Bank rate savers may have a long wait before the Federal Reserve decides to raise interest rates.
That after the Federal Reserve Bank of San Francisco released a research paper recommending that the Fed holds off on any rate increases until 2012.
That would go against the grain of many economists who believe that the Federal Reserve should hike rates in 2011, if not later in 2010.
The research paper — written by Glenn D. Rudebusch, a senior vice president and associate director of research at the San Francisco Fed — was fairly blunt in its assessment that lower rates are needed to fuel economic growth. “To deliver future monetary stimulus consistent with the past — and ignoring the zero lower bound — the funds rate would be negative until late 2012,” Rudebusch wrote. “In practice, this suggests little need to raise the funds rate target above its zero lower bound anytime soon.”
A continued lower interest rate environment would likely mean lower bank savings rates going forward — and that’s bad news for financial consumers looking for a break when it comes to low bank deposit rates.
Checking Account Rates
Thus, once again, the need to be even more diligent about uncovering good interest rate deals.
Let’s start this week’s edition of Deals of the Week with a hefty 4.01% interest rate on Capital Bank of Raleigh’s free checking account.
The deal has a balance ceiling of $10,000 on the account, but 4% is 4% — compare that rate to the average U.S. checking account rate of 0.124% as measured by BankingMyWay’s National Interest Rate Tracker.
Here are the particulars:
- Minimum opening deposit is only $100
- No monthly service fee
- ATM fees refunded nationwide at the end of each statement cycle if monthly account conditions are met (up to $20 per statement cycle).
- Unlimited transactions.
- Monthly electronic statement includes free check images.
- To get the great rate, you’ll need to clear the following hurdles:
- One direct deposit or draft
- 10 debit/check card transactions
- View your statement online
For a monthly fee of $3.99, Capital Bank also offers “Bonus Benefits” on things like dining, online shopping and travel.
Find out more at CapitalBank-US.com.
Certificates of Deposit
Ally Bank’s 12-Month CD has a 1.49% yield that is as competitive as they come. The average national 12-month CD is 0.753% this week, according to the BankingMyWay National CD Rate Tracker.
You can open an account with no monthly fees and also get Ally’s “10-Day Best Rate” guarantee, as well as automatic renewal at maturity.
But perhaps the best feature is the CD’s 60-day early withdrawal penalty. As Ally points out, most banks charge an interest payment of anywhere from 90 to 180 days worth of interest in early withdrawal penalties.
But Ally sees it differently, and that’s a “win-win” for CD investors — it opens the door to a good interest rate and doesn’t slam that door in your face if you leave early. Ally’s 60-day policy is good not just for the 12-month CD, but for most CDs in the Ally bank deposit family.
Also, Ally calculates the 60-day penalty based on the first 60 days starting balance and APY, and not the more expensive last 60 days, as many banks do.
Get more information at the bank’s FAQ page.
Cash Back on Home Purchase
More and more lenders are offering cash deals on home purchases.
The latest example of this trend comes from JPMorgan Chase (Stock Quote: JPM). The bank’s “Home Connect” program offers cash back when you buy or sell your home with the program, along with the following services (from the Chase Web site).
- mortgage pre-qualification and financing
- personal assistance
- expert guidance
- recommendations of leading real estate professionals
- excellent service
Check the Chase “cash back” table below to see how much you can earn by using Home Connect. Chase promises “no catch and no hidden costs” with the services, so it may be worth looking into.
Find out more by calling 1-866-649-4041 or visit Chase.com.
—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at BankingMyWay.com.