CD from Colorado Federal Savings Bank
Colorado Federal Savings Bank is new to our list this month. Despite having the state of Colorado in their name, this institution doesn’t have any branches and serves customers nationwide through their online banking platform. They’ve been around since 1990 and have over $1 billion in assets. Currently, they’re offering a 24 month CD for 2.51% APY with a minimum deposit amount of $5,000. While they’re an online-only bank, they don’t currently have a mobile app.

LEARN MORE Secured

on Colorado Federal Savings Bank’s secure website

 

  • 2-Year CD from a Credit Union: Greenwood Credit Union – 2.80% APY, $1,000 minimum deposit

Greenwood Credit Union
Greenwood Credit Union is open to anyone and everyone. The only requirement to become a member with this credit union is to open their Share Savings Account with a minimum deposit amount of $5. You’ll also have to maintain that amount in the account to remain an active member. When you go to apply for membership, you can also add that you want to open their 24 month CD. You’ll need to deposit $1,000 in order to earn their outstanding 2.80% APY. This deposit will be in addition to the $5 to open the Share Savings Account. Accounts can be managed online or through their mobile app. Deposits made to Greenwood Credit Union are insured by the NCUA.

LEARN MORE Secured

on Greenwood Credit Union’s secure website

 

  • 3-Year CD: Mainstreet Bank – 2.70% APY, $500 minimum deposit

3 Year CD from MainStreet Bank
Mainstreet Bank is located in Northwern Virginia and has a nationwide presence through their mobile and online banking platforms. Established in 2004, they currently have over $800 million in assets. With only a minimum of $500, you can open a 3 year CD with a 2.70% APY. All deposits made to MainStreet Bank are insured by the FDIC.

LEARN MORE Secured

on MainStreet Bank’s secure website

  • 3-Year CD from a Credit Union: Latino Credit Union, 2.60% APY, $500 minimum deposit

Latino Credit Union
Latino Credit Union surprises us with their outstanding rate of 2.60% on a 3-year CD. As a bonus, the minimum amount to open the account is five times lower than Live Oak Bank’s deposit requirement. This credit union is open to anyone who is willing to donate $10 to join the Latino Community Development Center (LCDC). Deposits are NCUA insured.

LEARN MORE Secured

on Latino Credit Union’s secure website

  • 5-Year CD: American Bank – 3.00% APY, $500 minimum deposit

60 Month CD from American BankAmerican Bank is a state-chartered bank headquartered in Allentown, PA. They have over $500 million in assets and have experienced steady growth year over year. They’re currently offering the most competitive rate on a 5-year CD provided by an online bank. All you need is $500 to deposit to open the account. They have an online banking platform as well as a mobile app.

LEARN MORE Secured

on American Bank’s secure website

  • 5-Year CD from a Credit Union: Northwest Federal Credit Union – 3.05% APY, $1,000 minimum deposit

5 Year Share Certificate from Northwest Federal Credit UnionNorthwest Federal Credit Union was established in 1947 and has grown to obtain over $3 billion in assets. This credit union is open to anyone willing to join one of their Community Partner Organizations. They give you the opportunity to do so when you go to fill out your membership application. In addition to banking online, this credit union also has a mobile app.

Northwest Federal Credit Union offers incredible rates on their 5 year CDs. Their rates are as follows:

  • $1,000-$99,000: 3.05% APY
  • $100,000-$249,999: 3.10% APY
  • $250,000+: 3.15% APY

LEARN MORE Secured

on Northwest Federal Credit Union’s secure website

3 Questions To Ask Before You Open A CD

1. Should I just open an online savings account instead?

With a CD, the saver and the bank make stronger commitments. The saver promises to keep the funds in the account for a specified period of time. In exchange, the bank guarantees the interest rate during the term of the CD. The longer the term, the higher the interest rate – and the higher the penalty for closing the CD early. With a savings account, there are few promises. You can empty the account without paying a penalty and the bank can change the interest rate at any time.

If you have a high level of confidence that you do not need to touch the money for a specified period of time, a CD is a much better deal. However, if you think you might need to use the money in the next couple of months, a savings account is a much better idea.

You can earn a lot more interest with a CD. Imagine you have $10,000 and know that you do not need to touch the money for two years. In a high-yield savings account earning 1.60%, you would earn $322.56 over two years. If you put that money into a 2.51% CD, you would earn $508.30. Given the ease of switching to an online CD, the extra interest income is easy money.

2. What term should I select?

The early withdrawal penalties on CDs can be significant. On a 1-year CD, 90 days is a typical penalty. And on 2 and 3 year CDs, a 6-month penalty is common. The impact of the penalty on your return can be significant. If you opened a one-year CD with a 2.20% APY and closed it after six months, you would forfeit half of the interest and earned only 1.11%. You would have been better off with a savings account paying 1.60%.

The worst case scenario is with the longest CDs. 5-year CDs usually have a one-year penalty for taking out funds early. If you open a 5-year CD and close it quickly, you could actually end up losing money.

Given the early penalties, you need complete confidence that you will not need to withdrawal the money early. Ask yourself this question: “do I have 90% confidence that I will not need access to the cash during the CD term?” If you don’t have confidence, go for a shorter term or a savings account.

3. Should I consider my local bank or credit union?

The interest rates shown in this article are all from online banks that offer products nationally. Our product database includes traditional banks, community banks and credit unions. If traditional banks offered better rates, they would have been featured in this article. The internet-only banks have dramatically better interest rates. That should not be surprising. Because internet-only banks do not have branches, they are able to pass along their cost savings to you in the form of higher interest rates.

However, you can always visit your local bank or credit union and ask them to beat the rates listed in this article. The chance of getting a better deal is extremely low (remember that Bank of America is only paying 0.07%), but you can try.

How To Find The Best Account

If you don’t find an account that meets your needs in this article, you can use the MagnifyMoney CD tool to find the best rate for your individual needs. Input your zip code, deposit amount and term. The tool will then provide you with CD options, from the highest APY to the lowest.

You can learn more about us and how we make money here.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Nick Clements
Nick Clements |

Nick Clements is a writer at MagnifyMoney. You can email Nick at nick@magnifymoney.com

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