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Best of

The Best Online Banks in 2020

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

The costs of operating brick-and-mortar bank branches are growing, which may explain why traditional financial institutions have ratcheted up fees and kept their rates stubbornly low. Meanwhile, online bank and credit union products have consistently offered lower fees and higher rates than those offered by conventional banks. Since online banks incur lower overhead costs, they can pass the savings on to consumers in the form of higher yields and lower fees.

Despite the decline in the federal funds rate in 2019 and the corresponding reductions in deposit yields at financial institutions nationwide, average savings account rates at online banks and credit unions are still well above those offered by their brick-and-mortar counterparts. As of January 2020, the yields paid on online savings deposits were averaging 1.75% APY, while savings accounts at brick-and-mortar banks were averaging a mere 0.27% APY.

Regardless of the rate environment, historical trends show that online banks outperform brick-and-mortar rates. It’s clear that online banks are the best option for consumers who want higher returns on their deposits. But for some consumers, it can still be daunting to make the switch to online banking. In the second edition of our Best Online Banks roundup, we hope to make the choice a bit easier for those looking to get an online account.

Best online banks for CDs

How we picked the top five: We chose banks with the highest 1-year CD rates that have consistently ranked in MagnifyMoney’s Best CD Rates page for the last two years.

#1 Goldman Sachs Bank USA — Winner

Goldman Sachs Bank USA, which operates the brand Marcus by Goldman Sachs®, is the consumer banking arm of financial industry giant Goldman Sachs. Goldman Sachs Bank USA has offered consistently high CD rates, and has been boosting their yields in a falling-rate climate — even as other competitors keep dialing back their own rates.

Ken Tumin, founder of LendingTree-owned, lauds Goldman Sachs Bank USA for its rates and its product line. “The addition of No-Penalty CDs with competitive rates has helped make Goldman Sachs Bank USA one of the best online banks for CDs,” he said. No-Penalty CDs provide you with the flexibility to withdraw your full balance at any time, starting seven days after you fund the account.

Goldman Sachs Bank USA’s high-yield CDs each require a $500 minimum deposit. You have 30 days to fully fund your account after you open it, although your interest rate locks in whenever you reach the $500 minimum deposit level.

If you hit the $500 minimum deposit level within 10 days of opening your CD account, the bank’s 10-Day CD Rate Guarantee kicks in, ensuring you get the highest published interest rate and APY the bank offers for that term. This helps you avoid the possibility of a rate reduction after you open the account but before you fully fund it.

#2 Ally Bank

12 Month High Yield CD from Ally BankLast year’s winner, Ally Bank, offers competitive rates across three different CD account types: High Yield CDs, Raise Your Rate CDs and No Penalty CDs. Ally Bank’s No Penalty CDs are of particular interest in today’s rate climate, as they allow you to avoid paying the price for closing out your certificate in exchange for one with a higher rate.

Ally Bank CDs rank highly for their rates as well as their lack of a minimum deposit requirement, which lets savers with low balances benefit from Ally Bank’s products. Whether you have a low balance or a high balance, you can snag great rates on Ally Bank’s 18-month and 3-year High Yield CDs, as well as its No Penalty CD.

#3 Capital One

12 Month 360 CD from Capital OneCapital One 360 is the online banking brand of Capital One. Capital One 360 offers a convenient online banking experience with very competitive interest rates on its full range of deposit products.

Currently, the highest Capital One 360 CD rates are concentrated on its mid-term accounts; on the whole, its rates are just short of those from Goldman Sachs Bank USA and Ally Bank. Capital One also features no minimum deposit requirement to open its CDs.

#4 Synchrony Bank

12 Month CD from Synchrony BankOffering both standard CDs and IRA CDs, Synchrony Bank has competitive rates across its entire line of CDs. However, Synchrony requires at least $2,000 to open an account, so this may place the accounts slightly out of reach for certain customers looking to save.

#5 Barclays

12 Month Online CD from BarclaysWith its roots in London 300 years ago, Barclays has made a big name for itself in the U.S. with its online bank, which offers consistently competitive rates. Over the past two years, it has managed to ride the wave of rate changes in both directions, with its rates not falling far behind its predecessor on this list.

Barclays doesn’t offer as wide a variety of CD types and terms as some other competitors, matching most closely with Capital One 360’s lineup. Still, Barclays promises no hidden minimums or fees, making for a more straightforward savings experience.

Best online banks for savings accounts

How we picked the top five: We chose banks that have maintained the highest savings account rates and consistently ranked in MagnifyMoney’s Best Savings Account page for the last two years.

#1 Goldman Sachs Bank USA — Winner

Goldman Sachs Bank USA isn’t just the best choice for CDs — it is also the best online bank for its savings account. The Goldman Sachs Bank USA Online Savings Account has consistently held a spot on MagnifyMoney’s Best Savings Account list for two years, and has sustained leading rates amid falling industry yields over the past year.

Tumin calls out one user-friendly fee in particular as a reason for its rise. “Goldman Sachs Bank USA is one of the very few banks that does not charge a fee for sending a wire transfer,” he said. Free wire transfers allow you to send money quickly, safely, and inexpensively.

Marcus by Goldman Sachs doesn’t require a minimum deposit to open a new Online Savings Account, (although you’ll have to make some sort of deposit within 60 days of opening to avoid account closure), nor does the account require a minimum balance to start earning interest. You also won’t face transaction fees on your account, allowing your money to really grow.

#2 Barclays

Online Savings Account from BarclaysBarclays Bank currently offers a savings rate that’s competitive with Goldman Sachs Bank USA. However, the Barclays Online Savings Account hasn’t quite held onto a consistent ranking on our Best Savings Account list over the years. Still, you won’t have to worry about meeting a minimum deposit amount or grappling with a monthly fee to benefit from this great rate, though.

#3 Synchrony Bank

High Yield Savings from Synchrony BankSynchrony Bank’s High Yield Savings account certainly delivers on its name with a competitive interest rate on all balances, earning even more than Goldman and Barclays as of this writing. Plus, there’s no monthly fee.

As is the case with all savings accounts, you’re limited to six outgoing transactions per statement cycle. However, unlike most institutions, Synchrony doesn’t charge an extra fee on every additional transaction, though they could close your account if you keep it up.

#4 American Express National Bank

High Yield Savings Account from American Express National BankNew to our list this year, American Express National Bank has often hovered among these competitors for a while, finally breaking through for 2020. It’s a simple account, with no minimum deposit or balance requirement, nor a monthly fee to worry about.

There’s no mobile banking app connected to American Express National Bank, which is the equally simple online bank offering from credit card giant American Express. You can access your American Express National Bank’s banking accounts online or over the phone, with some funding options available by mail, too.

#5 Ally Bank

Online Savings Account from Ally Bank Ally Bank has remained a constant presence on our best-of lists, especially for its competitive, user-friendly Online Savings Account. You won’t need to worry about having a high balance to open or maintain this account, since Ally doesn’t require either. It also doesn’t charge a monthly service fee.

In addition to its high rates, Ally Bank offers top of the line online transfer capabilities: it’s a feature that provides a more seamless banking experience, but is often overlooked by other banks. With its quick turnaround and zero to low fees, Ally’s transfer policies make it much easier to access your money, especially in case of emergency.

Best online banks for money market accounts

How we chose the top five: The winner of best bank for money market accounts is the institution that had the highest money account rate and consistently held a spot on MagnifyMoney’s Best Money Market page for two years.

#1 Premier Members Credit Union — Winner

Ending Goldman Bank USA’s winning streak, Premier Members Credit Union offers a special competitive money market account rate that has consistently ranked on MagnifyMoney’s Best Money Market page for two years.

“Premier Members Credit Union’s Money Market has a unique reversed tiered system that offers a big rate advantage for those with small balances,” said Tumin. As of this writing, this Money Market Account offers its top 3.00% APY on balances up to $2,000, while its top tier of $250,000 and over earns 0.25% to 0.30% APY. You only need $5 to open a new Money Market Account. Another plus is the account’s inclusion of paper checks for further convenient access.

Premier Members Credit Union began in 2015 as a merger between Boulder Valley Credit Union and Premier Members Federal Credit Union. Membership is open to residents and employees within select Colorado communities, employees and family members of select partner companies and relatives of current members. You can also become eligible by joining the Impact on Education charity.

#2 Virtual Bank

eMoneyMarket from Virtual Bank Virtual Bank’s competitive rate applies when you open a new eMoney Market account with at least $100 in new money. The interest rate applies to all balances of at least $0.01, and interest is paid monthly. There’s no minimum balance requirement, but keeping at least $100 in the account allows you to waive the $5 monthly fee.

Virtual Bank is an online division of IBERIABANK, which was founded in New Iberia, La., in 1887. Virtual Bank is available online and on mobile, through your browser and mobile app offerings.

#3 Sallie Mae Bank

Money Market from Sallie Mae BankLast year’s winner, Sallie Mae Bank still rocks the top three this year, offering a rate well above the competition on its Money Market Account. While the name Sallie Mae is typically associated with student loans, Sallie Mae Bank offers some great banking products designed to help you grow your savings efficiently.

Interestingly, Sallie Mae Bank’s money market rate is higher than its own savings account, whereas other online banks tend to focus more on their savings accounts. This account doesn’t require a minimum balance, nor does it charge a monthly fee. Plus, it includes check-writing capabilities, a feature that experts like Tumin consider the hallmark of a true money market account.

#4 Self-Help Credit Union

Money Market from Self-Help Credit UnionFounded in 1980, Self-Help Credit Union is based in Durham, N.C., with 29 branches total throughout North Carolina, South Carolina and Florida. In addition, there are other institutions under the Self-Help brand, including Self-Help Federal Credit Union, Center for Responsible Lending and Self-Help Ventures Fund.

The Self-Help Credit Union Money Market Account’s high-yield interest rate requires a $500 minimum deposit and maintained balance. Keeping at least that much in the account will also help you avoid the $5 monthly fee.

You can join Self-Help Credit Union if you live, work, worship or attend school in select eligible counties, meet family or employer affiliation criteria or are/become a member of the Center for Community Self-Help (requires a $5 fee).

#5 Ally Bank

Money Market Account from Ally BankWith more of a focus on its other savings accounts, Ally Bank might have allowed its money market account to dip slightly. Still, the account offers a solid rate consistently enough to make this list. In addition, it does well in terms of service: There’s no minimum opening deposit amount or minimum balance amount needed to maintain the account. Plus, we give it credit for its check-writing abilities, which not many banks offer.

Best online banks for checking accounts

How we chose the top five: Our best online banks for checking needed to check off a few boxes: charge no monthly maintenance fees, offer out-of-network ATM fee refunds and consistently rank in MagnifyMoney’s Best Checking Account page for the last two years.

#1 Aspiration — Winner

If you’re looking for both a great checking account and a way to give back to your community, Aspiration is the bank for you, as it donates 10% of its revenue to charities.

The Aspiration Spend & Save Account is a cash management account that earns at a pretty high interest rate. Note that while the Save side of the account earns the high APY, the Spend side also earns cashback. You can earn up to 5% cashback at businesses part of Aspiration’s Conscience Coalition, which focus on “building a better world;” 0.5% at merchants with a high AIM (Aspiration Impact Measurement) score, which measures for sustainability; and 0.1% on all other purchases. It doesn’t require a minimum deposit to open or a minimum balance to maintain the account.

You get to save money when using ATMs, as Aspiration allows you free access to every ATM in the world, plus five ATM surcharge reimbursements each month. This user-friendly ATM policy is Tumin’s favorite of Aspiration’s features.

As for fees, Aspiration implements a Pay What Is Fair system. It works just like it sounds — essentially, you get to choose how much you want to pay for the bank’s products, even if it’s $0. Account holders set their own fee on the account dashboard, which then gets debited monthly from their Aspiration account or another linked account. Aspiration hopes and trusts its customers will agree to operate on a two-way basis of trust and fairness. For extra services like wire transfers, the bank promises to charge only the cost of completing that service.

Aspiration is not a bank; rather, it is a an SEC-registered broker-dealer, so the FDIC insurance is provided by partner banks. Aspiration keeps the cash you deposit in a Spend & Save account with multiple partner banks, which provide FDIC insurance of up to $2 million.

#2 Simple

Checking Account + Protected Goals Account*Another fintech cash management account takes the number two spot: Simple’s online checking account. This account includes a Simple Visa® Debit card, paper checks and built-in savings and budgeting features. There’s no monthly fee and no minimum balance requirement.

The interest-earning aspect at Simple comes from its savings feature, the Protected Goals account. The money you keep in Goals earns 1.90% APY if you have $10,000 or more, or 1.75% if you have less than that. Just keeping money in the checking account will accrue 0.01% APY.

Like Aspiration, Simple is not a bank, so it sweeps your deposits into accounts at BBVA USA, which provides FDIC insurance up to the legal limit. Founded in 2009, Simple is based in Portland and is accessible online, on mobile and over the phone.

#3 Consumers Credit Union

Free Rewards Checking (High)Consumers Credit Union’s free Rewards Checking account doesn’t quite earn interest outright; instead, you’re required to meet certain qualifications first to determine your rate on balances up to $10,000. Meeting the requirements also guarantees unlimited reimbursement for any and all ATM fees.

The starting 3.09% rate requires you to enroll in eDocuments, make at least 12 debit card purchases totaling at least $100 each month and receive direct deposits or ACH credit totaling at least $500 per month. Meet all those requirements, plus spend at least $500 in CCU Visa Credit Card purchases each month, to earn the 4.09% APY, or spend at least $1000 in CCU Visa Credit Card purchases each month to snag the top rate of 5.09% APY. If your balance surpasses $10,000, you will earn significantly lower rates.

Rewards Checking doesn’t charge a monthly fee and includes unlimited check-writing abilities. Consumers Credit Union provides members with access to over 30,000 ATMs and over 5,000 shared branches. Founded in 1930 and headquartered in Lake County, Ill., Consumers Credit Union opens membership up to anyone. All you have to do to join is become a member of the Consumers Cooperative Association with one-time $5 Membership fee.

#4 Ally Bank

Interest Checking AccountAlly Bank’s Interest Checking account has no monthly fees and refunds up to $10 in third-party ATM fees each month. The account also earns interest, where your balance determines your rate. Balances of $15,000 and over can earn the account’s higher rate, although neither rate stands out too much.

Still, standard checking account rates are generally low everywhere. Ally’s Interest Checking account is better used for its low fees, like their free overdraft transfers, to really get the most out of this kind of account.

#5 Charles Schwab Bank

High Yield Investor Checking Charles Schwab Bank, a division of financial services giant Charles Schwab, was launched in 2003. It currently offers a savings account and a checking account, the Schwab Bank High Yield Investor Checking account, which earns at a decent rate. Plus, it comes with no monthly fees, minimum deposit requirements or minimum balance requirements. The account includes a Platinum Debit Card, which you can use at any ATM in the world. If you face any foreign ATM fees, Charles Schwab Bank provides unlimited ATM fee rebates.

When you open a High Yield Investor Checking account, you’ll be opening a linked Schwab One brokerage account at the same time, as well. These are two separate accounts, although accessible through the same Charles Schwab login.

Best online banks for checking accounts

How we chose the top five: The winners are the online banks that ranked best among the four categories above: checking, savings, money markets and CDs.

#1 Ally Bank

Ally Bank remains the Top Online Bank of 2020, having appeared in all of the categories above.
From its 1919 beginnings as a financing division of GM, Ally Bank is now one of the biggest names in the online banking industry. Its rates remain consistently competitive and its fees are consistently low to nonexistent. Further, Ally provides customers with user-friendly features and perks for a better overall banking experience.

“Ally offers easy online account management, which includes a solid ACH bank-to-bank transfer capability for all of their accounts” Tumin noted. He also praises Ally for “keeping competitive” on its savings account and maintaining ease for customers.

#2 Goldman Sachs Bank USA

Goldman Sachs Bank USA offers some of the highest rates in the industry, topping the lists twice for best CDs and best savings accounts. At the time, these are the only kinds of accounts Goldman Sachs Bank USA offers. Still, there is some variety with its high-yield CDs and no-penalty CDs, which allows one to make a withdrawal without facing a heavy penalty. Its CDs require a minimum deposit of $500, while the online savings account can be opened with any amount. They’re all excellent options thanks to their high yields and lack of monthly service fees.

#3 Barclays

Barclays is one of our top online banks thanks to its CDs and savings account. These are the only kinds of accounts available through Barclays U.S. bank division. Neither of these accounts require a minimum deposit to open, which allows you to start saving no matter which amount you can set aside, and you won’t face monthly service fees for owning these accounts.

#4 Synchrony Bank

Synchrony Bank appears twice in our roundup categories as one of the best banks for CDs and one of the best banks for savings accounts. These placements land the bank in the second spot for top online banks. Not only does this mean that Synchrony offers some of the highest rates, but it also signals that the bank has been consistent in its rates offerings.

In addition to those accounts, Synchrony also offers a money market account, IRA CDs and an IRA money market account; there is no checking account at this time. If you elect to get an ATM card from Synchrony, you can use any ATM displaying the Plus or Accel logos without being charged by Synchrony. You can also receive ATM rebates up to $5 per statement cycle.

#5 Capital One 360

Capital One 360 appears once on this list for its consistently competitive CD rates, where it placed third. Its CDs continue to perform competitively, especially on its 1-year and longer-term accounts. Capital One is also a solid CD choice for its lack of a minimum requirement. You are allowed to add up to 10 beneficiaries to your Capital One 360 CDs as well.

Best overall online bank

How we chose the best overall bank: The best overall online bank is the institution that averaged the top ranking in the four categories above: checking, savings, money markets and CDs.

Winner: Ally Bank

Ally Bank keeps its crown as the Best Overall Bank in 2020, offering a top-five account in all four categories above. “Ally Bank offers the best combination of savings account, checking account and CDs,” Tumin said of Ally’s win. “All of these accounts have a long history of competitive rates and features.”

Ally Bank’s vast spread of products makes it easy for you to grow your savings in a number of ways. Its CDs provide a variety of high-rate savings options. Its online savings account consistently offers a top rate, despite declining rates elsewhere. Its money market account and interest checking account offer much by way of accessibility and low fees.

Ally Bank started as GMAC in 1919, the financing division of GM and evolved over time to keep up with consumers’ needs and demands for a better bank. In 2009, GMAC became the online Ally Bank, focused on transparency with its customers and greater value on its accounts. Since then, Ally has grown its offerings to include not only auto financing, but also high-yield deposit accounts, credit cards, investment accounts and more. Plus, its existence as an online bank means greater returns for you and more convenient 24/7 access.

Best new online bank

How we chose the winner: To find the best new online bank, we found the bank that was launched within the last 12 months and has held the highest APY since it’s launch.

Winner: BrioDirect

BrioDirect is a competitive new bank to keep your eye on. “BrioDirect has maintained one of the highest rates for a low-minimum online savings accounts since it was launched in the summer of 2019,” Tumin said.

The high-yield savings account highlighted requires a $25 minimum deposit and minimum balance to earn interest. There’s no monthly fee.

BrioDirect also offers a wide variety of high-rate CDs from 30-day to 60-month terms. As of writing, its short- and mid-term CDs fare better in today’s rate climate. These high-rate CDs require at least $500 to open.

BrioDirect is an online sub-brand of Sterling National Bank, so deposits are considered under one banking roof for FDIC insurance purposes.


Should I switch to an online bank account?

Switching to an online bank could be the right move if you’re really trying to boost your savings and you’re tired of the low yields a traditional bank provides. Online banks typically help you avoid high account fees and balance minimums, too. Certainly, a big difference is the lack of physical branches. Still, online banks offer user-friendly online and mobile interfaces for increased convenience.

Even if you’re not convinced it’s time to ditch your big bank in favor of one of our picks, you don’t have to take an all-or-nothing approach to online banking. Often the biggest deterrents when people consider moving their banking online are that they have no physical branch location to deposit cash and no bank representative to talk to in person.

But “it doesn’t need to be all or nothing,” Tumin said. “If you have a local bank, you can do most of your banking with an online bank and have a checking account with your favorite local bank.”

With this strategy, you can get a feel of how to transfer money online and then start transferring more money to the savings account, he added. You could also simply keep your accounts linked for the easier cash access. To really take advantage of an online bank’s high rates, you could keep the majority of your funds in a high-yield account to boost your savings more efficiently.

If you find that you’re comfortable with online banking, then you can either make the switch completely or split your money between your online and local bank depending on your preferences.

Choosing the right bank account

Choosing the right bank accounts depends entirely on you and what’s important to you. If having a physical branch location nearby is part of your ideal banking experience, then an online bank won’t be the right place to open all your accounts. Perhaps you don’t need full service branches, just easy ATM access. Maybe you’re all for the high-yield accounts, typically found at online banks. Determining these preferences and necessities will help you narrow your search.

Choosing a savings account: When looking for a savings account, it’s tempting to just plop your money into the easiest option at your local bank. Unfortunately, this approach to saving won’t typically get you the highest returns. Even if you just want to set money aside, why not set it aside in an account that will earn you more money with no extra work on your part? Look for a savings account that offers a high-earning interest rate. Even better, find one that doesn’t charge a monthly fee. That way, you’ll be growing your money, not losing it to unnecessary fees.

Choosing a CD account: Finding a certificate of deposit with a high interest rate is even more crucial. After you make your initial deposit, you won’t have access to that money until the CD term ends. You’ll want to make that deposit a worthwhile investment, especially if you open a CD that’s a year long or more. Before you rush to open a new CD, always check the account’s minimum deposit requirement. Banks will typically require a minimum deposit of anywhere from $500 to $10,000 to open a certificate. Many online banks don’t require a minimum opening deposit. Still, the larger your initial deposit, the more interest you’ll earn, especially since you cannot make additional deposits throughout the CD term.

Choosing a money market account: A money market account often works like a hybrid of a savings account and a checking account. For starters, you’ll want to find a money market account with a high yield. Some banks offer higher interest rates on their money market accounts than on their savings accounts, but that’s not always the case. Plus, you may need to fork over large amounts to open the account or earn at the best rate. To get the best money market account, find one that provides an ATM card. That way, you can access your account more easily than a regular savings account. (You’re still limited to six transactions per statement cycle.)

Choosing a checking account: Finally, choosing the right checking account may be the most important financial decision, since you’ll constantly be moving money in and out of your account. The best checking accounts are those that don’t charge a monthly fee. You shouldn’t have to pay a bank to keep your money safe and accessible. Even better, find a checking account that earns interest. That way, you can grow your money in all accounts, not just your savings.

Bank fees and fine print to watch out for

Traditional bank accounts are rife with fees. From monthly service fees to overdraft fees, paying bank fees like these can really cut into the savings you’re trying so hard to build. To avoid falling into this trap, it helps to start by finding bank accounts that don’t charge monthly fees. This is especially common at online banks.

You may have to search through the fine print and account disclosures for other potential bank fees. It’s important to look for fees charged for out-of-network ATM usage, excessive transactions, account inactivity and incoming and outgoing transfers, since you could easily run into them if you’re not careful. Some online banks may even charge you for paper statements.

Another big fee that you’ll want to avoid is an overdraft fee. You won’t want to overdraft your account in the first place, but always keep an eye on your balance so it doesn’t happen by accident. You can typically find these fees in an account’s fee schedule. Some banks may require you to call or visit a branch to learn more about their fees.

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Best of

The Best Checking Account Bonus Offers

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

It’s easy to stick with the same bank your whole life. If you’re not rate-chasing for the best deals out there, all you really need from an account is convenient access to your money to get by each day. At least that way, you get to avoid the hassle of switching your money and accounts, even if it does mean you miss out on some great savings rates.

Banks realize that it’s easy to stay put, too. So in an attempt to gain some new customers, banks can offer some great bonus offers on checking accounts. The promise of a few hundred dollars just for opening an account can be enough to incentivize potential customers to open an account. These bonus offers can be so tempting, that many people chase bonus offers to try and make a few extra bucks.

When looking for bonus offers, it’s important to look past the promotional dollar amount that’s being advertised. For starters, make sure you trust a bank before opening an account with them. You don’t want to be stuck with a new bank that has terrible customer service! Also, be sure to check what’s required of you to snag that bonus offer. Often, it’s opening the new account with a certain balance and maintaining that balance for the next few months. It could also require several direct deposits posted to the account. Make sure you can fulfill these requirements before opening an entirely new bank account.

If you should see an offer you like, just be aware that you may have to open the account from a specific webpage to qualify for the bonus. Other banks could require you to visit a branch to redeem your offer, so it’s important to double check the application requirements.

The best checking account bonus offers in 2020

BankBonus*Minimum Deposit to Earn BonusWhen the deal expires
HSBCUp to $750$5,0003/1/2020
CitibankUp to $500$15,0003/31/2020
Wells Fargo$400$4,0007/31/2020
TD Bank$300 $2,500No expiration date
Huntington BankUp to $200$1,0001/07/2020
Chase$200 $251/21/2020
Fifth Third Bank$200$5004/30/2020
TD Bank$150$500No expiration date
*Terms apply


The best checking account bonus offers are — simply put — the ones with the biggest cash amounts we could find at the time of publishing. Below, we’ll detail each of the best checking account bonus offers. You’ll find out whether it’s available in your area and what the requirements you have to meet to earn the bonus.

You might also want to read more about what each account is like on its own. For example, you might want to snag the highest bonus, but what if the account normally charges a monthly fee that you can’t afford? Check it all out below.

Chase — $2,000 bonus with $250,000 minimum deposit

Offer ends 3/06/2020

Offer rules: Earn this $2,000 cash bonus by joining Chase Private Client. You’ll need to transfer at least $250,000 in qualifying new money or securities to a combination of eligible personal checking, savings and/or investment accounts and maintain the balance for at least 90 days. This excludes any You Invest, J.P. Morgan retirement accounts and CDs.

Who’s eligible: This offer is available only to existing Chase customers in select states and Washington D.C. You can redeem this offer by visiting a Chase Private Client branch of emailing an upgrade code.

Account details: Chase Private Client requires you to maintain an average daily balance of $250,000 or more. This can be in any combination of qualifying personal or business deposits and investments. Chase Private Clients gain access to further perks and benefits in banking, credit cards, loans and investing. This includes free ATM withdrawals abroad, home and auto loan specialists and free online stock and ETF trades with You Invest by J.P. Morgan.

There is no monthly service fee on Chase Private Client Checking or Chase Private Client Savings accounts. Private Client Savings Accounts earn 0.01% APY.


on Chase Bank’s secure website

Member FDIC

Chase — $1,000 bonus with $75,000 minimum deposit

Offer ends 3/06/2020

Offer rules: Earn this $1,000 bonus when you join Sapphire Banking. Within 45 days, transfer at least $75,000 in qualifying new money or securities to a combination of eligible personal checking, savings and/or investment accounts and maintain that balance for 90 days. J.P. Morgan retirement accounts and CDs are excluded from this combination.

Who’s eligible: The offer is available in select states and Washington D.C. Anyone can snag this offer as long as you meet the requirements detailed above.

Account details: Chase Sapphire Checking earns 0.01% APY. You can link your Chase Sapphire Checking account to a Chase Premier Savings account to earn higher relationship rates on the Premier Savings account. That enables higher balances to earn higher rates.


on Chase Bank’s secure website

Member FDIC

HSBC — up to $750 bonus with $5,000 minimum deposit

Offer ends 3/1/2020

Offer rules: There are two offers available here. For the $750 bonus, you can open a Premier Checking account and make recurring direct deposits totaling at least $5,000 for three consecutive consecutive calendar months from the first full calendar month after account opening.

To earn a $350 bonus instead, open an Advance Checking account and deposit at least $5,000 in new money to combined accounts within 30 calendar days of account opening and maintain at least that balance for 90 days. You must also set up recurring direct deposit for at least three consecutive months following the account opening month.

Who’s eligible: You must be a new HSBC customer to take advantage of these offers and fund your new accounts with new money. This means money not already held with HSBC.

Who’s eligible: The Premier Checking account earns 0.01% APY on balances of $5 or more but charges a hefty $50 fee that can be waived with a whopping $100,000 minimum balance. The Advance Checking also earns 0.01% APY, but has a smaller $25 fee that you can waive with a $10,000 minimum balance.


on HSBC’s secure website

Member FDIC

Citibank — $700 bonus with $50,000 minimum deposit

Offer ends 3/31/2020

The offer: To earn this $700 bonus, open a new Citi Priority Account Package with an initial deposit of at least $50,000 within 30 days of opening. This deposit can be shared between the new checking and savings accounts in the Package.

You must also maintain at least that balance for 60 consecutive calendar days following account opening.

Who’s eligible: Only new-to-Citibank customers who have not been a signer on a Citibank checking account within the past 180 days are eligible for this offer. You must be a U.S. citizen or resident who is at least 18 years old. You can redeem the offer by opening online here.

Account details: The Citi Priority Package earns 0.03% APY on its Interest Checking account and 0.04% – 0.15% APY on the Citi Savings account.

The package includes access to Citi Personal Wealth Management Financial Advisors by phone, investment resources and financial planning tools. It also adds extra perks like waived fees for overdraft protection, checkbooks and incoming wire transfers.

The Citi Priority Package charges a $30 monthly service fee. You can waive it by maintaining a combined average monthly balance of $50,000 or more in eligible linked deposit, retirement and investment accounts.


on Citibank’s secure website

Citibank — $400 or $500 bonus with $15,000 minimum deposit

Offer ends 3/31/2020

Offer rules: You can earn $400 in bonus cash if you open a new eligible checking and savings account in a Citibank Account Package. You’ll need to deposit at least $15,000 in new-to-Citibank money within 30 days of opening. Since the package includes a checking and savings account, you can split that deposit between the accounts. You’ll need to maintain at least that much money in your accounts for 60 consecutive days to receive the bonus.

You can earn $100 more — for the total $500 bonus — when you complete at least one qualifying direct deposit (within 60 days of account opening) each month for two consecutive months.

Who’s eligible: You qualify for this offer if you are a new Citibank customer opening a new Checking and a new Savings account. To redeem the offer, you can easily apply online. You must be at least 18 years old and a U.S. citizen or resident to apply for these accounts online.

Account details: The Citibank Account Package earns 0.01% APY on its Interest Checking account and 0.04% – APY depending on your balance on the Citi Savings account. The account includes certain perks like a free order of checkbooks, fee-free ATM access (when you meet balance requirements) and the opportunity to earn Citi ThankYou Rewards.

The Citibank Account Package charges a $25 monthly service fee. You can waive the fee if you keep at least $10,000 in eligible linked deposit, retirement and investment accounts with the bank.


on Citibank’s secure website

Wells Fargo — $400 bonus with $4,000 in direct deposits

Offer ends 7/31/2020

Offer rules: Open a new Everyday Checking account with a $25 minimum opening deposit. Then within 90 days of opening, you must make at least $4,000 in qualifying direct deposits. This includes your salary, pension, Social Security or other regular monthly income deposited by your employer or another outside agency.

Who’s eligible: Only new Wells Fargo checking and savings customers from Denver, Houston, Miami, Orlando, Fla., Phoenix, and Seattle are eligible to redeem this offer. You must also not have received a bonus for opening a Wells Fargo consumer checking or savings account within the past 12 months.

You can redeem the offer online here or receive the offer code through the same page to bring to a branch to open your new account.

Account details: The Wells Fargo Everyday Checking account is simple, with a Platinum Debit Card and access to more than 13,000 Wells Fargo ATMs. There is a $10 monthly fee on the account, which you can waive in a few different ways:

  • Make 10 or more debit card purchases or payments
  • Receive qualifying direct deposits totaling $500 or more
  • Maintain a $1,500 minimum daily balance
  • Link a Wells Fargo Campus ATM or Campus Debit Card (for college students)
  • The primary account owner is between 17 and 24 years old


on Wells Fargo’s secure website

TD Bank — $300 bonus with $2,500 minimum direct deposits

No expiration date

Offer rules: You can earn a $300 bonus when you open a new TD Beyond Checking account. The account needs to receive direct deposits of at least $2,500 within 60 days of opening to qualify. The direct deposit must be from your paycheck, pension or government benefits from your employer or the government.

Who’s eligible: To qualify for this checking account bonus offer, you must be a new TD Bank customer, without any previous or current TD Bank personal checking accounts. You must also open the account through this web page.

You cannot redeem the offer if you’re a Canadian cross-border banking customer.

Account details: The TD Beyond Checking account earns interest on all balances. Higher balances have the chance to get a slight rate boost, but all rates are still pretty minimal. Account holders can access non-TD ATMs without a TD fee and receive reimbursement for other ATM surcharges with a minimum daily balance of $2,500. The account also includes a free standard checks, money orders, stop payments, paper statements and incoming wire transfers.

The account charges a $25 monthly maintenance fee. However, you can waive the fee when you receive monthly direct deposits of $5,000 or more, maintain a minimum daily balance of $2,500 or maintain a combined balance of $25,000 across eligible TD accounts.


on TD Bank’s secure website

Chase — $300 bonus with direct deposit

Offer ends 01/21/2020

Offer rules: It’s pretty simple to earn this $300 bonus offer when you open a new Chase Premier Plus Checking account. You just need to make a direct deposit in this account within 60 days after opening. This can be your paycheck, pension or government benefits.

Who’s eligible: You cannot apply for this offer if you’re an existing Chase checking or fiduciary account holder. You do not qualify if you had an account closed within the last 90 days or closed with a negative balance.

Account details: Like its name suggests, Chase Premier Plus Checking is a high-end account. It earns interest, although at a minimal 0.01% APY on all balances. It has a high fee of $25, which you can waive with an average beginning day balance of at least $15,000 in combined balances between this account and any linked qualifying Chase checking, savings and other accounts.

The account includes four free non-Chase ATM transactions per statement cycle and free Chase design checks. You can also take advantage of a rent-free small safe deposit box.


on Chase Bank’s secure website

Member FDIC

Huntington — up to $200 bonus with $1,000 cumulative deposits

Offer ends 01/07/2020

Offer rules: You can benefit from a $200 bonus by opening a Huntington 5 checking account or a $150 bonus with an Asterisk-Free Checking account. Whichever account you open, you must make cumulative deposits of at least $1,000 within 60 days of account opening and keep your account open for at least 90 days to earn the reward.

Who’s eligible: You must be a resident of Illinois, Indiana, Kentucky, Michigan, Ohio, Pennsylvania or West Virginia to qualify for this bonus offer. You must also be a new Huntington checking customer who hasn’t closed a checking account within the last six months.

You’ll need to fund this new account with money not currently on deposit with Huntington. You cannot combine this offer with another checking offer.

You can redeem the offer by applying either online or through a code found online to bring to your local branch.

Account details: The Huntington 5 Checking account earns at a modest 0.05% APY. There is a small $5 monthly fee that you can waive with at least $5,000 in total relationship balances, which includes other Huntington deposit and investment accounts.

The Asterisk-Free Checking account is more basic. It does not charge a monthly fee, earn interest or have a minimum balance requirement.


on Huntington National Bank’s secure website

Member FDIC

Chase — $200 bonus with $25 minimum deposit

Offer ends 01/21/2020

Offer rules: When you open a new Chase Total Checking account with at least $25 and set up direct deposit, you can get a bonus of $200. The direct deposit needs to be made to the account within 60 days of account opening. This can be your paycheck, pension or government benefits.

Opening the checking account alone can earn the $200 bonus. If you would also like to open a Chase Savings account along with the Chase Total Checking, you can boost your total reward to $350.

Who’s eligible: You cannot open a new account with the checking account bonus offer if you already have a Chase checking account. The offer also doesn’t apply to those with fiduciary accounts, who have had accounts closed within the last 90 days or closed with a negative balance.

Account details: Chase Total Checking is the bank’s most popular checking account out of its three checking options. It’s also the most basic and straightforward without any added perks or features. It charges a $12 monthly service fee that you can waive with either direct deposits of at least $500, a minimum daily balance of at least $1,500 or an average daily balance of at least $5,000 in combined linked qualifying Chase checking, savings and other balances.


on Chase Bank’s secure website

SunTrust — $200 bonus with $500 in direct deposits

Offer ends 03/31/2020

Offer rules: This checking bonus offer applies to new SunTrust Essential Checking accounts. You must make at least $500 in direct deposits per statement cycle for two consecutive cycles within the first three full months after opening the account.

The bonus will be deposited into your new account up to 8 weeks after all qualifications have been verified.

Who’s eligible: This offer is available to new SunTrust personal checking customers. You can’t even be a secondary account holder on another account or have closed a personal checking account within 180 days of the promotion start date. You must also have a mailing address in Alabama, Arkansas, Georgia, Florida, Maryland, Mississippi, North Carolina, South Carolina, Tennessee, Virginia or Washington, D.C.

To qualify, you must use the application link on this SunTrust page with the code Q120ESSENTIAL. You can also use the page the email yourself a coupon to bring into a SunTrust branch to redeem the offer.

The SunTrust Essential Checking account does not earn interest. There is a $7 monthly fee which you can waive with one of the following per statement cycle:

  • Making 10 or more client-initiated transactions
  • Making $500 or more in total qualifying monthly Direct Deposits
  • Keeping a $500 minimum daily collected balance

Students opening a new account may also receive a 5-year Student waiver.


on SunTrust Bank’s secure website

Citibank — $200 bonus with $5,000 minimum deposit

Offer ends 03/31/2020
Offer rules: Opening a new Citibank checking account in a Basic Banking Package can earn a $200 bonus if you deposit at least $5,000 in new money within 30 days of opening. You need to maintain at least that minimum in the account for 60 consecutive calendar days to fully qualify for the reward.

Who’s eligible: You can redeem this offer through the offer webpage. You’re eligible if you’re a new Citibank customer who is at least 18 years old and a U.S. citizen or resident.

The account: The Basic Banking Package is made for simple checking. It includes unlimited check writing and free non-Citi ATM usage for customers 62 and older. There is a $12 monthly fee that you can waive by making one qualifying direct deposit and one qualifying bill payment each cycle, or by keeping a combined average monthly balance of at least $1,500 in this account and other eligible linked accounts. Customers 62 and older can also waive the fee.


on Citibank’s secure website

Fifth Third Bank — $250 bonus with $500 minimum deposit

Offer ends 04/30/2020

Offer rules: You have the option of opening a new Fifth Third Essential, Enhanced, Preferred or Free checking account to earn the bank’s $250 bonus offer. While you don’t need to open the new account with a specific deposit amount right away, you have 45 days to reach an account balance of at least $500. Then you’ll need to maintain at least $500 in the account for 60 days to qualify completely for the bonus.

Who’s eligible: To redeem this offer, you will need to visit this Fifth Third webpage, email yourself the offer coupon and bring it to a Fifth Third branch to redeem. This limits the offer’s availability to customers near a branch, which you can find in Florida, Georgia, Illinois, Indiana, Kentucky, Michigan, North Carolina, Ohio, Tennessee and West Virginia.

You do not qualify for this bonus if you are already a Fifth Third Bank customer, or have closed an account with the bank within the last 12 months.

Account details: Unlike most other banks, Fifth Third Bank allows you to choose which checking account – Essential, Enhanced, Preferred or Free (when available) — you’d like to open with the bonus offer. This gives you the flexibility to open the account that works better for you in the long run. The Fifth Third Enhanced and Preferred Checking accounts earn interest on your balances, with the Preferred Checking earning at a slightly higher rate. As for fees, the monthly service fee ranges from $8 to $25, which you can waive with minimum balances.


on Fifth Third Bank (OH)’s secure website

Member FDIC

TD Bank — $150 bonus with $500 in direct deposits

No expiration date

Offer rules: If the TD Bank Beyond Checking account above isn’t quite your style, you can still earn $150 when you open a new TD Convenience Checking (SM) account. You’ll also have to make at least $500 in cumulative direct deposits within 60 days after opening to qualify for the offer. The direct deposits can be a paycheck, pension or government benefits from your employer or the government.

Who’s eligible: This offer is open only to new TD Bank customers without any previous or current TD Bank personal checking accounts.

The account: The TD Convenience Checking account doesn’t earn interest. It charges a $15 monthly fee that you can waive by maintaining a $100 daily balance or if you’re aged 17 to 23.


on TD Bank’s secure website


5 things to watch out for with checking account bonus offers

#1 Checking account bonus offers aren’t entirely “no-strings-attached.” You can see above the various requirements you typically have to meet to earn a bonus, whether that’s meeting a minimum deposit amount or completing a certain number of direct deposits. But there’s often more to checking account bonus offers than what meets the eye.

#2 Banks report bonus payouts as interest to the IRS. In the year you receive your bonus, you’ll also receive a 1099-INT form, indicating you need to file the “income” in your taxes for that year. This lessens the total reward you gain from the checking account bonus offer. The exact amount deducted will depend on your tax bracket, but the higher the bracket, the smaller your final bonus.

#3 Banks may pull a credit check and a ChexSystem verification report when you apply for an account. This allows them to check for a history of good account standing, or, to the opposite, any dings in your financial history, like a trail of unpaid fees or bounced checks. Even if you have nothing to hide, a hard inquiry into your credit can temporarily dip your score just a little, so if you’re just opening one account, the effect won’t be catastrophic. However, if you’re opening multiple new accounts within quick succession, your credit score can take a hit.

Opening several accounts can also appear in a ChexSystem report. Whenever a bank pulls a ChexSystems report, it shows up as an inquiry. While this doesn’t ding your credit score or financial history, it may hurt your chances at a new account if a bank sees all those recent inquiries.

#4 You need to keep the account open for at least a few months. If you thought you could quickly open an account, collect your checking account bonus and close the account before moving onto the next one, we’re here to tell you that’s not how it works. Remember all those requirements you need to meet to redeem the offer? Not only is there a minimum deposit requirement, but you also need to keep your balance above that minimum for a certain number of days, typically 60.

Even after waiting two months to fully qualify, you may not see the bonus deposit into your account until months later. For example, Citi will deposit your bonus into the qualified account 90 days after you complete all the required activities. You may need to wait even longer if there are delays in depositing your reward. If that does happen, though, contact customer service to see what the delay might be.

You could also lose your bonus rewards if you close the new account within a certain time period. For example, Chase will deduct the checking account bonus amount from your account at closing if you close the account six months after opening with the bonus offer. This protects banks from paying out too many bonuses without getting any new account deposits in return.

#5 Finally, make sure you’re opening your new account the right way. To snag a checking account bonus offer, you often need to start your application through the right webpage. Other banks may require you to visit a branch to redeem the offer. Pay attention to the specific bank and account requirements; otherwise, you could find yourself with a new checking account, just without a bonus.

Think beyond the bonus offer when committing to a checking account

Although it’s tempting, you shouldn’t open new accounts left and right just for a checking account bonus offer. Once you snag that bonus, you’re stuck with an entirely new checking account. You should make sure that you’re comfortable enough with the account to make chasing the bonus worthwhile.

Pay attention to the account’s fees. Banks are quick to advertise the checking account bonus offer and the account’s many benefits. But make sure you also look for the account’s monthly maintenance fee. Once you open that account, you’ll be responsible for paying that fee each month. Plus, don’t forget that it takes months to meet the offer requirements in the first place, and another few months for the bonus to be deposited into your account. Paying that fee over those months can really add up, cutting into the total bonus you’ll actually receive. No one wants to be trapped paying an unnecessary and high fee that could have been avoided.

If you do choose to close your new account, whether before or after snagging the bonus, you’ll likely face a fee for closing it early. Paying this fee certainly isn’t worth it if you didn’t earn the bonus. But even if you do earn those extra dollars, paying any fee lessens the total reward you could have received. Some banks may also deduct the checking account bonus amount from your account if you close it too early, leaving you with zero net gain.

Make sure you can meet an account’s minimum balance. You can often waive an account’s monthly fee by meeting further requirements, typically a minimum balance. These can reach pretty high, though, especially when accounts have several features and perks. These accounts also tend to offer higher bonuses, so be careful if you’re looking solely for the highest bonus.

Instead, look for the checking account bonus offers that require lower balances to qualify. These accounts tend to charge smaller monthly fees. Even better, look for an account that doesn’t charge a monthly service fee, no matter your balance.

The accounts with high bonuses may not be the most favorable ones. Banks create these checking account bonus offers to invite consumers to become a customer. But perhaps there’s a reason why not too many new customers are opening these accounts. If you take a look at the accounts above, you’ll see they’re all from brick-and-mortar banks. They all charge monthly fees and can require sky-high balances to waive those fees. Those that earn interest only earn at the most minimal rates. These accounts, while appealing in the short-term for their bonuses, may not be the most beneficial in the long run for your finances. You should invest in accounts that grow and save you money.

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2020 Fed Meeting Predictions — Federal Funds Rate Still on Ice

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.


As we open a new year of Fed meetings, it looks like we’re beginning 2020 with a continuation of the Federal Reserve’s policy pause. They haven’t made a change to the federal funds rate since October, and it’s largely looking like things will stay that way for the time being.

Whenever the Fed decides to make a move, it’s certain they will seek to continue the U.S. economy’s expansion, which is now in its 11th year. The Fed remains optimistic about the U.S economy’s outlook, a good omen as we move through 2020 and a new decade. Read on for our predictions for each upcoming Fed meeting and updates on what went down at the most recent meeting.

Our January 2020 Fed meeting predictions

We expect the Fed to hold the federal funds rate steady. Fed Chair Jerome Powell indicated that it would “materially reassess” the Fed’s outlook to prompt another change in their policy stance last October, after the Federal Reserve cut the federal funds rate for the third and final time in 2019. We have not seen the sort of change in the data that would deliver such a material reassessment.

Back in December, the Fed left the federal funds rate unchanged at 1.50% to 1.75% , and the data has held steady since then. The latest labor market data shows employment remains strong, even as wage growth remains flat. Recall that Powell has reiterated that he’d need to see wage growth before hiking rates, so we know not to expect any rate hikes. Otherwise, growth in housing starts — a key metric for the housing market — is exceeding expectations, although manufacturing remains soft.

All in all, these economic indicators are neither hot nor cold, and pretty clearly anchor expectations that the Fed will keep rates on ice again next week.

Chair Powell should provide some insight into what to expect for 2020 at his post-meeting press conference. As we move into the new year, Powell will likely outline the Federal Open Market Committee’s (FOMC’s) economic outlook for 2020. Again, we probably won’t see much change to their general sense of restrained optimism. Still, it’s important to tune in for some insight into what the Committee is focusing on.

For one, we may get an update on the “downside risks” that have been periodically menacing the otherwise healthy U.S. economy over recent months. It was these risks that prompted the Fed to cut rates last July and continue cutting into October, although lately those risks seemed to have moved in a more positive direction.

As always, it’s important to remember that whatever Powell and the FOMC indicate about the economy in January, economic conditions change throughout the year, as will the Committee’s response to those changes.

Remember this time last year? Markets were bracing for a recession that never arrived, while these days, recession’s not really coming to mind. But if last year taught us anything, it’s to stay on top of the economic goings-on — the outlook can change quicker than you realize.

What happened at the December 2019 Fed meeting

As expected, the Fed left the federal funds rate untouched. The Federal Open Market Committee (FOMC) kept the federal funds target range at 1.50% to 1.75%. Notably, all voting members agreed with this direction, lending a definitive stance to the decision.

So it looks like we’re entering another rate pause period, as economic developments at home and abroad have not given the Fed any reasons for a “material reassessment” of its outlook. Recall the comments that Fed Chair Jerome Powell made at the October meeting, when he said the Committee would only change the direction of monetary policy if they could see any real reasons to do so in the economic outlook.

Overall, the Fed’s outlook for the U.S. economy remains positive, pointing to a strong labor market, solid job gains, low unemployment rate and solid consumer confidence. Despite continuing softness in exports and manufacturing and business fixed investment, the economy continues to grow at a moderate rate.

There were no surprises in the SEP, and few revisions to the projections released in September. The SEP forecasts for real GDP and personal consumption expenditure (PCE) inflation remained unchanged for the next three years. Notably, the Core PCE inflation projection was revised lower only slightly for 2019. Unemployment rate expectations are also down through the longer run, which aligns with the continued strength of the labor market.

The SEP downgraded its federal funds rate projection. By this forecast, we shouldn’t expect a rate hike until 2021. But, if 2019 has taught us anything, it’s that the tides of monetary policy can change very rapidly, altering both our economic expectations and our economic reality.

Speaking of fed funds rate projections, we got a new Fed dot plot. The Fed dot plot anonymously demonstrates each individual FOMC member’s own projection for the federal funds rate, shown as the midpoint of the target range or target level for the federal funds rate.

As it’s the end of the year, all members indicated a midpoint dot just above 1.5% for 2019. Most members chose to keep their dot there for 2020, with only four indicating a midpoint range just below 2%. Things start to look up in 2021, when eight members foresee a federal funds rate between 2% and 2.5%, while the other nine kept their dots below 2%. The outlook only continues to climb after that.


Upcoming Fed meeting dates in 2020:

Here is the FOMC’s calendar of scheduled meetings for 2020. Each entry is tentative until confirmed at the meeting proceeding it. For past meetings, check the next section to catch up on our pre-game forecasts and after-action reports for what happened in 2019.

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Learn more: What is the Federal Open Market Committee?

The FOMC is one of two monetary policy-controlling bodies within the Federal Reserve. While the Fed’s Board of Governors oversees the discount rate and reserve requirements, the FOMC is responsible for open market operations, which are defined as the purchase and sale of securities by a central bank.

Most importantly, the committee controls the federal funds rate, which is the interest rate at which banks and credit unions can lend reserve balances to other banks and credit unions.

The committee has eight scheduled meetings each year, during which its members assess the current economic environment and make decisions about national monetary policy — including whether it will institute new rate hikes.

A look back at 2019

We’ve come a long way since December 2018, when the Fed delivered its fourth rate increase of that year, and the ninth in its campaign of rate hikes that began way back in December 2015. We saw a couple more rate increases in the first half of 2019 — the December 2018 SEP had projected a 2.9% federal funds rate projection for 2019. Obviously, that forecast did not age well.

Experts and markets alike were already wary of the December 2018 rate increase, convinced that a recession was just around the corner. Luckily, we’ve managed to avoid a recession, thanks in part to the Fed’s monetary policy moves, which have remained rather accommodating throughout the year.

That December 2018 hike would be the last one before a six-month monetary policy pause, ended by a historic 25-bps rate cut at July’s FOMC meeting. It was the first Fed policy easing since the depths of the Great Recession, more than a decade ago.

Fed Chair Powell acknowledged the ups and downs we’ve been through over the course of the past year. “Our views about the path of interest rates… changed significantly, as the economy faced some important challenges,” surprising challenges that he didn’t see coming, Powell said, citing weaker global growth and trade developments as those main hurdles. However, he is pleased that the Committee moved to support the economy throughout these challenges. “I think our moves will prove appropriate,” he said.


Our October Fed meeting predictions

There’s a chance the Fed will cut the federal funds rate again. The federal funds rate currently stands at 1.75% to 2.00%. If the Fed cuts rates in October, it will be the third cut in as many meetings. The two recent cuts — in July and September — were characterized by the Fed as protective measures, guarding against downside risks to the otherwise strong economy. These risks included constant global trade uncertainty and its byproduct, manufacturing decline.

Unfortunately, global trade negotiations remain rocky and manufacturing continues to display weak growth numbers. In September, U.S. manufacturing activity fell to a 10-year low, according to the Institute for Supply Management. In order to further support the economy, the Fed may have to execute another rate cut, many experts argue.

We should hear more about the state of the economy and the chance of recession. Talk of recession has hung over the economy since last December, although never truly manifesting as a real threat. Market watchers pointed to an inverted Treasury yield curve as a sure sign of recession, as an inversion has historically preceded a recession. However, the data supported the opposite: strong job growth, historically low unemployment rates and wage growth. In any case, the yield curve recently un-inverted.

The U.S. economy is in its 11th year of expansion, which the Fed seeks to support and maintain with its monetary policy choices. So keep an eye out for the Fed’s latest outlook.

What happened at the October Fed meeting

The FOMC has cut the federal funds rate at its third consecutive meeting. After cutting interest rates in July and September, the Federal Open Market Committee (FOMC) has lowered the federal funds rate range by 25 basis points to 1.50% to 1.75%. As with the previous two reductions, the committee says this easing is meant to provide “significant support” to the U.S. economy against downside risks. These include muted inflation pressures, the ongoing trade battle with China, slower global growth and weaker U.S. manufacturing due to global uncertainties.

Does this mean the Fed will continue to cut rates? Fed Chair Jerome Powell is always quick to state that the Fed’s decisions are driven by the economy’s performance, noting at the post-meeting press conference that “policy is not on a preset course.” He said the economy’s current growth rate and continuing resiliency would not indicate another necessary rate cut. Of course, he also stressed that any changes to this state of affairs could prompt the Fed to ”materially reassess” its outlook, although he never shares what he thinks those changes might look like.

For what it’s worth, the FOMC again did not deliver a unanimous decision to cut rates. Kansas City Fed President Esther George and Boston Fed President Eric Rosengren voted to maintain the target range at 1.75% to 2.00%.

The downside risks to the U.S. economy remain, but it continues to perform well on its own. The Fed’s October meeting statement began by outlining the state of the economy. On the upside, the statement indicated that the labor market remains strong, the economy is growing at a moderate rate, job gains are solid, unemployment is low and household spending growth is strong. The weaker data points include low inflation, weaker business fixed investments and exports and slower manufacturing.

On the whole, the data continues to point to a growing, stable economy, in its 11th year of expansion. The committee itself said it expects the economy to keep expanding at a moderate rate.

Our September Fed meeting predictions

It certainly looks like the Fed may cut rates again at its September meeting. The 25 basis point (bp) cut in July — the first in over a decade — reduced the federal funds rate to 2.00% to 2.25%, and the Federal Open Market Committee (FOMC) justified its move by saying it wanted to protect against “downside risks,” namely weak global growth and rocky trade policy negotiations. Due to the persistence of these risks in the interim, markets and economic experts are preparing for yet another 25 bps cut later this month, which would put the federal funds rate at 1.75% to 2.00%.

After the July meeting, Fed Chair Jerome Powell stated that he and the FOMC did not see the historic rate reduction as the first in a string of cuts. However, Powell spoke at the University of Zurich on Sept. 6, right before the FOMC’s pre-meeting silent period, and stated that the committee would “continue to act as appropriate” to protect the U.S. economy. The risks cited in July have not abated in September, so many have concluded it’s not too far-out to assume this signals another rate cut.

Economist and Fed-watcher Tim Duy agrees — and he thinks the cuts won’t end in September, either. “The Fed will cut rates 25bp next week and leave the door open for more,” he wrote.

We’ll get a look at the Fed’s newest Summary of Economic Projections this month. Every other Fed meeting brings the release of the Summary of Economic Projections (SEP), which outlines each committee member’s outlook for the U.S. economy over the next couple of years and the longer term. These forecasts include GDP growth, inflation, unemployment and the federal funds rate. The SEP gives us a relative idea of what to expect from the economy in the future.

Relatedly, Powell should once again stress that we’re not on the verge of recession. While speaking in Zurich, Powell assured that the Fed’s “main expectation is not at all that there will be a recession.” He points to the U.S. economy’s continued expansion — “moderate growth, a strong labor market” and inflation, although muted, hovering around the 2% goal. He also reminded us that we’re now in the 11th year of an economic expansion. It is expected that Powell will use the post-meeting press conference, as he has done before, to address and dispel recession concerns.

That said, recession concerns aren’t entirely unfounded. Overall growth has slowed from its speedy pace in 2018, and the latest jobs report showed fewer new jobs in August. Further, the Treasury yield curve — a tool used to look at the future direction of interest rates and broader economic trends — has inverted recently. This phenomenon — where long-term Treasury interest rates fall below short-term Treasury rates — has historically indicated an upcoming recession. A yield curve inversion like this shows that markets are predicting lower rates in the future. However, there’s certainly room for prediction error; the curve inverted once before this year and it was not followed by an immediate recession.

What happened at the September Fed meeting

The Federal Open Market Committee (FOMC) cut the federal funds rate, as expected. Fed funds took another 25 basis point tumble to 1.75% to 2.00%, and the committee once again cited “implications of global developments” and “muted inflation pressures” as the causes.

If you recall, this reduction seems to contradict Fed Chair Jerome Powell’s remarks back in July, when he was emphatic that July’s cut — the first in over a decade — was not the opening shot in a campaign of many reductions. Rather, he referred to it more as a “mid-cycle adjustment” and a protective response due to a few “downside risks” (weak global growth and trade uncertainties) to the otherwise strong economy.

As with the July meeting, there were dissenters on the committee. Kansas City Fed President Esther George and Boston Fed President Eric Rosengren, who had both voted against the July rate change, preferred to maintain the 2.00% to 2.25% range. St. Louis Fed President James Bullard also voted against the decision, although he really wanted a bigger, 50 basis point cut.

Chair Powell and the Fed’s Summary of Economic Projections (SEP) indicate a continued positive outlook for the U.S. economy. The Fed continues to acknowledge that the U.S. economy itself is still doing just fine; as Powell stated at today’s press conference, “we continue to see sustained expansion.”

“This has been our outlook for quite some time,” he added, despite significant changes in their views on the appropriate path of interest rates.

More specifically, the FOMC’s statement points to the continued strength of the labor market, moderate growth in economic activity, solid job gains, a low unemployment rate and strong household spending growth. The only downside seems to be weakened business fixed investment and exports — both of which can be explained by the ongoing trade conflict.

The SEP indicates that committee members now predict an infinitesimal increase in both the real GDP and the unemployment rate for 2019. The personal consumption expenditure (PCE) and Core PCE inflation projections remain unchanged from the June SEP — so inflation continues to be a non-event. Their future predictions for 2020 to 2022 and the longer run also remain relatively unchanged.

The Fed dot plot — which anonymously indicates each member’s federal funds rate prediction — shows a much lower and more cohesive outlook for 2019 when compared to June’s SEP. Undoubtedly as a result of rate cut double header, there are more low-rate predictions through 2022. The majority indicate a federal funds rate below 2% for this year and next year.

So how about that recession? The past few months have been clouded by a certain cognitive dissonance: The Fed’s positive economic outlook on one hand, and the public’s seeming obsession with an imminent recession on the other. If you were to look at just the data, you’d see an economy performing well. Of course, there’s more to it than that, as risks keep emerging and causing softness here and there.

Still, the “most likely case is continued moderate growth,” a widely shared projection among forecasters, according to Powell. And the reason for the continued positive outlook, Powell added, is the committee’s dedication to its mandates: “Our shifting to a more accommodative stance over the course of the year has been one of the reasons why the outlook has remained favorable.”

As for continued worries about the inverted treasury yield curve, Powell admitted that while the Fed certainly monitors the yield curve carefully, “there’s no one thing” that you can point to that undoubtedly means recession. Rather, Powell suggested, the inverted curve may be a result of the very risks the rate cut is intended to protect against.

“We don’t see a recession, we’re not forecasting a recession, but we are adjusting monetary policy in a more accommodative direction to try to support what is, in fact, a favorable outlook.”

Our July Fed meeting predictions

Chances of a rate cut at the July meeting are way up. Committee Chair Powell all but confirmed the possibility in his recent testimony before Congress. “Since the June meeting, and even for a period before that, the data have continued to disappoint,” he said. As the Fed relies on jobs, manufacturing and wage data to help inform their policy decisions, disappointing data like what we’ve been seeing, provides a real justification of a rate cut.

However, the cut shouldn’t be anything more than 25 basis points. “The data doesn’t support a 50bp move,” maintains economist Tim Duy. Growth has certainly slowed in 2019, but June’s job reports provided a positive surprise, while wage growth still weakened.

Experts speculate that if the Fed does not cut rates this month, they will signal a rate cut to come in September instead. For one, Boston Federal Reserve President Eric Rosengren has vocalized that he thinks the economy is “quite strong” at the moment and doesn’t quite yet need Fed policy interference. Whether the rest of the FOMC agrees with him or not will be revealed next week.

We’ll hear more about the economy’s future as talk of an impending recession continues. Speculation about an upcoming recession has held steady since December 2018, when the Fed downgraded their economic outlook. Since then, growth has continued to slow, although a few positive surprises along the way have buoyed sentiment.

One recession indicator will be very clear if the Fed actually holds off on a rate cut this month. “Without a rate cut, the markets may consider the odds of a more significant slowdown as increasing,” said Ken Tumin, founder of, another LendingTree-owned site. One interpretation of the Fed not cutting rates yet would be a need to maintain an insurance policy against an impending economic slowdown. “Keep your powder dry” is a common saying, and no cut may mean the Fed wants to reserve it’s finite rate cutting policy tools to fight a recession later.

What happened at the July Fed meeting

The Federal Reserve cut the federal funds rate by 25 basis points. After a six-month monetary policy pause, the Federal Open Market Committee (FOMC) has lowered the federal funds rate by 25 basis points to a range of 2.00% to 2.25%, a choice it maintains is “appropriate to sustain the expansion” of the economy.

The FOMC statement cites “implications of global developments” (such as trade conflict and Brexit) and “muted inflation pressures” as its chief reasons for the rate cut, also calling out softer growth in U.S. business fixed investment. On the other hand, the committee acknowledged the still-favorable parts of the U.S. economy, including the strong labor market, low unemployment and increased household spending.

At the press conference, Fed Chair Jerome Powell underscored these good bits, stressing that “nothing in the U.S. economy that present a prominent, near-term threat,” while very pointedly calling out global risks, warning that the implications of these risks weigh heavily on the FOMC’s thinking.

As to whether these points signal more rate cuts, Powell was adamant that they do not. In reference to previous instances where mid-cycle rate cuts have evolved into rate cutting cycles, Powell said that “the Committee is not seeing that,” adding “that’s not our perspective … or outlook.”

The Fed maintained a positive outlook for the U.S. economy. Despite slower growth, the US economy has continued to grow, and Chair Powell made sure to emphasize the point in his press conference. “The Committee still maintains a favorable baseline outlook,” he said, continuing to stress the issue throughout.

Powell begs us not to take the rate cut as a signal of panic at the Fed. If you remember, Boston Federal Reserve President Eric Rosengren spoke on July 19 about his preference to wait to make any rate changes, “given that the economy is quite strong” and with inflation holding around 2%. In fact, Rosengren and Kansas City Fed President Esther L. George were the two dissenters at the July meeting. Both indicated their preference to keep rates unchanged.

At the press conference, Powell doubled down on the rate cut as a safeguard from downside risks. He identified three threats the rate cut would protect against. First, weak global growth, namely in Europe and China. Secondly, weak domestic manufacturing. Third — a byproduct of risks one and two — is stubbornly muted inflation growth.

For some, however, the Fed rate cut is hardly justified, or is merely a fig leaf.

Ahead of the July meeting, University of Oregon economist Tim Duy proclaimed that “the December rate hike was simply a small mistake than needed to be rectified,” and he remained as emphatically critical in its wake. “All policy makers really know at this point is that they are navigating a mid-cycle course correction,” he wrote in Bloomberg.

The Fed’s reassurances of a positive economic outlook suggest a recession remains a distant threat, at best. We’ve seen consistent growth throughout this year, albeit at a slower pace than 2018. Plus, the Fed continues to keep a positive outlook for the U.S. economy. Any threats that are perceived now are the target of today’s rate cut, designed to continue the growth we’ve been seeing.

When asked about how cutting rates today would give the Fed little wiggle room to cut again when a recession hits, Powell was quick to shut down any assumption that one was impending. “In other cycles, the Fed wound up raising rates again after a mid-cycle adjustment,” he countered, quickly adding, however, that “I’m not predicting that.” Still, he leaves it open to the possibility of future rate hikes after this cut, rather than an overall downward turn.

Our June Fed meeting predictions

The Fed could signal a possible future rate cut. Chair Jerome Powell recently indicated the Fed’s willingness to cut rates, if necessary, in response to a bad outcome in trade negotiations, or data pointing to a weakening economy. This was the first time Powell had hinted at the possibility of monetary policy changes since the Fed chose to put an end to its rate hike streak back in January.

Economist Tim Duy points to the May jobs report, especially revisions to the prior months’ data, as another trigger for the Federal Open Market Committee (FOMC) to foreshadow a possible rate cut. Job gains slowed in May, due to softer economic growth rather than a lack of workers. But Duy warns that the revisions indicate U.S. job growth has “slowed markedly” over the last four months, another worrying sign.

Note that there is practically zero chance of a rate cut at the upcoming June meeting. Instead, you should look for hints to a rate cut later in 2019. “I don’t think they’ll change the rate,” says Tendayi Kapfidze, chief economist at LendingTree. “Definitely not at this meeting. I’d be surprised if it happens before September.”

The Fed could soften their economic forecast. The June Fed meeting will bring the latest Summary of Economic Projections (SEP). Much like it sounds, this is where the FOMC updates their long-term forecast for economic performance over the next few years.

Kapfidze predicts we’ll see another downgraded SEP forecast. “I think they’ll come up with a softer forecast. It’s just a question of how soft,” he said. With the data coming in somewhat mixed and trade negotiations remaining highly unpredictable, Kapfidze said the Fed finds itself in a “delicate moment to get the pulse of the state of the economy.”

We should learn more about the Fed’s approach to their 2% inflation goal. At the April/May meeting, we learned that inflation for personal consumption expenditures — the Fed’s preferred measure of price changes — fell unexpectedly. This left many economists and experts concerned that the Fed was neglecting its mandate to keep inflation symmetrically around 2%.

“Perhaps inflation is not coming back as they anticipated,” Kapfidze muses. So while inflation is stable right now, it’s definitely still a concern.

What happened at the June Fed meeting

The Fed kept the federal funds rate steady… for now. The federal funds rate was left at 2.25% to 2.50%, as the Fed continues its rate pause. The Fed changed its tone by dropping its “patient stance” language, saying instead that it would “closely monitor the implications” given the “uncertainties about this outlook,” namely trade developments and global growth concerns.

In simpler terms, the FOMC felt the current data didn’t support a case for cutting rates right now. However, it does expect the economic climate to change in the next few months – possibly for the worse.

“The Committee wanted to see more [before making any changes],” said Fed Chair Jerome Powell at the post-meeting press conference. “I expect a full range of data, and that something will change before the next meeting.” Essentially, as these “uncertainties” become clearer, the Fed will adjust policy accordingly.

The dovish St. Louis Fed President James Bullard was the only dissenter to the policy decision, voting to lower the federal funds rate range by 25 basis points, while all others voted to maintain rates where they are.

A rate cut at the next meeting is by no means an inevitable conclusion. Most experts expected the Fed to signal that a rate cut was imminent. We didn’t get that strong of a sign.

The Fed’s latest Summary of Economic Projections (SEP) predicts no rate changes until 2020, keeping the projection for 2019 within the current range at 2.4%. The 2020 projection, however, dropped to 2.1%, which lies below the current lower limit of the rate range. It’s also well below the previous March projection for 2020 of 2.6%.

Still, Tendayi Kapfidze, chief economist at LendingTree, points to three signs that a rate cut is coming. “For one, at least eight Fed members projected a cut before the end of the year,” he shares. “Two, we saw one member already voting for a cut at this meeting. Three, the Fed removed the word ‘patient’ in their statement, instead calling out the uncertainties and risks.”

As for when the Fed might reduce rates, Kapfidze thinks the next Fed meeting in July is still too soon. “Perhaps September is more realistic.”

The SEP was stronger than expected. The Fed’s economic projections were little changed from its March outlook, again contradicting expert predictions of a softer outlook. Change in real GDP and the federal funds rate projections for 2019 matched the numbers in March, while the unemployment rate projection dropped by a single basis point for 2019.

In its statement, the FOMC points to strong labor market reports, low unemployment, higher household spending and overall moderate economic growth as support for a continued favorable baseline outlook.

That tricky problem with inflation remains. If you recall from last month’s meeting, inflation was the hot topic as the Fed was concerned about inflation continuing to fall short of its goal of 2%. This time around, the Fed again acknowledged that overall inflation and inflation for items other than food and energy are running below 2%.

Chair Powell shared that the Committee points to uncertainties in global growth and trade negotiations as factors for muted inflation. Plus, the SEP gives us some additional insight, showing us that the Fed expects inflation to continue to run below target.

Still, Powell reiterated the Committee’s firm commitment to its inflation objective. He also stated that while inflation continues to run below target, the Committee expects it to pick back up thanks to solid growth and a strong job market, although “at a slower pace than had been expected.”

Our April/May Fed meeting predictions

The Fed should reaffirm their patient stance at the April 30/May 1 meeting, and may reiterate their view that stronger U.S. economic data is needed before they can make more policy changes. The Fed already said as much in its March meeting minutes, where it confirmed that “a majority of participants” agreed to leave “the target range unchanged for the remainder of the year,” due to the unsettled economic outlook. When considering rate changes, the Fed looks at job growth, wages, and inflation pressures; if the numbers meet the Fed’s parameters, rates stay unchanged, but if they are too hot or too cold, rates need to change. Inflation has been hovering around the Fed’s target of about 2%, and while both job growth and retail sales were points of concern due to low numbers since December, both measures have recovered somewhat in March economic data reports.

Without drastic changes to the data, there is little risk the Fed will be moving rates up (or down). As economist Tim Duy succinctly told MagnifyMoney, “We will not see a rate cut. I don’t think we will see much change in policy at all. It should be a boring meeting.”

About that economic outlook! Even if the Fed stays on pause, it seems like the latest data should tamp down talk of an upcoming recession. We’ve been hearing analysts and commentators talk about a possible recession since December, when the data showed a decline in economic indicators across the board. The cynicism really started to kick in when the Treasury yield curve began to invert, which can be (but isn’t always) a harbinger of recession. However, the stronger March jobs, retail and new home sales reports have lessened such concerns. Plus, the latest GDP report from the Bureau of Economic Analysis shows growth at an annual rate of 3.2% in the first quarter of 2019, exceeding economists’ predictions of 2.5% growth.

Tendayi Kapfidze, lead economist at LendingTree, said as much back in March ahead of that month’s Fed meeting: “Since the financial crisis, data in the first quarter has been coming in weak because of seasonal adjustment. Models that make this adjustment are skewed by this, but then everything can reaccelerate in following quarters.” Plus, on top of that adjustment, the government shutdown greatly affected reports in both their results and how they were measured.

On the whole, we’re still seeing an economy on the rise, not a decline — it’s just not growing quite as fast as it was in 2018.

What happened at the April/May Fed meeting

The Fed maintained their patient policy stance. The Fed left rates unchanged at 2.25% to 2.50%. The latest economic data has indicated some recovery in jobs and retail sales growth, while the unemployment rate remains low, as well. Plus, GDP grew 3.2% in the first quarter, exceeding expert economists’ predictions of 2.5%. This data supports the Fed’s outlook for a growing economy and its decision to keep interest rates unchanged.

What about the Fed’s inflation goal? This was the big question for Fed Chair Jerome Powell at his press conference following the FOMC meeting. Inflation for personal consumption expenditures — the Fed’s preferred measure of price changes — has been dropping for the past three months, with the first quarter coming in at 0.7%, below the committee’s 2% target. Powell did note that inflation “unexpectedly fell,” standing at 1.6% for the previous 12 months ending in March.

When asked about what signs the FOMC might see as a need to take action, Powell first answered, “We are strongly committed to our 2% inflation objective, and to achieving it on a sustained and symmetric basis,” a point he reiterated throughout the conference. “The Committee would be concerned if inflation were running persistently above or below 2%” he continued, also noting that what they are currently seeing does not indicate a persistent problem.

While policy remains on hold for now, economist Tim Duy has indicated that weak inflation numbers should still push the Fed to cut rates before the end of the year — “If the Fed is serious about the inflation target, then the odds favor a rate cut over a rate hike,” he writes. Given Powell’s reassurance of the Fed’s strong commitment to its inflation goal, a rate cut could certainly be in the near future.

Our March Fed meeting predictions

There’s little chance of a rate hike this time around. In a policy speech on March 8, Fed Chair Jerome Powell reinforced the FOMC’s patient approach when considering any changes to the current policy, indicating he saw “nothing in the outlook demanding an immediate policy response and particularly given muted inflation pressures.”

This is no different from what we heard back in January, when the Fed took a breather after its December rate hike. There was no change to the federal funds rate at that meeting, and Powell had stressed that the FOMC would be exercising patience throughout 2019, waiting for signs of risk from economic data before making any further policy changes.

Further strengthening the case for rates on hold, the reliably hawkish Boston Fed President Eric Rosengren cited several reasons that “justify a pause in the recent monetary tightening cycle,” in a policy speech on March 5. His big tell was citing the lack of immediate signs of strengthening inflation, which remains around the Fed’s target rate of 2%.

Even though there had been some speculation of a first quarter hike at the March Fed meeting, LendingTree chief economist Tendayi Kapfidze reminds us that the Fed remains, as ever, data-dependent. “The latest data has been on the weaker side, with the exception of wage inflation,” he says.

The economic forecast may be weaker than December’s. The Fed will release their longer-range economic predictions after the March meeting. These projections should include adjustments in the outlook for GDP, unemployment and inflation. The Fed will also provide its forecast for future federal funds rates.

Kapfidze expects we’ll see a weaker forecast this time around than what we saw in December. “I except the GDP forecast to go down, and the federal funds rate expectations to go down.” This follows a December report that posted lower numbers than the September projections.

Despite flagging economic projections, Rosengren offered a steady outlook in his speech. “My view is that the most likely outcome for 2019 is relatively healthy U.S. economic growth,” he said, again attributing this to “inflation very close to Fed policymakers’ 2 percent target and a U.S. labor market that continues to tighten somewhat.”

The Fed’s economic predictions offer clues to its future policy decisions. In September, the Fed projected a 2019 federal funds rate of 3.1%. That number dropped to 2.9% in the December report. With the current rate at 2.25% to 2.5%, there’s still room for more hikes this year. Keep in mind, however, that, the March meeting may narrow projections for the rest of 2019.

As for Kapfidze, he thinks we’ll see a rate hike in the second half of the year. “If wage inflation continues to increase and it trickles more into the economy, the Fed could choose to raise rates due to that risk.”

However, as of March 12, markets see the odds of a rate hike this year at zero, while the odds of a federal funds cut has risen to around 20%, based the Fed Fund futures.

What happened at the March Fed meeting

The Federal Reserve signaled no rate hikes this year, and the possibility of only one increase in 2020. The Fed has pivoted pretty rapidly from its hawkish stance in 2018 to a more dovish outlook as it puts policy on ice. This change in tone grows directly from the FOMC’s observation of slowing growth in economic activity, namely household spending and business investment. The Fed also noted that employment gains have plateaued along with the unemployment rate, which nevertheless remains at very low levels.

So the federal funds rate looks to remain at 2.25% to 2.50% for a year or more, and the FOMC highlighted that this is the not-too-hot, not-too-cold level that for now best serves its dual mandate to “foster maximum employment and price stability.”

The Fed also released its Summary of Economic Projections (SEP). The March SEP indicated a median projected federal funds rate of 2.6% for 2020, which is why everybody is discussing the possibility of at least one, small increase next year.

For those who were really hoping for at least one more rate hike, all is not lost — Tendayi Kapfidze, LendingTree chief economist, believes we shouldn’t take March’s decision too gravely. “There are special factors that suggest the economy could reaccelerate,” he says. “The government shutdown threw a wrench into things, slowing some activity and distorting how we measure the economy.” He also remarks that since the financial crisis, data in the first quarter has continued to come in weak, still leaving room for everything to reaccelerate in the second and third quarters. He points to the already strong labor market as a plus.

Fed economic forecasts hint at a possible rate cut by the end of 2019. Just as the Fed projects a slightly higher federal funds rate in 2020, it also posted a projected 2.4% for 2019. Note that this projected rate falls below the upper end of the current rate corridor of 2.5%. This means the doves may want to see a possible rate cut if improvements in the economic outlook don’t materialize by mid-year.

When asked about this potential rate cut, Fed Chair Jerome Powell emphasized the Committee’s current positive outlook, while also emphasizing that it remains mindful of potential risks. Still, he maintained that “the data are not currently sending a signal that we need to move in one direction or another.” He also remarked that since it’s still early in the year, they have limited and mixed data to consult.

Kapfidze offers a more concretely positive outlook, noting that the chances of a rate cut are pretty slim. “To get a rate cut, you’d have to have sustained growth below 2%. There would have to be further weakness in the economy, like if trade deals get messier, to warrant a rate cut.”

The Fed downgraded its economic outlook for 2019 for the second time in recent months. In line with Kapfidze’s predictions, we did see a weaker economic outlook coming out of this month’s Fed meeting. The median GDP forecast for 2019 and 2020 decreased from December projections, while it remained the same for 2021 and beyond. This comes hand in hand with the decreased fed funds rate projections.

The FOMC increased their unemployment projections, which Kapfidze found surprising because the labor market has been so strong. “Maybe they believe that those numbers indicate a deceleration,” he said, “but really, it has to be consistent considering the other changes that they made.”

Why the Fed March meeting is important for you

It’s easy to let all of this monetary policy talk go in one ear and out the other. But what the Fed does or doesn’t change has an impact on your daily life. Without a rate hike since December, we’re already starting to see mortgage rates fall. This is helpful not only for those who want to buy a home, but also for those who bought homes at last year’s highs to refinance.

As for personal loans and credit cards, we may still see these rates continue to increase, just at a slower rate. These rates have little chance of decreasing because lenders may take the current weaker economic data as a sign that the economy is going to be more risky.

Deposit accounts will feel the opposite effects as banks may start to cut savings account rates. At best, banks will keep their rates where they are for now, until more evidence for a rate cut arises.

Our January Fed meeting predictions

Don’t expect a rate hike. The FOMC ended the year with yet another rate hike, raising the federal funds rate from 2.25 to 2.5%. It was the committee’s fourth increase of 2018, which began with a rate of just 1.5%.

But the January Fed meeting will likely be an increase-free one. Tendayi Kapfidze, chief economist at LendingTree, the parent company of MagnifyMoney, said the probability of a rate hike is “basically zero.”

Kapfidze’s assessment is twofold. First, he noted that the Fed typically announces rate increases during the third month of each quarter, not the first. This means a hike announcement would be much more likely during the FOMC’s March 19-20 meeting, rather than in January.

Perhaps more importantly, Kapfidze said there’s been too much market flux for the FOMC to make a new decision on the federal funds rate. He predicts the Fed will likely wait for more evidence before it considers another rate hike.

“I think a lot of it is a reaction to market volatility, and therefore that’s lowered the expectations for federal fund hikes,” Kapfidze said.

But if a rate hike is so unlikely, what should consumers expect from the January Fed meeting? Here are three things to keep an eye on.

#1 The frequency of rate hikes moving forward

It’s unclear when the next increase will occur, but the FOMC’s post-meeting statement could give a clearer picture of how often rate hikes might occur in the future.

The Fed released its latest economic projections last month, which predicted the federal funds rate would likely reach 2.9% by the end of 2019. This figure was a decline from its September 2018 projections, which placed that figure at 3.1%.

As a result, many analysts — Kapfidze included — are forecasting a slower year for rate hikes than in 2018. Kapfdize said some analysts are predicting zero increases, or even a rate decrease, but he believes that may be too conservative.

“I still think the underlying economic data supports at least two rate hikes, maybe even three,” Kapfidze said.

Kapfidze’s outlook falls more in line with the Fed’s current projections, as it would mean two rate hikes of 0.25% at some point this year. There could be more clarity after the January meeting, as the FOMC’s accompanying statement will help indicate whether the Fed’s monetary policy has changed since December.

#2 An economic forecast for 2019

The FOMC’s post-meeting statement always includes a brief assessment of the economy, and this month’s comments will provide a helpful first look at the outlook for 2019.

Consumers will have to wait until March for the Fed’s full projections — those are only updated after every other meeting — but the FOMC will follow its January gathering with its usual press release. This statement normally provides insight into the state of household spending, inflation, the unemployment rate and GDP growth, as well as a prediction of how quickly the economy will grow in the coming months.

At last month’s Fed meeting, the committee found that household spending was continuing to increase, unemployment was remaining low and overall inflation remained near 2%. Kapfidze expects January’s forecast to be fairly similar, as recent market fluctuations might make it difficult for the FOMC to predict any major changes.

Read more: What the Fed Rate Hike Means for Your Investments

“I wouldn’t expect any significant change in the tone compared to December,” Kapfidze said. “I think they’ll want to see a little more data come in, and a little more time pass.”

At the very least, the statement will let consumers know if the Fed is taking a patient approach to its analysis, a decision that may help indicate just how volatile the FOMC considers the economy to be.

#3 A response to the government shutdown

The big mystery entering January’s Fed meeting is the partial government shutdown. While Kapfidze said the FOMC’s outlook should be similar to December, he also warned that things could change quickly if Congress and President Trump can’t agree on a spending bill soon.

“The longer it goes on, and the more contentious it gets, the less confidence consumers have — the less confidence business have. And a lot of that could translate to increased financial market volatility,” Kapfidze said.

Kapfidze added that the longer the government stays closed, the more likely the FOMC is to react with a change in monetary policy. During the October 2013 shutdown, for example, the Fed’s Board of Governors released a statement encouraging banks and credit unions to allow consumers a chance at renegotiating debt payments, such as mortgages, student loans and credit cards.

“The agencies encourage financial institutions to consider prudent workout arrangements that increase the potential for creditworthy borrowers to meet their obligations,” the 2013 statement said.

What happened at the January Fed meeting:

No rate hike for now

In its first meeting of 2019, the Federal Open Market Committee announced it was keeping the federal fund rate at 2.25% to 2.5%, therefore not raising the rates, as widely predicted. This decision follows much speculation surrounding the economy after the Fed rate hike in December 2018, which was the fourth rate hike last year. In its press release, the FOMC cited the near-ideal inflation rate of 2%, strong job growth and low unemployment as reasons for leaving the rate unchanged.

In the post-meeting press conference, Federal Reserve Chairman Jerome Powell confirmed that the committee feels that its current policy is appropriate and will adopt a “wait-and-see approach” in regards to future policy changes.

Read more: How Fed Rate Hikes Change Borrowing and Savings Rates

Impact of government shutdown is yet to be seen

The FOMC’s official statement did not address the government shutdown in detail, although it was discussed briefly in the press conference that followed. Powell said he believes that any GDP lost due to the shutdown will be regained in the second quarter, providing there isn’t another shutdown. Any permanent effect would come from another shutdown, but he did not answer how a shutdown might change future policy.

What the January meeting bodes for the rest of the year

Don’t expect more rate hikes. As for what this decision might signal for the future, Powell maintains that the committee is “data dependent”. This data includes labor market conditions, inflation pressures and expectations and price stability. He stressed that they will remain patient while continuing to look at financial developments both abroad and at home. These factors will help determine when a rate adjustment would be appropriate, if at all. When asked whether a rate change would mean an increase or a decrease, he emphasized again the use of this data for clarification on any changes. Still, the Fed did predict in December that the federal funds rate could reach 2.9% by the end of this year, indicating a positive change rather than a negative one.

CD’s might start looking better. For conservative savers wondering whether or not it’s worth it to tie up funds in CDs and risk missing out on future rate hikes – long-term CDs are looking like a safer and safer bet, according to Ken Tumin, founder of, another LendingTree-owned site. Post-Fed meeting, Tumin wrote in his outlook, “I can’t say for sure, but it’s beginning to look more likely that we have already passed the rate peak of this cycle. It may be time to start moving money into long-term CDs.”

Look out for March. Depending on who you ask, the FOMC’s inaction was to be expected. As Tendayi Kapfidze, LendingTree’s chief economist, noted [below], if there is going to be a rate increase this quarter, it will be announced in the FOMC’s March meeting. We will also have to wait for the March meeting to get the Fed’s full economic projections. For now, its statement confirms that household spending is still on an incline, inflation remains under control and unemployment is low. It also notes that growth of business fixed investment has slowed down from last year. As for inflation, market-based measures have decreased in recent months, but survey-based measures of longer-term inflation expectations haven’t changed much.

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