Tired of pathetic deposit rates? Try these banks

If you're wearily waiting for the rate on your savings account to rise, 2014 probably hasn't brought you much relief. But that doesn't mean savers lack options today.

New research by MoneyRates.com indicates that savings account and money market account rates in the U.S. remained near historic lows throughout the second quarter of this year. Overall, the average savings account rate in the survey came in at 0.180 percent. The average money market account rate was even worse at 0.162 percent. 

But amid these lackluster figures, there were some banks - and categories of banks - that offered consumers a chance to earn more.

Rise of the Internet bank

The standout category in the survey was online-only banks - institutions that forgo a traditional branch network. While the average savings account rate at online banks - 0.536 percent - may not seem impressive, that figure was more than five times the average at brick-and-mortar banks (0.096 percent).

“Considering the low level of rates generally, the difference between the best banks and the average is surprising,” says Richard Barrington, CFA, senior financial analyst for MoneyRates.com and author of the study. “You can earn five times as much interest by shopping around, so why wouldn't you?”

If five times the interest isn't enough to make you switch banks, the top rate surveyed for savings accounts, which came from the Internet-based Synchrony Bank, came in at 0.950 percent - or nearly 10 times the interest offered by the average neighborhood bank branch.

In other words, on a savings account started with $100,000, the average brick-and-mortar bank would pay about $96 in annual interest. At the interest rate posted by Synchrony in the second quarter, that same deposit would yield about $950 annually.

Barrington says that putting dollar figures on the interest offered by the leading banks can help consumers motivate themselves to make a change. 

“Maybe interest rates are too abstract for people to really appreciate what the differences mean,” Barrington says. “Convert the extra amount you could earn to dollars when you compare banks, and you'll probably see that extra is worth having.”

For those not ready to test the waters of online-only banking, the survey also revealed that medium-sized banks - those with between $5 billion and $10 billion in deposits - offered an average savings account rate of 0.277 percent. That was more than 10 basis points higher than their smaller and larger counterparts - albeit roughly half the yield of what the typical online-only account offers.

Desperately seeking safety

Admittedly, no interest rate of less than 1 percent is likely to raise investors' pulses today, particularly in light of the gains the stock market has posted lately. Yet for some consumers - including many retirees - an FDIC-insured bank account may be the wisest place to store savings they would rather not risk in the stock market.

“Money on deposit should be your safety blanket, the totally secure area of your investments,” Barrington says. “Even so, there is no reason to make sure that money isn't working as hard for you as it could be.”

The MoneyRates.com survey offers more details on the top banks in the survey and its methodology.  

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